The judgement does not come entirely unexpected as it is largely in line with the Advocate General opinion from earlier this year. As we have already noted in our analysis of the AG opinion, the case has the potential to undermine Extended Collective Licensing (ECL), which is currently held as the solution for the issue of out-of-commerce works.

At this point it is unclear how the Doke & Soulier judgement relates to the EU Commission’s proposal for dealing with out-of-commerce works in the collections of cultural heritage institutions—currently a part of the proposal for a Copyright in the Digital Single Market directive. Regardless, the judgement  casts a shadow of doubt over ECL arrangements such as the one at the center of the Commission’s proposal. This is mainly due to the fact that through this decision the court has established stringent criteria that national measures would need to fulfil. The fact that according to the court “every author must actually be informed of the future use of his work by a third party and the means at his disposal to prohibit it if he so wishes” (para 38) seems to contradict the very purpose of Extended Collective Licensing arrangements, which is to circumvent the need to clear rights on a per-work (or per-rightsholder) basis.

Can ECL still provide a solution for out-of-commerce works?

Looking at the reasoning of the court, it becomes evident that the judgement is not so much concerned with the operation of of ECL as a legal mechanism, but rather with the question of whether EU member states can limit the ability of authors to exercise their exclusive rights in ways other than those foreseen by the EU legislator. The court answers this with a resounding “no” and then goes on to examine whether the French system respects the ability of authors to object to the use of their out-of-print works. The court comes to the conclusion that it does not, because authors are neither individually informed about future uses of their works, and because their ability to opt out of such uses is limited. In summary, the court does not declare ECL in general incompatible with the InfoSoc directive, but has ruled, that the French ECL implementation does not sufficiently respect the authors’ exclusive rights.

In the light of the ongoing efforts to modernize the EU copyright framework, this means that any legislative solution to the issue of out-of-commerce works needs to be based on a clearly defined exception to the exclusive rights of authors and other creators. The most obvious way to achieve this would be for the EU legislator to introduce a mandatory exception that allows cultural heritage institutions to make out-of-commerce works in their collections available online, which is exactly what cultural heritage institutions have been arguing for in the run up to the Commission’s proposals.

Unfortunately the Commission has not paid much attention to this recommendation,  and instead has presented a flawed proposal to require member states to introduce Extended Collective Licensing in their national laws. Given that the Commission’s proposal would explicitly introduce ECL into EU copyright law, but at the same time fails to create an explicit exception to the exclusive rights of authors and other creators, it remains an open question whether the Commission’s proposal would satisfy the requirements that CJEU has outlined in the Doke & Soulier decision. In this situation the EU legislator would probably be well advised to strengthen the Commission’s proposal by adding a mandatory exception benefitting cultural heritage institutions.

Commercial exploitation is not the answer

There also is another side of the Doke & Soulier case that has received relatively little attention, even though it provides an important clue for designing the EU approach to the out-of-commerce works problem: The French mechanism for making out-of-print works available relies on commercial publishers who can obtain licenses to re-publish digital editions of out-of-print works. In essence it tries to put the out-of-print works back into commercial circulation.

The reason why Doke & Soulier brought their legal challenge is the fact that the French system confiscates the exclusive rights to their works from authors (and previous publishers) and then lets a collecting society license them to other publishers. Even when one ignores the legal details of the case, it is hard to justify why the fact that a book is out-of-print should give reason to expropriate authors of their rights in favor of commercial exploitation by publishers.

It is difficult to understand why the French government is relying on this questionable mechanism to bring old books back into circulation when there is a much more obvious (and less problematic) solution: allow cultural heritage institutions to make out-of-commerce works in their collections available online as part of their existing public task.

Such a solution also limits the exclusive right of authors to control the use of their works, but it does so in a much less invasive way, and relies on public institutions that have a long history of providing access to works that have fallen out of commercial circulation. While this approach is central to the Commission’s proposal, it is needlessly weakened by the fact that recital 27 of the proposed directive would allow cultural heritage institutions to generate “reasonable revenues” from making out-of-commerce works available online.

It is unclear why the Commission has included this recital in its proposal. The idea that it is possible to generate significant revenues from providing online access to old collections has turned out to be wishful thinking. The only effect of allowing institutions to charge for access to works that they make available thanks to an exception is to undermine support among rightsholders. Providing access to cultural heritage is part of their public interest mission. Introducing revenue flows into the process only muddies the waters.

A real solution for out-of-commerce works is needed

Taking into account these two lessons from the Doke & Soulier ruling, it is clear that the Commission’s proposal for a “solution” to the out-of-commerce problem needs to be improved. It needs to be more solidly grounded in the public interest mission of cultural heritage institutions (removing recital 27 is a good first step) and it needs to be anchored by an exception to the exclusive rights  of authors that allows institutions to make these works available, either based on extended collective licensing or, where such arrangements cannot be expected to work, on the basis of that exception alone.

