Implementing articles 18-22 of the Copyright Directive: Opinion of the European Copyright Society

The European Copyright Society (ECS), a group of prominent European scholars, has published an opinion on the implementation of the Directive on Copyright in the Digital Single Market into national law: Comment Addressing Selected Aspects of the Implementation of Articles 18-22. Full text of the opinion is available on the ECS website here.

Member States have until 7 June 2021 to transpose the Copyright Directive into their national laws. Articles 18-22 of the Copyright Directive provide protections for authors and performers in their contractual dealings with economic actors, by introducing a principle of appropriate and proportionate remuneration (art. 18), transparency obligations (art. 19), contract adjustment mechanism (art. 20), alternative dispute resolution mechanism (art. 21), and a right of revocation (art. 22). To date, none of those provisions has been transposed by any Member State (although some national laws already comply). CREATe’s resource page provides information on the current state of the Copyright Directive implementation and can be accessed here.

ECS has previously published comments on the implementation of articles 14 and 17 of the Copyright Directive (reported here), with the full text of the opinions available on the ECS website.

Drafting of the opinion on articles 18-22 was led by prof. Séverine Dusollier with contributions from other ECS members, including profs. Lionel Bently, Martin Kretschmer, Marie-Christine Janssens and Valérie-Laure Benabou.

In its opinion, ECS welcomes the protections articles 18-22 of the Copyright Directive provide to authors and performers, and urges the Member States to give them “full force and efficiency”. ECS notes that “protection of authors and performers is […] the core principle which should inform the interpretation and implementation” of articles 18-22, and that this principle implies the following:

– Articles 18-22 have a binding nature and cannot be contractually overridden, except insofar as expressly permitted by the Directive.

– Exclusions from the scope of application of the Articles 18-22, despite their role in balancing the different interests of all stakeholders, have to be interpreted in a strict manner and should not serve as ways to exclude some contracts or situations from the protective provisions to the detriment of authors and performers. In particular, Member States should ensure that any of the permissible derogations for computer programs, employment contracts, contracts by CMOs, open access licences, do not circumvent the protection that
the Directive provides for authors/performers;

– The choice of law applicable to transfer or licence contracts should not deprive the authors and performers of the benefit of the mandatory provisions of the Directive;

– Articles 18-22 should apply, as a matter of principle, to existing contracts, as laid down by Article 26.

– Authors and performers are entitled to an equal level of protection, as a matter of principle, but performers may choose to accept a differentiated treatment if this is better for them in the light of their specific circumstances. The Directive does not provide for a maximal harmonisation.

ECS notes that the Copyright Directive does not provide for the maximum harmonisation as far as the the contractual protection of authors and performers is concerned, which means that “Member States are permitted to maintain or enact greater protection to authors and performers in relation to transfer/licensing contracts”. ECS also recommends that Member States take account of “the specific economic conditions and digital modes of exploitation and markets” when implementing the provisions, “to enable authors and performers to benefit fully from the opportunities of the information society”. Additionally, “ECS believes that the Articles 18-22 and the rights they confer, could benefit from collective bargaining agreements, establishing sectoral codes of practices or model schemes and conditions, or agreeing upon adaptations of standard legal provisions”.

With respect to implementation of individual articles, ECS recommends:

Article 18 – Right to an appropriate and proportionate remuneration: “Appropriate” and “proportionate” are two distinct elements of the remuneration to which authors and performers are entitled. Proportionate refers to a percentage of the actual or potential economic value of the rights and constitutes a principle that may be substituted by a lump sum only under strict and limited conditions. Sectoral collective bargaining agreements could help better define the factors of a fair remuneration and the limited cases where a lump sum could be admitted. The ECS reminds that Member States may achieve the principle of an appropriate and proportionate remuneration by other mechanisms, such as the granting of unwaivable rights of remuneration.

Article 19 – Transparency obligation: Authors and performers are entitled to receive relevant information necessary to ascertain the revenues yielded by the exploitation of their works, which should comprise all revenues generated, all financial flows between exploiters as well as expenses occurred. The ECS underlines that Member States should consider the issue of sanction, should the transferees or licensees not comply with their obligation to provide the required information. In addition, the ECS welcomes the possible extension of the transparency obligations to sublicensees when necessary, including to obtain information about the revenues generated by Internet platforms exploiting creative content.

Article 20 – Contract adjustment mechanism: The ECS is of the opinion that the contract adjustment mechanism is broader than a best-seller provision, where the remuneration can be readjusted in case of unforeseen commercial success of a work. Instead, authors/performers should be entitled to receive an additional, appropriate and fair remuneration, in any situation where the originally agreed-upon remuneration is disproportionately low compared with all the subsequent relevant revenues derived from the exploitation of the works or performances.

Article 22 – Revocation right: The Directive conditions the right for authors/performers to claim back their rights from their counterparty upon the lack of exploitation of rights they have acquired. To ensure a better and more efficient protection of authors and performers, Member States are advised to broaden the scope of the right of revocation so that it can operate in cases of partial exploitation that do not meet the customary standards of the sector concerned. However as the revocation might be a problematic and risky option for authors and performers, other possibilities, such as a right to revise the contract on a regular basis, may be provided by Member States.

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European Copyright Society:
Addressing Selected Aspects of the Implementation of Articles 18 to 22 of the Directive (EU) 2019/790 on Copyright in the Digital Single Market

See also: Addressing Selected Aspects of the Implementation of the Extended Collective Licensing Rules (Arts. 8 and 12) of the Directive (EU) 2019/790 on Copyright in the Digital Single Market

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