Copyright Directive: Articles 18-23 – the "best seller" provisions
These provisions set out that where authors and performers license or transfer their rights in their copyright work, they should receive appropriate and proportionate remuneration. These provisions go beyond what was considered in the proposed text of the Directive – Article 18, which enshrines the principle of appropriate and proportionate remuneration, is entirely new, for example. Each Member State will determine the mechanism for implementing the provisions and can take into account the principle of contractual freedom and a fair balance of rights and interests.
What is new?
- Transparency obligations
Article 19(1) imposes transparency obligations which require that authors and performers should be given on a regular basis (at least once a year) information on the exploitation of their works and performances, to ensure greater transparency in terms of the revenues earned. These obligations apply from 36 months after the Directive enters force (unlike the 24 months for the other provisions). The right extends to sub-licensees, where the rights have been licensed and the first contractual counterpart does not have all the required information (Article 19(2)). However, Member States are permitted to limit the level of obligation in duly justified cases (where the administrative burden would become disproportionate) and will be free to decide that the obligation does not apply where the contribution is not significant in the overall work or performance (unless the author or performer can show that they require the information for the contract mechanism provided for in Article 20).
- Contract adjustment mechanism
Where the revenues that authors and performers receive under a contract turn out to be disproportionately low compared to the revenues derived from the exploitation of the relevant work, in the absence of an applicable collective bargaining agreement that provides for a similar mechanism, a contract adjustment mechanism should allow the authors and performers to claim additional, appropriate and fair remuneration (Article 20(1)). This Article does not apply to agreements concluded by (1) entities defined in Article 3(a) and (b) of the CRM Directive or (2) other entitles that are already subject to the national rules implementing the CRM Directive. Any attempt to contact out of the contract adjustment mechanism will be unenforceable.
- Right of revocation
The provisions further provide a right for authors and performers that have granted an exclusive licence or transfer of their rights to revoke such licence or transfer of rights where the works or performances have not be exploited (Article 22). This will not apply if the lack of exploitation is predominantly due to circumstances that the author or the performer can reasonably be expected to remedy.
There has been a mixed reaction to these Articles. Some European creatives have welcomed the provisions. A number of organisations have released statements praising the Directive, for example the European organisations of authors (including The European Composer and Songwriter Alliance (ECSA), the EWC, The Federation of European Film Directors (FERA) and The Federation of Screenwriters Europe (FSE)) welcomed the provisions and have called on Member States to implement the Directive "so that it honours its promises to improve the livelihoods of all authors and foster Europe’s creativity".
However, the provisions create a practical burden for film and TV producers that acquire rights, including the additional administrative burden of the reporting obligations and the potential uncertainty of contracts and fees negotiated with rightsholders. Ahead of confirmation of the Directive, the European Producers, Broadcasters and Distributors/Publishers of Film and Audiovisual Content strongly opposed the proposals arguing that they were not fit for purpose. They argued that the proposals created "unreasonable burdens, and serious disincentives, on those who invest daily in the creation and distribution of European films and audiovisual works" and that "proportionate remuneration would create legal uncertainty". Since formal adoption of the Directive, collective bodies have also released reserved statements about the effectiveness of the provisions.
It will be interesting to observe how the provisions are adopted in Member States. There is a key question in the UK of whether the provisions will be adopted at all. It is perhaps unlikely that the UK would be required to implement the Directive given the upcoming Brexit deadline, but the UK may nevertheless choose to implement it.
Thanks to Fieldfisher Trainee Rachel Bowley for authoring this article.