German Ministry of Justice plans to tighten copyright contract law, again

Written on 3 Feb 2016

In many countries, authors and users of copyright (such as publishers) are subject to few controls when it comes to setting the terms of licences. In Germany, by contrast, authors already have a statutory right to receive “fair” and “equitable” compensation for the exploitation of their works.

New legislation being proposed would afford further protections for authors that would impose a significant administrative burden on licensees and potentially threaten the viability of producing certain types of works.

What is the current position?

“Fair” and “equitable” are familiar concepts in German contract law. However, they caused heated debates in the German copyright community when, in 2002, the German government tightened legislation on copyright contract law by providing a statutory basis (the UrhG) for authors to claim “fair” and “equitable” compensation for the exploitation of their works. Authors were even entitled to “open up” existing agreements with their licence partners (users) on the grounds that they challenged the fairness and equity of the compensation.

In order to give guidance as to what is “fair” and “equitable” as compensation, the law allows associations of authors to set up “collective remuneration rules” (Gemeinsame Vergütungsregeln, or GVRs) with single users or associations of these. In the years since, however, very few GVRs have been set up. Those that have are in the media sector, concerning book authors, newspaper journalists and directors and actors of certain TV productions, amongst other things.

What is being proposed?

The German Federal Ministry of Justice (BMJV) is determined to tighten this legislation even further. The BMJV claims that, despite the UrhG, authors are still being forced to accept total buy-outs of their rights that do not provide a fair and equitable share of the benefits derived from their works. Where GVRs do exist, the BMJV does not believe that users have been paying what was agreed upon collectively.

Based on the assumption that authors are faced with a “structural imbalance of power” when it comes to negotiating compensation for their works, the BMJV recently issued draft legislation which seeks to strengthen the authors’ position both on an individual and a collective level.

Separate remuneration for every use of a work

On an individual level, the draft legislation provides a right of the authors to be remunerated separately for every single use of their works. Users would not, as a rule, be able to pay only once for multiple usages of the works, but rather would be obliged to pay separate compensation to the author for each usage.

In order to enable the author to verify the accuracy of the compensation, the users would be obliged to render an account once a year to the author of every use of his or her works and the benefits derived from such uses.

Authors would also be entitled to revoke their licence to a user after five years if they had a third party at hand who wanted to use the work in question. The user would only be able to prolong their agreement on the terms offered by the third party (German rules on pre-emption rights being applicable).

As with the UrhG, exemptions to many of these provisions would apply where agreed upon collectively in GVRs.

Collective actions

On a collective level, the Ministry’s draft legislation seeks to strengthen the authors‘ position by introducing a right to bring collective actions. Authors’ (and users’) associations would be entitled to bring cease and desist claims in cases where existing GVRs are not applied properly. The law is also intended to put more pressure on the parties to set up more GVRs.

Reaction to the proposals

Predictably, while authors‘ associations in general have welcomed the draft legislation, users throughout the sectors are very much opposed to it.

Regarding the author’s right to call back a licence after five years, book publishers insist that they will lose their backlist business, and movie makers emphasise that they will not be able to recover the enormous costs for films in five years.

Moreover, annual renderings of accounts for every single use of each works to every author would result in a huge bureaucracy. This is a point being emphasised particularly by press publishers. Newspapers and magazines contain hundreds of works, from a multitude of authors, photographers and illustrators, in each edition. They are also distributed in various printed formats and in diverse digital versions, on a variety of distribution channels.

Others point out that it would not even be possible to separately compensate every single contributor to “multi-author works” such as films or press products for every single use. If complete buy-outs of rights were no longer allowed, it might be practically impossible to produce these kinds of products. In their view, the need to pay fair and equitable remuneration to the authors must not lead to prohibitive compensation conditions in the media industry.

The debate on German copyright law is once more heating up. Those whose businesses involves licensing copyright in Germany will be watching closely the development of the proposed new legislation.