NUNZIANTE MAGRONE INTER ALIA Legal e-news
On 9 April 2014 the Directive 2014/26/EU of the European Parliament and of the Council of 26 February 2014 on collective management of copyright and related rights and multiterritorial licensing of rights in musical works 1 for online use in the internal market entered into force and shall be transposed by the Member States of the European Union by 10 April 2016. The Directive is part of a wider EU program aimed at increasing the protection of intellectual property rights, which the European Commission's Communication on the «Europe 2 2020» growth strategy , the Digital Agenda for 3 Europe and the European Parliament Resolution of 22 September 2010 on Enforcement of 4 Intellectual Property Rights in the Internal Market belong to. The E.U. legislator – enthused by the exhortations contained in the Commission’s Recommendation 737/2005/EC of 18 October 5 2005 – meant to improve the efficiency of the collecting societies managing copyright and related rights, by facing the need to include the protection of such rights within the freedom of movement of goods and services in the Single 6 European Market context . Furthermore, it meant 1 Published in the Official Journal of the European Union, 20 March 2014, L 84. 2 Communication from the Commission «Europe 2020: a European strategy for smart, sustainable and inclusive growth», Brussels 3 March 2010, COM(2010) 2020.
to encourage multi-territorial licensing for online uses of musical works, in an increasingly crossborder perspective. The main obstacles to these objectives are traditionally represented by the cultural gap separating the national laws providing for collectings, as well as by the resulting inefficiencies in the exploitation of copyright and related rights within the internal market, by the lack of transparency and efficiency in the rightsolders’ compensation procedures, by the limited availability of creative content for online diffusion and by the non-granting of licences of 7 rights on the new platforms and, finally, by the 8 spreading of piracy . 1. Collecting Societies. The collecting societies of copyright are societies intermediating between authors and users, created in order to manage the rights of economic exploitation resulting from the work. Collecting societies promote the filling of two complementary needs: authors’ one to control the economic exploitation of their own works by third parties (through radio, TV, satellite, IT networks); the users’ other one to present their licensing requests to a single contact point – so called one9 stop-shop . By merely working on national basis and endemically being connected to the territory, collecting societies operate by virtue of a mandate given by the authors (rightholders), through which they are entitled to grant applicants (potential users) with licences and authorizations for the economic exploitation of copyrighted works. From such granting activity they perceive proceeds that are distributed among the rightholders, net of commissions due to the intermediation activity performed.
3
Communication from the Commission to the European Parliament, to the Council, to the European Economic and Social Committee and to the Committee of the Regions, A «Digital Agenda for Europe»», Brussels 19 May 2010. 4
Resolution 2009/2178(INI) (2012/C 50 E/06).
5
Recommendation 737/2005/EC from the Commission of 18 October 2005 on Collective Cross-border Management of Copyright and Related Rights for Legitimate Online Music Services. 6 In this perspective P. MARZANO, during the meeting «La gestione collettiva dei diritti d’autore e connessi all’indomani della Direttiva Europea 2014/26/UE» organized by Luiss Guido Carli, on 27 May 2014.
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7 See F. MASCHIO, «Disciplina delle licenze multi-territoriali e tutela dei consumatori», in Judicium, Il processo civile in Italia e in Europa (www.judicium.it), 29 October 2012. 8 See G. MAZZIOTTI «Symposium: Collective Management of Copyright: Solution or Sacrifice?, New Licensing Models for Online Music Services in the European Union: From Collective to Customized Management» in «The Columbia Journal of Law & Arts» vol. 34, 4, 757 (2011). 9
See G. D’AMMASSA, «Le società di gestione collettiva», in «La Guida al diritto d’autore», sul sito http://www.dirittodautore.it/la-guida-al-dirittodautore/#.U86FALHIzyU, last visited 5 September 2014.
