Directive 2019/790 on Copyright in the Digital Single Market: Authors’ Group Recommendations on the Transposition of Articles 18 to 23

EWC

Posted on June 30, 2020, 5:00 pm
19 mins

Brussels, 30 June 2020

In contrast to the Information Society Directive (2001/29/EU) general approach, Directive 2019/790 on Copyright in the Digital Single Market includes market regulation elements aiming to achieve “Fair remuneration in exploitation contracts of authors and performers” (Title IV, Chapter 3, Articles 18 to 23).

Articles 18 to 23 set out a new harmonised framework for the contractual relationshipbetween authors and their contractual counterparts which stems from the explicit acknowledgement by the EU legislator of the systemic weak bargaining power of authors negotiating their individual contracts Our organisations representing authors in the audiovisual, music and book sectors have welcomed this essential and historical step forward to bring fairer terms to all authors in the European Union. Yet the impact of these provisions very much depends on a thorough and faithful implementation process in national legislation, consistent with the spirit of the Directive. If properly implemented, those provisions can greatly contribute to a harmonised digital single market for creators and provide new opportunities for transnational mobility of authors.

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Particular attention must be brought to the fact that the new set of rights is inter-connected: the transparency obligation, cornerstone of the Chapter, is indispensable to the implementation of a right to proportionate remuneration based on the actual exploitation and commercial success of the work, as well as to allow for the effective use of the contract adjustment mechanism, the revocation right and the dispute resolution procedure. In order to bring legal security to rightholders throughout the value chain as well as a level-playing field between all European authors in exercising these new rights, we very much welcome the reference to collective bargaining and collective mechanisms as essential tools to effectively implement these provisions in practice. Here are the key elements implementation should include to bring about concrete progress in EU authors’ situation:

 

1. Acknowledgement of authors’ systemic weak bargaining power when negotiating contracts

  • National legislations should introduce wording which similarly acknowledges thesystemic weak bargaining power of an author negotiating his/her contract, as the basisfor the introduction of the rights set out in Articles 18 to 23. In addition, Member Statesshould consider the fact that those contracts are very often of long duration and for thefull term of copyright (70 years after the death of the author/s).
  • In that spirit, Article 23 by which “Member States shall ensure that any contractualprovision that prevents compliance with Articles 19, 20 and 21 shall be unenforceable inrelation to authors and performers” should be extended to all provisions (includingArticles 18 and 22) aiming at securing fair remuneration of authors in contracts. Such anextension would enable authors to fully benefit from all the provisions adopted by the EUco-legislators and aimed at achieving a fair remuneration in exploitation contracts ofauthors and performers.

 

2. Principle of appropriate and proportionate remuneration (Article 18)

  • The right to “appropriate and proportionate remuneration” constitutes authors’entitlement to a share of the income generated by the ongoing use of their work. Itshould therefore be clearly established on the basis not only of “potential” but mostimportantly of “actual” economic value of the rights licensed or transferred.
  • While important flexibility is left to Member States in its implementation, implementingarticle 18 does entail assessing whether current practices are compatible with thenew legal framework and the subsequent introduction of new mechanisms where necessary.
  • A clear definition of the exceptional cases where lump-sum payments can bedeemed constituting proportionate remuneration should be provided: only where thereis no prospect of a work earning any other income in the future. If it has thepossibility to earn income in the future, proportionate remuneration based on actualexploitation of the work must apply.
  • Ample flexibility on the mechanisms to implement proportionate remuneration is alreadyprovided by article 18. Bundling of several use entitlements into one singlepayment can therefore only be considered acceptable when coupled withadditional remuneration based on agreed thresholds (e.g. minimum guaranteeupfront payment) through regular monitoring of the economic performance of the work.
  • Various existing models allow calculation of actual value of exploitation rights andrelated payments overtime:
    • joint remuneration rules
    • collective bargaining
    • voluntary collective rights management
    • statutory remuneration mechanisms

 

