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Stance concerning the directive on collective management of copyright

Oct. 15, 2012, 5:50 p.m.
Marta Skotnicka

Translated by: Katarzyna Bednarska

Hereby the Modern Poland Foundation presents a stance on the European Commission’s directive concerning the modification of the rules of collective copyright and related rights prepared within the public consultations announced by the Ministry of Culture and National Heritage.

To whom it may concern,

The European Parliament and the Council’s proposal of the Directive on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online uses in the internal market (further called ‘the Directive’), presented within public consultation, introduces a number of standard actions for copyright collecting societies. In comparison with the current legal system, the proposed regulations should be assessed positively. However, one has to bear in mind that the directive in question does not modify the current copyright system in a radical way. The Directive is based on the assumption that the primary aim of copyright is to protect the monopoly granted to the author (or a person for the benefit of whom the author disposes of their copyright). This model continuously neglects both the rights of users due to long-time protection of musical works and the limited right to use these works, namely fair use. The proposal of the Directive preserves this legal status and strengthens the authors’ position towards copyright collecting societies. Moreover, the proposed regulations significantly facilitate the functioning of subjects making use of musical works in various Mamber States of the European Union and purchasing licenses embracing this territory. This group of users, however, is the only one that shall benefit from the introduction of new regulations. New regulations concerning copyright are usually advantageous mostly to agents, while users, without whom even the best works would never yield profit or popularity to their authors, benefit the least.
It is worth noting that the scope of the Directive embraces multi-territorial licenses concerning musical works only, while all other sorts of works are left out beyond the scope of the regulations. Therefore, the Directive regulates copyright only fragmentarily, thus contributing to further complication of the legal system, already unclear to the average user. In the Foundation’s opinion, copyright should not only be ”culture consumer-friendly” but also, most of all, comprehensible. Establishing a separate type of license for a small group of works surely does not meet this requirement.

Independently of the general reservations mentioned above, the Directive proposes some solutions that deserve attention. First of all, one such remarkable solution is introduction of transparency obligations imposed on collecting societies, which are implemented by means of numerous informational duties. In Chapter 5 of the Directive are formulated minimal requirements concerning the activity data passed to those interested. Creation of such a catalogue is certainly an important innovation which guarantees that clients of copyright collecting organizations shall enjoy greater rights. Additionally, it facilitates public control over the organizations that are entrusted the authors’ financial means. Transparency of standard agreements proposed by those organizations should help authors choose an organization that best suits their requirements. What is more, transparency should also contribute to the increase of competitiveness in this area, which is currently not very high.

However, some reservations are raised concerning the planned scope of data disclosure. In accordance with the art. 191 of the Directive, it would be sufficient to disclose to the public: the organization’s statute, membership terms, and terms of termination of the authorization to rights management, the list of people actually in charge of the organization, rules on distribution of the amounts due to rightholders, management fees, deductions from copyright royalties, and the procedures of complaint handling and dispute resolution. In the Foundation’s opinion, the above mentioned scope of information is too narrow and such restrictions unjustifiably limit public control over organizations’ management. Moreover, limiting the scope of the data available to the public is not justified by protection of a collecting society’s interest but it considerably hampers authors’ choice of a suitable institution. Standard licensing contracts and a register of an organization’s repertoire are submitted only to persons enlisted in art. 182. Yet, these data may constitute a substantial premise on which authors may decide to cooperate with a given organization as they provide essential information concerning an organization’s activity.

Furthermore, it is worth noting that information included in art. 19 does not exceed standard information available on the basis of already existing regulations. In this respect, the Directive does not introduce any significant novelty. It would be worthwhile to use the fact of creating new legislation concerning copyright collective management to introduce changes more profound than those proposed in the project.

In the Foundation’s view, transparency requirements concerning copyright collecting organizations are not sufficient and on the balance day, they do not exceed values indicated in art. 20 of act 53 of the Directive. The Directive allows the Member States to exclude these organizations from the obligation of disclosure of, among other things, financial reports and information as well as reports concerning amounts deducted and donated for social, cultural and educational aims. The Foundation regards this exception as unwarranted, especially that – considering a high turnover threshold or of net balance sheet total – it could include numerous subjects. Transparency obligation should apply to all organizations alike, and not only to the biggest ones. The aim of the Directive is, among other things, to create an efficient and competitive copyrights management market. That is why any regulations that would generate the risk of black economy should be eliminated. It is worth emphasizing that in the current Polish legal system there are no exclusions from the requirement of submitting financial reports, and it is worthwhile that this state of affairs is maintained.
A critical assessment also concerns a solution included in art. 324 of the Directive, according to which the conditions of the license granted for services universally available for a period shorter than 3 years may be formed in isolation from the license conditions hitherto agreed with an online music service provider. Such a structure in fact discriminates new technologies, since it permits imposition of high and unjustified fees on the use of musical works accessible within previously unknown business models. At the same time, it hampers public access to innovative technologies and limits users’ rights to benefit from cultural goods, including musical works.
A positive stance should be taken on a group of regulations concerning the means of executing the Directive’s rules, including art. 345. These regulations emphasize the importance of efficient and fast adjudication of disputes between copyright collecting organizations and cooperating subjects, authors included.
Considering a monopolistic position that collecting societies frequently enjoy, it is particularly important to guarantee authors who cooperate with these organizations security and provide them with procedures enabling them to exact their due rights.