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Copyright Law
COPYRIGHT LAW: THE NEW DIRECTIVE 2014/26/EU ON COLLECTIVE MANAGEMENT OF COPYRIGHT AND RELATED RIGHTS AND MULTITERRITORIAL LICENSING OF RIGHTS IN MUSICAL WORKS FOR ONLINE USES.
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2. Main Issues. Collecting societies operate under exclusivity and monopoly, raising controversial issues related to the applicability of the competition rules in this context. Last 24 February, the Court of Justice of the European Union issued a decision on this particular matter, after have been requested by Krajský soudv Plzni (Czech Republic), on 24 July 2012, in the case concerning Ochranný svaz autorský pro Prava k dílům hudebním, o.s. (OSA) against Léčebnélázně Marienbad, a.s. (C-351/12). In that decision, the E.C.J. remarked that, although the territorial monopoly reserved to OSA (in its quality of copyright collective management organization in the Czech Republic) constitutes a restriction on freedom to provide services, such a restriction is justified, as appropriate and necessary in order to achieve the aim to effectively manage intellectual property rights. In conclusion, the Court concluded that OSA’s monopoly granted by the Czech law is compatible with the freedom to provide 10 services . Alongside the matters concerning monopoly and competition, there are further issues of a practical nature, related to the keeping of repertoires in the individual countries, which are often incomplete and not synchronized compared to those managed by similar bodies in other countries, to the difficulty of identifying the rightholders, to frauds committed by associates to the detriment of collecting societies.
the Directive 26/2014/EU has been issued just in order to face the above-mentioned issues and improve the efficiency of the system represented by the collecting societies. It does set purposes of governance and transparency, by providing for the necessary requirements in order to:
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ensure the proper functioning of the management of copyright and related rights by collective management organizations;
•
grant multi-territorial licensing by collective management organizations of authors’ right in musical works for online uses.
The Directive applies, in general, to all collective management organizations established in the territory of the European Union, while some of the provisions (notably the III title) only concern those who manage copyright in musical works for online uses on multi-territorial basis. It establishes the principle (already introduced by Recommendation 737/2005/EC) according to which the rightholders can freely choose to entrust with the protection of their works the collective management organizations they consider the most appropriate, even independent management entities and regardless of the State of nationality, as well as to divide the protection of 11 their works among different collectings . The new rules should foster prompter remuneration to the rightholders, greater transparency on the income sources resulting from the management of rights as well as improve information processes towards authors and business partners.
3. The Directive 26/2014/EU.
10 Moreover, in a streamlining perspective of management of rights for online uses, G. MAZZIOTTI, op. cit. remarks: «Rather, collective management of online rights should be based on a free and E.U.-wide market where collective rights management organizations compete with one another on the grounds of their services and of the appeal of their repertoires. Since monitoring tasks of collective rights managers in the online environment can easily be performed directly on the Internet (i.e., from a distance), collecting societies are no longer excused for not competing in the cross-border provision of their services and of their own repertoires».
•
4. Online Multi-territorial Licensing. Multi-territorial licence has been defined, at the EU level, as "a licence covering intellectual property rights for more than one single territorial 12 legal area" or "a licence which covers the 13 territory of more than one Member State” .
11
See (6), (15) and (19) recitals of the Directive.
12
See F. MASCHIO, op. cit.
13
See art. 3, § 1, letter m) of the Directive.
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Copyright Law
The main collectings operating in Italy are Società Italiana Autori ed Editori (S.I.A.E.), CLEAREDI, Itsright, Società Consortile Fonografici, Nuovo Imaie, Artisti 7607.