The post CJEU ruling in Doke & Soulier case emphasizes the need for a real solution to the out-of-commerce problem appeared first on COMMUNIA Association.

Since the role of CCSs in collective rights management and shaping of copyrights is crucial, the European Union adopted the Directive 2014/26/EU on collective rights management and multi-territorial licensing of rights in musical works for online uses in February 2012 (see our previous coverage here). The transposition date for Member States was April 2014. The directive sets up a common framework for financial reporting. CCSs have to draw up and publish an annual transparency report including detailed accounts, financial information, and a special report on the use of the amounts deducted for purposes of social, cultural, and educational services.

Poland is an example of member state that introduced the obligation of disclosing the CCS financial data long before the directive implementation deadline: the first reports were submitted in 2011. Centrum Cyfrowe, a member organization of COMMUNIA, conducted the analysis of the financial and narrative reports of Polish CCSs for the years of 2010-2013. The CCSs were obliged to disclose these reports for the study.

The authors of the report attempted to answer the question of whether the existing mechanism of operation of copyright collection societies is efficient, as these entities are of high social importance. The report also addresses the question of whether the current activities of CCSs fulfill their statutory obligations. An additional task for the authors of the report was to determine the extent to which the widely available information regarding CCSs allows the public to understand the principles of their functioning.

The key findings of the report are as following:

• years may pass from collection until distribution of royalties – the period between the collection of funds and their transfer to rightsholders may take up to 6 years;
• capital income and economic profitability weaken the motivation for repartition since CCSs derive financial income (interest on the capital) from due funds which have not been distributed to copyright holders;
• the costs of collective copyright management are higher than it appears from their presentation in the financial statements;
• only CCSs members influence the principles of repartition.

Authors of the report claim that the key issue is to assure is that in the process of exercising statutory authorizations there is no conflict of interest between economic profitability and efficient repartition. Moreover, they recommend that the Ministry of Culture and National Heritage act as the authority supervising societies and should oblige CCSs to:

1. implement a clear-cut and comprehensive manner of reporting on the costs of servicing copyright collection so that there are no doubts as to how expensive that system is and in order to make it possible to optimize collective copyrights management in the future;
2. apply any instruments available (taking into account new technologies) in order to make the system of redistribution of the funds collected from the market by CCSs clear and transparent.

The last point is in line with one of COMMUNIA’s key demands during the discussion of the Directive on collective rights management: Copyright Collection Societies should be required to publish information about their membership and the repertoire that they represent through open,  machine readable interfaces.
You can read more about the conclusions of the report in the abstract (in English).

The post Polish Copyright Collection Societies and Their Financial Data appeared first on COMMUNIA Association.

The Compromise text was adopted in early April (to our knowledge, it has not been widely circulated but has been made available online by the Austrian Parliament). The adoption of this text at a rather early stage of the legislative procedure, suggests that a possibility of a conclusion at first reading exists. However, it does not take account of the draft reports released by the Parliamentary Committees a few weeks after. As we highlighted earlier, the opinion drafted by MEP Helga Trüpel for the CULT Committee shares some core arguments with Communia’s policy. The deadline for tabling amendments on the leading Committee’s report (JURI) is June 6th.

It is thus interesting to look more closely at the content of the Compromise text to have a better idea about what the Council would be ready to vote for at the present time of the procedure (more than the Parliament insofar as the guessing about the final parliamentary vote is very uncertain at this stage of the procedure), although new matters of discussion may arise during the amendment and ‘lobbying’ period.

Let’s focus on the main issues raised in our policy paper:

Transparency

From Communia’s perspective, the general availability of information about membership and represented repertoire is essential. The Presidency proposal considers, like the Commission, that CMOs should only be held liable for a limited obligation of information, ignoring the specific needs of a wide-range of users. As highlighted in our policy paper, users are not properly considered, whereas the categories of beneficiaries of such access to information shall be much wider than those listed in Article 18. The rearranging of the corresponding provisions (namely the removal of Art. 18.2) by the Presidency does not improve the flaws of what was originally proposed by the Commission.

It is regrettable that the Directive proposal does not properly distinguish between the needs of users and the needs of the public (as broadly stated under Article 19: ‘Disclosure of information to the public‘). As we pointed out, users have specific needs but shall also be understood widely, beyond the usual contractual parties of CMOs, so that other potential licensees, including developers or any other persons or entities needing to contract with a CMO, can rely on accurate licensing information. ‘Users’ shall also be understood by CMOs as future contractors (even if still part of the ‘public’). This being said, the Compromise text aptly suggests adding standard licensing contracts and standard applicable tariffs as a category information subject to public disclosure (Art. 19).

