Revision of Copyright Contract Law in Germany

Written on 20 Feb 2017

Recent revisions in German copyright law have introduced changes to the right of authors and performing artists to obtain reasonable compensation for their work. This right was originally introduced in 2002 to strengthen the position of artists and authors regarding revenue generated by the exploitation of their work. Due to the changes in technology and media distribution as well as fundamental rulings of German courts since, the legislator now adapted a revision to modernize the legal framework. The new regulation is expected to become effective on 1 April, 2017.

While two aspects of the new law could potentially affect the games industry, the consequences of both are limited, and no action is likely required for games industry companies:

  • Author’s right to information has been extended and now also applies to certain third parties.
  • More importantly, computer programs are now generally exempt from the scope of copyright contract law.

The right to reasonable compensation, provisions regarding joint remuneration rules and the transfer of usage rights for periods longer than ten years have also been changed.

1 Right to Information on the Extent of Usage

Under German law, authors have the right to demand information from their contract partners on the extent of the usage of their work and the economic benefits obtained from the granted exploitation rights. This right does not apply to authors of computer programs, but individuals who have contributed “non-code” assets to games, such as artwork or music, are entitled to such information.

The right to information will now be extended, with authors receiving the right to request information not just from their direct licensees, but also from certain third parties, namely parties who have a “significant commercial influence” on the licence chain and parties who profit directly from any clear disproportionality in revenue distribution. This regulation affects rights agencies and commissioned production business models as well as entities who stand to profit from an unexpected “blockbuster” situation.

Furthermore, even copyright owners who agreed to a flat license fee (instead of royalties depending on sales of a final product) will also be entitled to request information.

2 Exclusion of Computer Programs

Computer programs were already excluded from the scope of general copyright contract law under the existing legal framework. The revision has introduced an even broader exception for computer programs that now also excludes the creation of joint remuneration rules.

3 Right to Reasonable Compensation

Authors and performing artists can demand reasonable compensation for their work. The revision added further criteria to determine whether the remuneration granted for rights of use is considered reasonable. While time and duration of use were already taken into consideration, frequency and extent were added as additional elements. Changes affecting joint remuneration rules were also introduced; these however do not affect the games industry in practice.

4 Joint Remuneration Rules & Buy-Out Contracts

Another change concerns buy-out contracts under which usage rights are granted against a one-time flat fee: These can no longer be granted as exclusive licenses for an unlimited timespan. In principle, any exclusive licence grant is transformed into a simple (non-exclusive) licence right after ten years, the author then regaining their right to exploit the work in other ways as well. However, parties can agree to extend the period of exclusivity after five years. Again, the loss of exclusivity does not apply to computer programs, but may apply to other game assets.