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As to the services concerning online uses of musical works, which have a multi-territorial range, collectings issue and cash the fee for the uses of their musical repertoires directly from the DSPs, for every country covered by the service. In this respect multi-territorial licensing agreements on a European basis have been entered into with the major music providers (Google, iTunes, Spotify). In some cases, the licences also provide for the gradual expansion into territories outside 14 the EU . The rules newly introduced by the Directive are intended to easily get the necessary licences in order to spread online musical works in the EU territory, as well as to foster the aggregation on a voluntary basis of repertoires and music rights owned by collectings filling determined requirements (being democratic in the 15 decision-making processes, transparency) . They are finally aimed at ensuring the proper collection and the equitable distribution of fees among the authors. The Directive considers and addresses the issue concerning the fragmentation of the market for online music services in the EU and the bad functioning of the digital market, a situation which sharply runs counter to the rapidly rising consumers’ demand to access to the digital content and their related innovative services 16 beyond national borders . Based on the recommendation 737/2005/EC, the EU legislator acknowledged that, in the era of the Internet and in an increasing 14 See SOCIETÀ ITALIANA DEGLI AUTORI ED EDITORI (S.I.A.E.), «Licenze multiterritoriali on-line», in http://www.google.it/url?sa=t&rct=j&q=&esrc=s&source=w eb&cd=1&ved=0CCIQFjAA&url=http%3A%2F%2Fwww.sia e.it%2Fdocuments%2FBollettinosociale%2FBS_201406111 41054.pdf&ei=D1DRU5rZCpHjsATN3YLwCw&usg=AFQjCN HeWSgsDXfFjuWqEHEuNDLI6o8uoA&sig2=HjG761V5SK0 2acxrUaQJiA&bvm=bv.71667212,d.cWc. 15
See (40) recital of the Directive.
16
See (38) recital of the Directive.
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cross-border context, commercial users need a licensing policy which best suits the ubiquity of the 17 online environment and multi-territoriality . The Directive sets out the requirements which shall be met by the collective management organizations in order to grant multi-territorial licences of rights for online uses of musical works, such as the capability to electronically process any data necessary in order to efficiently and transparently manage licences, as well as to identify the related repertoire by also controlling its use, to issue invoice to the users, to collect the proceeds resulting from the rights and distribute the amounts due to the rightholders. It is also required the capability to accurately identify the musical works that collective management organizations are authorized to represent, as well as the rights and rightholders corresponding to each musical work; the faculty to use appropriate tools in order to identify and promptly and effectively solve any discrepancies should arise with respect to the data held by other collective management organizations granting multiterritorial licences for online uses of musical works. *** In conclusion, the Directive 26/2014/EU is particularly innovative, on the one hand by tending to promote the harmonization of the national provisions of the Member States concerning the management of collecting societies and, on the other one, by preserving, in accordance with art. 18 167 TFEU , their cultural differences resulting by 17 See (39) recital of the Directive. Furthermore, see G. MAZZIOTTI, op. cit.: «In this prospective framework, all stakeholders would effectively end up treating the European Union as a “Digital Single Market.” The opportunity for online music providers to offer their services by merely having to clear the necessary online rights in the country where their content is materially uploaded (or where the provider is established), while paying the same price for all music titles, would greatly reduce today’s discriminations between big and small music repertoires, mainstream and local (or niche) repertoires, major recording businesses and small or independent record labels, traditional business models and innovative businesses combining commercial and noncommercial licenses».
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See (3) recital of the Directive, according to which the E.U. is required to take cultural diversity into account in its action and to contribute to the flowering of the cultures of the Member States, while respecting their national and regional diversity and at the same time bringing the common cultural heritage to the fore. For an in-depth analysis on the different national models of collectings, see G. Mazziotti, op. cit.
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Copyright Law
The management system of rights for online uses is based on a distinction between licences for national online uses and licences for multi-territorial online uses, designed to the so called Digital Service Providers (DSPs) which offer music services in several European countries.
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their constitution, composition and purposes. In the light of such elements of differentiation, it will be interesting to observe the way the new system of rules, as harmonized at European level, will operate. th
(September 5 , 2014) For any further clarification, please contact: Iole Di Muccio (i.dimuccio@nmlex.it) Giuseppe Mazziotti (g.mazziotti@nmlex.it)
The information in this report are general and should not be considered or relied on as a legal advice; before taking any action based on the same it is advisable to require the assistance of a consultant.
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