3. Transparency obligation (Article19)

  • Article 19 is the cornerstone of the EU legislator’s approach to fair and proportionateremuneration in authors’ contracts: transparency on the exploitation of their works andrevenues generated is a pre-requisite for the valuation of the rightstransferred/licensed.
  • As per Article 23, this right to information cannot be waived by contract. It is also aminimum: “Member States should have the option, in compliance with Union law, to provide for further measures to ensure transparency for authors and performers” (rec. 76).
  • The minimum scope of the transparency obligation is defined in Article 19 paragraph1 and recital 75:
    • up-to-date accurate data,
    • to be received on a yearly basis,
    • as long as exploitation is ongoing,-comprehensive to include identification of all modes of exploitation,
    • and all relevant revenues worldwide including merchandising,
    • reporting should be comprehensible for individual recipients,
    • and fit for the purpose of an “effective assessment of the rights in question”.
  • All modes of exploitation and revenues should be listed separately. A work can performdifferently on different modes of exploitation; the share of revenues must be assessed indetail in order to properly inform the use of the contract renegotiation mechanism.
  • Contractual counterparts, who, with their successor in title, are responsible for thetransparency obligation, should have the responsibility to notify authors whenexploitation of the work has ceased, thereby suspending their transparency obligation.Where exploitation has ceased, revocation of rights under Article 22 should be grantedwhen requested.
  • In cases where the contractual counterpart does not hold the information necessary tofulfil the transparency obligation, that additional information shall be provided uponrequest to authors “or their representatives” by sub-licensees (i.e. users granted alicense to exploit the work in a particular format) (Article 19 para. 2).
  • To make this provision workable in practice, several elements have to be introduced orclarified:
    • Authors’ contractual counterparts should exercise due diligence in collecting the datafrom sub-licensees necessary to fulfil their transparency obligation;
    • Authors’ contractual counterparts should systematically provide information on theidentity of sub-licensees;
    • Authors’ representatives should include their duly mandated representativeprofessional organisation;
    • Possible collective enforcement of the transparency obligation should be set out, withduly mandated representative organisations entitled to receive the data in addition tothe individual author (Recital 76 and 81 sets out that authors must be able to use theinformation “for the purpose of exercising their rights under this Directive”);
    • Confidentiality agreements cannot prevent the use of information in the scope of thetransparency obligation by authors or their representatives (including representative organisations) in enforcing the right to remuneration, the contract adjustmentmechanism, the right of revocation or in using the dispute resolution procedure, as setout in recital 81;
    • Collective enforcement of the transparency obligation could be operated directlybetween authors’ representative organisations and sub-licensees based oninformation on sub-licensees provided by authors’ contractual counterparts.
  • Recital 76 sets out the possibility for Member States to take a sector-specific approachto the transparency obligation implementation: “all relevant stakeholders should beinvolved when deciding on such sector-specific obligations” through collectivebargaining.
    • Where possible, such sector-specific framework agreement should be extended torightholders not affiliated to the representative organisations involved in thenegotiation in order to bring legal security to all rightholders.
  • Paragraph 3 introduces a possible exception to the transparency obligation “where theadministrative burden resulting of the obligation […] would become disproportionate inthe light of the revenues generated by the exploitation of the work”, but only in “dulyjustified cases” and limiting the obligation to “the types and level of information that canreasonably be expected in such cases”.
    • It does NOT provide the possibility to exclude a category of works (e.g. smallerbudget) or a category of companies (e.g. based on size) from the transparencyobligation: economic success comes to creative works of all shapes and sizes.
    • Paragraph 3 clearly sets out the revenues generated by said work to assess theexemption. Duly justified cases where the transparency obligation generates adisproportionate administrative burden on the contractual counterpart shouldtherefore be assessed on a case-by-case basis.
  • Paragraph 4 enables Member States to introduce an exception to the transparencyobligation when the author/performer’s contribution is “not significant, having regard tothe overall work or performancee”. This exception should only apply to limited, dulyjustified cases since the significance of a certain level of contribution ab initio might beassessed differently in time, taking into account the actual exploitation of a work.

 

4. Contract adjustment mechanism (Article 20)

  • Article 20 sets out that “authors […] are entitled to claim additional, appropriate and fairremuneration […] when the remuneration originally agreed turns out to bedisproportionately low compared to all subsequent relevant revenues derived from theexploitation of the works.”
  • “Disproportionately low” should be understood as “not proportional” and not in amore restrictive way, as set out by certain translations of the Directive on Copyright inthe Digital Single Market in various EU languages.
  • The ability of authors to use this mechanism requires:
    • the scope of information on exploitation and revenues generated by the workobtained through the transparency obligation to be sufficiently detailed andcomprehensive to allow for a fair assessment of the level of remuneration (rec. 78).
    • a clear definition of the right to appropriate and proportionate remuneration based onthe actual exploitation revenues of the work,
    • and a clearly restrictive definition of acceptable lump-sum payments.
  • The contract adjustment mechanism applies on an individual basis “in the absence of anapplicable collective bargaining agreement providing for a [comparable] mechanismcomparable to that set out in this article”.
  • Authors can be represented in making the claim for additional remuneration by “dulymandated” representatives, who can act on behalf of “one or more” authors inprocessing the request for contract adjustment. Those representatives are entitled toprotect the identity of the author in order to mitigate blacklisting risks.
  • Duly mandated representatives should explicitly include professional organisations and guilds.

