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Remuneration Rights in EU Copyright Law

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Abstract

This article clarifies the concept of remuneration rights and examines remuneration rights in EU copyright law. Specifically, the article examines the criteria for the calculation of remuneration under the different remuneration rights in copyright law and evaluates how they conform to the normative methodology based on Calabresi and Melamed’s distinction between property rules and liability rules. In the EU copyright acquis, in some cases remuneration reflects the market value of the use of the work, whereas in others it reflects the harm inflicted on the rightholder through use of the work. In spite of overlaps between harm and market value when used as the basis for the calculation of remuneration, the two criteria are fundamentally different. In yet other cases, remuneration is not closely tied to either market value or harm but is a means for the redistribution of surplus. The article concludes that a harm-based remuneration right is a young cuckoo bird in the nest of copyright law and that the calculation of remuneration ought always to be based on market value, unless the purpose of the right is to pursue specific policy objectives by redistribution of surplus. The article recommends that courts, de sententia ferenda, exploit the overlap between harm and market value and shift the focus of interpretation towards the latter.

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Notes

  1. Guide to the Copyright and Related Rights Treaties Administered published by the WIPO and Glossary of Copyright and Related Rights Terms (2003), p. 307. Further on terminology, see Geiger (2017), pp. 310–311, and Geiger and Bulayenko (2016), pp. 113–115.

  2. Ficsor (2006), pp. 42–43.

  3. Art. 14ter Berne Convention and Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the resale right for the benefit of the author of an original work of art, OJ L 272, 13.10.2001, pp. 32–36.

  4. This type is also called “limitation-based remuneration rights”, cf. e.g. Geiger (2017), p. 305 et seq.; and Geiger and Schönherr (2014), p. 133.

  5. Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L 167, 22.6.2001, pp. 10–19.

  6. Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (codified version).

  7. See also Xalabarder (2018), p. 44.

  8. Directive (EU) 2019/790 of the European Parliament and of the Council of 17 April 2019 on copyright and related rights in the Digital Single Market and amending Directives 96/9/EC and 2001/29/EC.

  9. Cf. the preamble of the DSM Directive, recital 72 and 75.

  10. Ross (1957), p. 821. For a recent and very comprehensive analysis, including an account of Scandinavian legal realism and intellectual property rights, see Rognstad (2018).

  11. Schovsbo and Riis (2019), p. 401.

  12. See infra.

  13. Cf. Kur and Schovsbo (2011), p. 409 et seq., Koelman (2004), p. 611, and Lewis and Reichman (2005), pp. 337–367.

  14. Calabresi and Melamed (1972), p. 1092.

  15. Calabresi and Melamed, ibid.

  16. Ard (2019), p. 694.

  17. Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the Enforcement of Intellectual Property Rights, OJ L 157, 30.4.2004, pp. 45–86.

  18. Preamble, recital 26.

  19. Calabresi and Melamed (1972), p. 1126.

  20. IPRED Art. 13 does not preclude Member States from adopting provisions that ensure that a hypothetical royalty shall be calculated in a way that exceeds the normal understanding of the market value. In Case C-367/15 OTK, ECLI:EU:C:2017:36, the CJEU held that IPRED Art. 13 must be interpreted as not precluding national legislation under which the holder of an intellectual property right that has been infringed may demand from the person who has infringed that right, without having to prove the actual loss, payment of a sum corresponding to twice the appropriate fee which would have been due if prior permission had been given for the work concerned to be used.

  21. This is discussed further infra in Sect. 6 in the context of statutory remuneration rights.

  22. ECLI:EU:C:2012:140.

  23. Para. 74.

  24. Cf. Case C-160/15 GS Media, ECLI:EU:C:2016:644, para. 28, Case C-527/15 Stichting Brein I, ECLI:EU:C:2017:300, para. 25, Case C-610/15 Stichting Brein II, ECLI:EU:C:2017:456, para. 20, and Case C-161/17 Renckhoff, ECLI:EU:C:2018:634, para. 29.

  25. Para. 75.

  26. Paras. 77 and 89.

  27. ECLI:EU:C:2016:379, paras. 28–32.

  28. Paras. 33–34.

  29. On the practical methods for the calculation of the remuneration in various countries, see Ginsburg (2015), p. 1416 et seq.