1Article 19

Announcing information to the public
1. The Member States make sure that every collective management organization make the following information public:

a) Status;
b) Conditions on membership, conditions on withdrawal of authorization for rights management (unless they are included in the status);
c) A list of the people mentioned in art. 9;
d) Criteria for the distribution of the amounts due to copyright holders;
e) Principles concerning management fees;
f) Principles concerning deductions from author’s pay for purposes different than management fees, including deductions intended for social, cultural and educational services;
g) Procedures for consideration of complaints and adjudication of disputes available in accordance with art. 34, 35 and 36.

2. Information mentioned in Act 1 are published on collective management organization’s website and are available to the public.
Collective management organization update the information mentioned in Act 1.

2Article 18

Information passed on to copyright holders, members, other collective management organizations and to users, on their request.
1. The Member States make sure that every collective management organization, without undue delay and via electronic means, share the following information on the request of every copyright holder whose rights are represented by the organization, every collective management organization on behalf of which it manages the rights on the basis of the representation agreement, or every user.
a) Standard license agreements and valid rates of copyright royalties;
b) Repertoire and rights managed by the organization as well as the member States concerned;
c) A register of drawn up representation agreements, including information concerning the collective management organizations with whom the agreements were drawn up, the repertoire covered by these agreements, and the territory each agreement concerns.

2. Moreover, on the request of any copyright holder or any other collective management organization, collective management organization shares information concerning the works in the case of which at least one copyright holder was not identified. Information includes: the title of a work, its author or the name of the publisher, and all other vital information that may be essential for the identification of a copyright holder.

3Article 20

Annual report on transparency

1. The Member States make sure that every collective management organization, independently of its legal form according to the national law, prepare and publish for each trading year, six months after the end of a trading year at the latest, an annual report on transparency and a separate report including certain additional information. The annual report on transparency is signed by all the directors. The annual report on transparency is published on the collective management organization’s website and remains publically accessible on this website for at least five years.

2. The annual report on transparency includes at least the information enlisted in attachment 1.

3. A separate report mentioned in Act 1, concerns the amounts deducted for social, cultural and educational services and includes at least the information enlisted in attachment 1 section 3.

4. Accounting information included in an annual transparency report are examined by at least one person who is entitled by law to examine financial reports in accordance with directive 2006/43/WE of the European Union and the Council of May 17, 2006 concerning statutory examination of financial reports and consolidated financial reports.
An expert auditor’s report on the examination is in whole incorporated, including all reservations, into the annual transparency report.
For the purposes of this passage, accounting information include the financial report mentioned in attachment 1 section 1 point a). and all financial information mentioned in attachment 1 section 1 point f) and g) and in attachment 1 section 2.

5. The Member States may decide that the regulations in attachment 1 section 1 point a), f) and g) are not applied to a collective management organization which, at a balance sheet date, does not exceed the upper limit in the case of two out of the three following criteria:
a) Balance sheet total: 350 000 EUR;
b) Net turnover: 700 000 EUR;
c) Average number of employees in a financial year: ten;

4Article 32

Conditions on license granting to Internet service providers

A collective management organization which grants multi-territorial licenses concerning the rights to musical works on the field of Internet exploitation, when granting licenses on services of a different kind, is not obliged to rest on license granting conditions agreed with the Internet service provider of the Internet musical service, who provides a new sort of service which is publically available for less than three years.

5Article 34

Procedures of dispute adjudication available to the members and to copyright holders

1. The Member States assure that collective management organizations make accessible to their members and copyright holders effective procedures of fast examination of complaints and dispute adjudication, particularly with reference to granting authorization for the management of rights and its withdrawal, withdrawal of rights from the management board, membership conditions, collecting amounts due to copyright holders, making deductions from these amounts, their division and payout.

2. Collective management organizations respond in writing to the members’ or copyright holders’ complaints. A collective management organization’s rejection of a complaint requires substantiation.

3. Parts are free to claim and to defend their rights by bringing a case to court.

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