Open content licenses and ability of rightholders to opt-out of collective management

Although only in a (legally non-binding) Recital, the freedom of rightholders to dispose of their works is expressly stated:

Recital 9: “The rights, categories of rights or types of works and other subject matter managed by the collective management organisation should be determined by the general assembly of members, without prejudicing the right of the rightholder to make such a choice under this Directive. It is important that the rights and categories of rights are determined in a manner that maintains a balance between the freedom of rightholders to dispose of their works and other subject matter and the ability of the organisation to effectively manage the rights” (emphasis ours).

However, the choice of rightholders is bound by what is allowed under this Directive, which is … not much. Indeed, the wording of Article 5 of the proposed Directive on the rights of rightholders, notably as regards their ability to terminate the mandate for the management of their rights with a collecting society or to withdraw from a collecting society is still the same as what was proposed by the Commission. As already highlighted in our policy paper (p. 5), the Commission considers that the freedom of choice of rightholders does not concern their works – which would have allowed them to opt-out of collective management and choose alternative licensing models like open content licenses – but only relates to their ‘rights, categories of rights or types of works and other subject matter‘.

As written in the Commission’s proposal, ‘the Directive should not prejudice the possibility for rightholders to manage their rights individually, including for non-commercial uses‘ (end of Recital 9). However, it is not said how this shall concretely take place for CMO members, whose ‘opting-out’ modalities are still unclear. The strategy that collecting societies have to devise regarding open content licenses, in the face of the growing trend of non-commercial uses and of rightholders’ will to grant non-exclusive licenses on their works, is still unclarified, if not inexistent.

It is worth mentioning that the ability for CMOs members to opt for open content licenses has been recently proposed in France in a national policymaking instrument (the Lescure Report, released earlier this week: see our comments), which acknowledges the importance of allowing an harmonious legal interaction between open licenses and collective management.

Moreover, the said ‘balance’ between the free choice of rightholders for the management of their works ‘and the ability of the [collective management] organization to effectively manage the rights‘ (see Recital 9 cited above) instills the idea that CMOs may claim for the necessity for them to manage all rights for the sake of the certainty of their repertoire. The respect of this ‘balance’ may give rise to litigation between CMOs and their members, thus potentially calling for arbitration (perhaps from the EU Court of Justice which is used to decide on other kinds of ‘balances’ inside the copyright law system).

Although unchanged as regards the ability of rightholders to ‘opt-out’ from collective management, the language of Article 5 now suggests imposing on CMOs an obligation to contract with rightholders. This is most likely motivated by the concerns expressed by some (including the European Parliament) with respect to cultural diversity, to prevent collecting societies from refusing to administer rights in certain works solely on grounds of their cultural origin or limited economic value. Such obligation for CMOs is a good thing for the certainty of repertoire towards users, provided that it is complemented by an obligation to keep track of all the information about the related rights and rightholders, and by an obligation to disclose it accurately to all users and potential users (which is presently not the case as underlined above).

Furthermore, the Compromise proposes to add a reference to ‘the records kept by a collective management organisation (which) should allow for the identification and location of its members and rightholders‘ (Recital 10). If this is not to resolve the ‘orphan works’ issue, it has nonetheless the advantage of setting the responsibility of collecting societies to provide information about the identification and the location of their members.

EU policymaking on collective management of copyright has mainly focused on the need of commercial (music) services for simplified and multi-territorial licenses, which has contributed to the lack of vision on non-commercial uses. Let’s hope that the draft CULT Committee report will help the Parliament adjust its amending proposals on the Directive proposal.

The post EU Presidency proposes compromise on draft Directive on collective management of copyright appeared first on COMMUNIA Association.

At this stage the draft opinions written by the rapporteurs for the four non-leading committees have been published. These opinions take the form of amendments proposed to the text of the directive (sometimes these are accompanied by short justifications).

In our policy paper from January we identified two main issues with the proposed directive: The first one concerns the transparency of repertoire information that has to be provided by collective management organisations and the second concerns the relation between collective management and open content licenses. In our analysis the proposed directive fails to sufficiently address these two issues.

We are happy to see that among the four published opinions the draft opinion of the Committee on Culture and Education authored by Helga Trüpel shares the concerns voiced in our policy paper. In the introduction of the document she writes:

The Rapporteur would like to stress that rightholders should have the possibility to make their works available under an open content license of their choice, for instance under Creative Commons, without necessarily opting out from the collective management system.