  30. The study will not include Ficsor’s type 3 remuneration rights because they do not conform to the nature of a liability rule in the methodological framework of Calabresi and Melamed. In this framework, type 3 remuneration rights are considered to be the third type of rule, in addition to property and liability rules, which are rules on inalienability because the holder of a type 3 remuneration right cannot waive the right, either in full or in part.

  31. Berne Convention for the Protection of Literary and Artistic Works (1886).

  32. Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations (1961).

  33. Art. 11(2) of the Beijing Treaty on Audiovisual Performances (2012) is of the same nature and structure. The Beijing Treaty furthermore introduces type 3 remuneration rights into the international legal instruments in the field of copyright, cf. Art. 12(3) of the Treaty.

    See also Art. 6 of Geneva Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of their Phonograms (1971).

  34. According to Bechtold, the notion of “equitable remuneration” is rooted in notions of natural justice and based on the theory that authors have a right to remuneration for every act of usage of their copyrighted works, Dreier and Hugenholtz (2016), p. 459. Similarly in Hugenholtz et al. (2006), pp. 70–71, who add that the concept does not include any consideration of harm to the rightholder; and Hugenholtz et al. (2003), p. 36. Article 31 of the TRIPS Agreement warrants compulsory licensing in patent law. According to TRIPS Art. 31(h), in such cases the patent holder “shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization”. During the negotiations of the TRIPS Agreement, several members supported that under a compulsory licence the patent holder should be ensured “fair and equitable remuneration” which resembles “equitable remuneration" in copyright law, cf. Gervais (2012), p. 496. The term “adequate remuneration” suggests that remuneration under compulsory licenses, in the context of the TRIP, may be calculated at a lower level than “equitable remuneration”.

  35. Ficsor (2002), p. 275.

  36. Reinbothe and von Lewinski (2015), p. 395 et seq.

  37. Nordemann et al. (1990), p. 128 et seq.

  38. Dreier and Hugenholtz (2016), p. 58.

  39. Masouyé (1981), p. 48; and Reinbothe and von Lewinski (2015), p. 395 et seq.

  40. Case C-271/10 VEWA, para. 29.

  41. ECLI:EU:C:2003:68.

  42. Paras. 24 and 38.

  43. Paras. 34 and 38, cf. Case C-192/04 Lagardère, ECLI:EU:C:2005:475, para. 48, and Case C-271/10 VEWA, ECLI:EU:C:2011:442, para. 35. In the SENA case, the Court refers to Art. 12 as the “source of inspiration” for Art. 8(2) of the RLR Directive, cf. para. 35.

  44. Para. 36, cf. Case C-192/04 Lagardère, ECLI:EU:C:2005:475, para. 49.

  45. Para. 37, cf. Case C-271/10 VEWA, ECLI:EU:C:2011:442, para. 32. In the SENA case, the Court further specifies “that Article 8(2) … does not preclude a model for calculating what constitutes equitable remuneration for performing artists and phonogram producers that operates by reference to variable and fixed factors, such as the number of hours of phonograms broadcast, the viewing and listening densities achieved by the radio and television broadcasters represented by the broadcast organisation, the tariffs fixed by agreement in the field of performance rights and broadcast rights in respect of musical works protected by copyright, the tariffs set by the public broadcast organisations in the Member States bordering on the Member State concerned, and the amounts paid by commercial stations, provided that that model is such as to enable a proper balance to be achieved between the interests of performing artists and producers in obtaining remuneration for the broadcast of a particular phonogram, and the interests of third parties in being able to broadcast the phonogram on terms that are reasonable …”, cf. para.46, and cf. Case C-192/04 Lagardère, ECLI:EU:C:2005:475, para. 50. See also Silke von Lewinski in Lewinski and von Walter (2010), pp. 324–325.

  46. Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission, OJ L 248, 6.10.1993, pp. 15–21.