 

5. Alternative dispute resolution procedure (Article 21)

  • Article 21 sets out that Member States must provide for “voluntary, alternative disputeresolution procedure” to handle disputes concerning the transparency obligation and thecontract renegotiation mechanism. Article 23 and recital 81 add that this procedure is ofa “mandatory nature, and parties should not be able to derogate from those provisions”.
    • Sector-specific procedure should therefore involve professional organisations ofauthors, performers and their contractual counterparts,
    • And provide binding arbitration.
  • Member States are required in addition to “ensure that representative organisations ofauthors may initiate such procedures at the specific request of one or more authors”: if asatisfactory dispute resolution procedure already exists at national level, its framework must therefore be extended to collective actions by duly mandated representative organisations including professional organisations and guilds.

 

6. Right of revocation (Article 22)

  • Several EU Member States and certain third countries already grant to authors thepossibility to claim back their rights in case their contractual counterparts are notproperly exploiting their works. Such a right does not only benefit authors but alsoencourages fair competition and access to a wide diversity of cultural works.
  • Article 22 provides that “Member States shall ensure that where an author or a performerhas licensed or transferred his or her rights in a work or other protected subject matteron an exclusive basis, the author or performer may revoke in whole or in part the licenceor the transfer of rights where there is a lack of exploitation of that work or otherprotected subject matter”.
  • The key concept of “lack of exploitation” has been translated into a more restrictive wayin certain EU languages. However, in certain EU Member States, more ambitiousconcepts such as “continuous and permanent exploitation” or “exploitation according to common usages” are used. The implementation of the right of revocation should be in line with those laws where the concept of exploitation is more ambitious.
  • Member States should not automatically exclude works which “usually containcontributions of a plurality of authors or performers” and consider sectorspecificities. Otherwise, this Article would be meaningless in practice for authors, sincea wide majority of creative works are in fact works of joint authorship. We note in thisrespect that collective bargaining agreements can derogate from the application of theright of revocation (paragraph 5) and therefore take into account the specificities of eachcreative sector.
  • Member States should provide that a continuous lack of regular reporting (non-compliance with Article 19) proves a lack of exploitation in practice. Otherwise,authors would not be able to demonstrate a lack of exploitation.
  • While the right of revocation can only be exercised after a reasonable timeframe, itcould be exercised at any given time after that timeframe, taking into account a present“lack of exploitation”. It should also be possible to exercise this right if the work hasnever been exploited.

 

The Authors’ Group consists of the following associations: European Composer and Songwriter Alliance (ECSA), European Writers’ Council (EWC), Federation of European Film and TV Directors (FERA) and Federation of Screenwriters in Europe (FSE).

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ECSA (European Composer and Songwriter Alliance) – The European Composer and Songwriter Alliance (ECSA) represents over 30,000 professional composers and songwriters in 27 European countries. With 57-member organisations across Europe, the Alliance speaks for the interests of music creators of art & classical music (contemporary), film & audiovisual music, as well as popular music.

Web: www.composeralliance.org  / EU Transparency Register ID: 71423433087-91

EWC – The European Writers’ Council is the non-profit federation representing 46 national writers’ and literary translators’ associations and unions in 29 European countries, including EU Member States as well as Belarus, Iceland, Norway, Switzerland, Turkey, and Montenegro. EWC’s members comprise over 160.000 professional authors in the text and book sector, working altogether in 31 languages.

Web: https://europeanwriterscouncil.eu/ / EU Transparency Register ID: 56788289570-24

FERA (Federation of European Screen Directors) – The Federation of European Screen Directors (FERA), founded in 1980, represents film and TV directors at European level, with 48 directors’ associations as members from 35 countries. We speak for more than 20,000 European screen directors, representing their cultural, creative and economic interests.

Web: https://screendirectors.eu/ / EU Transparency Register ID: 29280842236-21

FSE (Federation of Screenwriters in Europe) – The Federation of Screenwriters Europe is a network of national and regional associations, guilds and unions of writers for the screen in Europe, created in June 2001. It comprises 25 organisations from 19 countries, representing more than 7,000 screenwriters in Europe.

Web: www.federationscreenwriters.eu/ EU Transparency Register ID: 642670217507-74

 

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