Furthermore, the Rapporteur would like to give even more flexibility to rightholders in the management of the rights. CMOs should provide accurate repertory information, in particular for works falling into the Public Domain. CMOs should ensure that the information in respect of the works whose term of protection terminates is accurate and regularly updated, in order to exempt such works from licensing and avoid claims to be enforced by CMOs in that regard.

In the following we take a closer look at the relevant amendments contained in the draft opinion of the Committee on Culture and Education:

Use of open content licenses by members of collective management organisations

While recital 9 of the Commission proposal contains language (‘Finally, this Directive should not prejudice the possibilities of rightholders to manage their rights individually, including for non-commercial uses.’) that clearly indicates that the directive is intended to create more flexibility for members of collective management organisations to exercise their rights individually, the actual provisions of the Commission proposal are somewhat ambiguous in this regard. Given this our policy paper suggests:

…to modify Article 5. This provision currently gives right holders the right to authorise (and terminate such authorisation) the management of ‘rights, categories of rights or types of works and other subject matter of their choice’. By changing this language into ‘rights or categories of rights or works or types of works and other subject matter of their choice’, authors would be effectively enabled to remove some works from the collective management system. This would allow them to make these works available under an open content license of their choice…

In line with this proposal the draft opinion contains three amendements (30, 31 and 32) that, if adopted, would allow rights-holders to remove individual works from from the collective management system. That would enable them to manage these works themselves, giving them the ability to make them available under the terms of open content licenses, including those that allow for the royalty-free commercial use of the licensed works.

In addition the draft report contains an amendment (29) that introduces a new sub paragraph 2 a in Article 5 (‘Rights of rightholders’). This amendement would give members of collective management organisations the right to grant free licenses for non-commercial uses of their works:

Rightholders shall have the right to grant free licences for the non-commercial use of their works and rights. In this case, rightholders shall inform in due time the collective management organisations authorised to manage the rights of such works that such a free license has been granted.

The addition of this sub paragraph is very welcome as it allows members of collective management organisations to make use of some open content licenses (those that only allow for non-commercial uses of the licensed work) without having to remove these works from the collective management system. Having this possibility means that members of collective management organisations can enjoy the benefits of collective rights management (effective collection for royalties form large groups of commercial uses) as well as the flexibility offered by non-commercial open content licenses.

Transparency

With regards to transparency our main concern has been that the measures intended to
increase the transparency with regards to the information about collective management organisations membership and their repertoire are insufficient. Given this we are happy to see that the draft opinion of the Committee on Culture and Education contains a number of amendments that would increase the transparency of membership and repertoire information.

Amendment 34 proposes a new paragraph 5 a in Article 6 (‘Membership rules of collecting societies’) that would require collective management organisations to make membership and repertoire information publicly accessible:

Collective management organisations shall make publicly accessible the list of their members and their respective rights or category of rights or works or type of works and other subject matter which the rightholders authorise the collective management organisation to manage, provided that the protection of the personal data of rightholders is preserved.

In addition amendments 61, 62 and 65 add language to articles 18 (‘Information provided to rightholders, members, other collecting societies and users on request’) and 19 (‘Disclosure of information to the public’) of the proposed directive that reiterates the requirement to make available membership lists and information on the managed repertoire through publicly accessible and searchable interfaces. As we had mentioned in our policy paper the last addition is crucial in an environment where automated data processing is fast becoming the norm.

Finally amendment 66 addresses another issue raised in our policy paper, the accurate and timely identification of works that have fallen into the Public Domain. In our policy paper we had suggested that…

…the legislator should give incentives for CMOs to provide accurate repertory information. In particular, CMOs shall ensure that the information in respect of the works whose term of protection terminates – thus ‘falling’ into the Public Domain – is accurate and regularly updated, so that Public Domain works are duly exempted from licensing.

This suggestion is taken up by amendment 66 which proposes to introduce a new paragraph 2 a under Article 19 (‘Disclosure of information to the public’) of the proposed directive:

Collective management organisations shall ensure that, in accordance with point (ab) of paragraph 1, the information on repertoire is accurate and regularly updated. In this respect, they shall particularly ensure that the information concerning the works whose terms of protection terminate is accurate and regularly updated, and made available to the public.

Conclusion

We are happy to see that most of the issues that we had identified are addressed by the draft opinion of the Committee on Culture and Education. The amendments discussed above would significantly strengthen the directive and therefor deserve broad support. If these amendments end up in the final version, the directive would strengthen the rights of authors who are members of collective management organisations with regards to the use of open content licenses. In addition it would strengthen the position of all users of protected works by ensuring the availability of accurate information on repertoires that are represented by Europe’s collective management organisations.

The post European parliament starts discussing the proposed Directive on collective management of copyright appeared first on COMMUNIA Association.