  47. Case C-192/04 Lagardère, ECLI:EU:C:2005:475, para. 51.

  48. Lewinski and von Walter (2010), p. 1028.

  49. Recital 35, cf. recital 38.

  50. ECLI:EU:C:2010:620.

  51. See also Case C-462/09 Stichting de Thuiskopie, ECLI:EU:C:2011:397, Joined Cases C-457-460/11 VG Wort ECLI:EU:C:2013:426, Case C-463/12 Copydan, ECLI:EU:C:2015:144, Case C-572/13 Reprobel, ECLI:EU:C:2015:750, Case C-435/12 ACI Adam, ECLI:EU:C:2014:254, Case C-521/11 Amazon I, ECLI:EU:C:2013:515, Case C-470/14 (EGEDA), ECLI:EU:C:2016:418, Case C-572/14 Amazon II, ECLI:EU:C:2016:286, and Case C-110/15 (Nokia Italia), ECLI:EU:C:2016:717.

  52. Paras. 32–33.

  53. Para. 39.

  54. Recital 35.

  55. Cf. Geiger and Bulayenko (2016), pp. 119–120.

  56. Case C-467/08 Padawan, para. 57.

  57. ECLI:EU:C:2011:442.

  58. Para. 28.

  59. Geiger and Schönherr (2014), pp. 132–133. See also Geiger (2017, pp. 310–311. Kretschmer finds that the harm-based concept is problematic and has failed to acquire a coherent meaning, Kretschmer (2011, pp. 17 and 67.

  60. Opinion in Case C-467/08 Padawan, ECLI:EU:C:2010:264, para. 79.

  61. ECLI:EU:C:2012:65.

  62. Similar in Case C-271/10 VEWA, paras. 29 and 37, concerning the right to “remuneration” for public lending according to Art. 6(1) of the RLR Directive.

  63. Cf. Xalabarder (2018), p. 97: “Although the terms remuneration and compensation are often used interchangeably by national and international legislators, the name should matter. A compensation is directed to “compensate … adequately” damage caused to the rightholder (i.e. in the case of a limitation of an exclusive right). A remuneration is not restricted to compensate any damages”. And Hugenholtz et al. (2006), p. 71: “In view of its distinct wording, the concept of ‘fair compensation’ must be distinguished from the notion of ‘equitable remuneration’ … In practice, the co-existence of the two concepts of ‘equitable remuneration’ and ‘fair compensation’ is likely to lead to frictions in the application of particular limitations, since the criteria for the calculation of an ‘equitable remuneration’ and a ‘fair compensation’ differ.”

  64. Hugenholtz et al. (2003), p. 36.

  65. Ricketson and Ginsburg (2006), p. 777.

  66. Kretschmer (2011), p. 67.

  67. In the same vein, Lewinski and von Walter (2010), p. 1482 argue with reference to the historical background of the InfoSoc Directive that “[fair] compensation does not necessarily mean a right to remuneration”, pp. 1028–1029 and 1482.

  68. Cf. recital 26 of the preamble: “As an alternative, for example where it would be difficult to determine the amount of the actual prejudice suffered, the amount of the damages might be derived from elements such as the royalties or fees which would have been due if the infringer had requested authorisation to use the intellectual property right in question”.

  69. Cf. supra in Sect. 2.

  70. Merges (1996), pp. 1293–1393.

  71. In general, on the economic function of collecting societies, see Handke and Towse (2007), 937 et seq.

  72. E.g. Drexl (2007), p. 263; Gyertyanfy (2010), pp. 63 and 66; and Stamatoudi (1997), p. 289.

  73. Directive 2014/26/EU of the European Parliament and of the Council of 26 February 2014 on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market, OJ L 84, 20.3.2014, pp. 72–98. In general, see Schwemer (2019).

  74. Riis (2011), p. 484, Kretschmer (2002), pp. 126–137, SM Besen et al. (1992), pp. 383–384, Posner (2001), pp. 30–31; Lunney (2010), p. 340 et seq.; Katz (2005), pp. 544–545; and Handke and Towse, pp. 943 and 945.

  75. Cohen Jehoram (2001), p. 136. See also Riis and Schovsbo (2010), p. 496; Handke and Towse (2007), p. 945; Kretschmer (2002), p. 134; and Wallis et al. (1999), p. 15.

  76. Case C-52/07, Kanal 5, ECLI:EU:C:2008:703, para. 28, and Case C-351/12, OSA, ECLI:EU:C:2014:110, para. 88.

  77. Ibid. paras. 36–37.

  78. Case C-52/07, Kanal 5, ECLI:EU:C:2008:703, para. 32, and case 402/85, Basset, ECLI:EU:C:1987:197, paras. 15, 16, 18 and 21.

  79. Case C-351/12, OSA, ECLI:EU:C:2014:110, paras. 87 and 92, case C-395/87, Tournier, ECLI:EU:C:1989:319, para. 38, and joined cases 110/88, 241/88 and 242/88 C-341/87, Lucazeau, ECLI:EU:C:1989:326, para. 25. See also C-177/16, Autortiesību un komunicēšanās konsultāciju aǵentūra, ECLI:EU:C:2017:689.

  80. Cf. also the directive’s preamble, recital 31. In essence, it resembles recital 17 of the Satellite and Cable Directive that concerns the payment to be made when acquiring exclusive rights for satellite and cable distribution.

  81. On remuneration of authors and performers for the licensing or transferring of their exclusive rights, recital 73 of the preamble of the DSM Directive states that the remuneration shall be “appropriate and proportionate to the actual or potential economic value of the licensed or transferred rights, taking into account the author's or performer's contribution to the overall work or other subject matter and all other circumstances of the case, such as market practices or the actual exploitation of the work. A lump sum payment can also constitute proportionate remuneration but it should not be the rule… Member States should be free to implement the principle of appropriate and proportionate remuneration through different existing or newly introduced mechanisms, which could include collective bargaining and other mechanisms, provided that such mechanisms are in conformity with applicable Union law.”

  82. In theory, it would not make practical sense to adopt a remuneration right and word the provision in a way that indicates that the corresponding remuneration should be established at a level above the market value because in such cases the users of the works would effectively be expected not to use the works at all. This scenario is correct if the market is functioning well and the remuneration is established as the result of a hypothetical agreement between the user and the rightholder because, under these conditions, the result of the hypothetical agreement will reveal the user’s true willingness to pay. However, it is a widely held view that in many copyright markets users have stronger bargaining power than rightholders, and the bargaining power is used to negotiate a royalty that is lower than the users’ real willingness to pay. Under such conditions the users are willing to pay a remuneration that exceeds the expected result of a hypothetical agreement. Cf. Reinbothe and von Lewinski (2015), p. 395 et seq.; and Nordemann et al. p. 128 et seq.; see also infra.

  83. Ginsburg (2015), p. 1386.

  84. See also Art. 6(2) of the RLR Directive that allows Member States to derogate from the exclusive lending right pertaining to phonograms, films, and computer programs, provided they introduce a remuneration for authors (if not more widely to other involved parties).

  85. Directive 2012/28/EU of the European Parliament and of the Council of 25 October 2012 on certain permitted uses of orphan works, OJ L 299, 27.10.2012, p. 5.

  86. Another example from outside copyright law where remuneration under a remuneration right is specified, is Art. 14 of Plant Variety Rights Regulation (2100/94/EC). Article 14 provides for a statutory license as a farmer’s privilege. Article 5(2) of the Commission Regulation (EC) No 1768/95 of 24 July 1995 states that the level of remuneration pursuant to Art. 14 of the Plant Variety Rights Regulation shall be sensibly lower than the amount charged for the licensed production of propagating material of the lowest category qualified for official certification, of the same variety in the same area.

  87. Art. 6(1).

  88. Recital 18.

  89. Case C-271/10 VEWA, ECLI:EU:C:2011:442, paras. 25–26.

  90. Case C-271/10 VEWA, ECLI:EU:C:2011:442, paras. 30 and 33.

  91. Case C-271/10 VEWA, ECLI:EU:C:2011:442, para. 34, referring to recital 7 of the original directive’s preamble (Council Directive 92/100/EEC): “Whereas the creative and artistic work of authors and performers necessitates an adequate income as a basis for further creative and artistic work, and the investments required particularly for the production of phonograms and films are especially high and risky; whereas the possibility for securing that income and recouping that investment can only effectively be guaranteed through adequate legal protection of the rightholders concerned”.

  92. Case C-271/10 VEWA, ECLI:EU:C:2011:442, paras. 37–39.

  93. Cf. Art. 6(3) of the Directive.

  94. In the taxonomy of Calabresi and Melamed, Art. 5(1) of the RLR Directive and the likes are “inalienability rules”.

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Riis, T. Remuneration Rights in EU Copyright Law. IIC 51, 446–467 (2020). https://doi.org/10.1007/s40319-020-00929-8

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