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Limits to Exclusive Rights in the Internal Relationship Between Original and Derivative Rightholders

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Online Music Distribution - How Much Exclusivity Is Needed?

Part of the book series: Munich Studies on Innovation and Competition ((MSIC,volume 12))

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Abstract

While Chap. 3 of this study dealt with the relevant rights, Chaps. 4–6 will deal with various types of limits to the relevant rights. The types of limits dealt with in this chapter interfere least with the concept of exclusivity, tackling the limits of the absoluteness of the exclusive rights in the internal relationship between original and derivative rightholders, as opposed to the limits of the possibility of excluding everyone from the use of the subject-matter in which the rightholder has an exclusive right, which will be covered in Chap. 5.

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Notes

  1. 1.

    This issue does not typically arise in the case of phonogram producers’ rights, but can also occur if the production was outsourced by the record label to a small record producer under a tape lease deal, see below Sect. 4 B II 2.

  2. 2.

    Certain regulation on the international level exists only with regard to moral rights, compare Art. 6 bis(1) BC. On the European level, Art. 4(1) Directive 2006/115/EC lays down a mechanism with regard to the rental right, according to which, where an author or performer has transferred or assigned his rental right concerning i.a. a phonogram to i.a. a phonogram producer, the original rightholder shall still retain the right to obtain an equitable remuneration for the rental, which according to Art. 4(2) Directive 2006/115/EC cannot be waived. This mechanism, without limiting exclusivity in relation to licensees, limits the power of the derivative rightholder to exclusively reap all profits from the exploitation of the right. Considering only a very hypothetic relevance of the rental right for OMD, which is also reflected in the complete lack of application of the mentioned protective mechanism in the context of OMD in EU countries such as Germany, this mechanism will not be covered here.

  3. 3.

    On the divisibility principle see Abrams, The Law of Copyright, § 4:41.

  4. 4.

    See Patry on Copyright, §§ 5:101–5:103, assuming such possibility, but Abrams, The Law of Copyright, § 4:44, rejecting it.

  5. 5.

    See Hilty/Peukert, 22 Cardozo Arts & Ent. L.J. 401, 407 (2004).

  6. 6.

    Schulze, in: Dreier/Schulze, Sec. 29 UrhG note 3; Schricker/Loewenheim, in: Schricker/Loewenheim, Sec. 29 UrhG notes 14–15.

  7. 7.

    See Schulze, in: Dreier/Schulze, Sec. 31 UrhG note 4; Schricker/Loewenheim, in: Schricker/Loewenheim, Vor § 29 UrhG note 49.

  8. 8.

    Schulze, in: Dreier/Schulze, Sec. 31 UrhG note 56.

  9. 9.

    Secs. 34(1) and 35(1) UrhG.

  10. 10.

    Secs. 34(5) sentence 2 and 35(2) UrhG; see also LG Leipzig ZUM 2007, 671, 672; Schulze, in: Dreier/Schulze, Sec. 34 UrhG notes 48–52; Hilty/Peukert, 22 Cardozo Arts & Ent. L.J. 401, 411 (2004).

  11. 11.

    See Sec. 101 CA, as discussed above.

  12. 12.

    See Schricker/Loewenheim, in: Schricker/Loewenheim, Vor § 28 UrhG note 87 and Sec. 31 UrhG note 85 with comprehensive further references to BGH case law and legal scholarship.

  13. 13.

    See below Sect. 6 C II 1 b cc.

  14. 14.

    This legislative decision has been criticized as establishing barely justifiable discrimination of performers in relation to authors in the light of the same droit moral dimension of both rights, see Dünnwald/Gerlach, Sec. 79 UrhG note 6 (even proposing to ignore the wording and “by way of interpretation” limit the transferability to the remuneration rights which are “harmless” from droit moral the point of view); Dünnwald, ZUM 2004, 161, 166–170; Gerlach, ZUM 2008, 372, 375–376; Krüger, in: Schricker/Loewenheim, Sec. 79 UrhG note 3. Whereas this criticism might seem justified, as far as the discrimination of performers in relation to authors is concerned, the argument that the execution of economic rights can be harmful from the droit moral standpoint does not seem to quite match the reality of today’s distribution of cultural goods and is therefore not convincing, see below Chap. 12.

  15. 15.

    See Schulze, in: Dreier/Schulze, Sec. 86 UrhG note 16.

  16. 16.

    See below Sect. 5 C II 1.

  17. 17.

    Secs. 79(2) and 85(2) UrhG.

  18. 18.

    See Passman, All You Need to Know About the Music Business, p. 70.

  19. 19.

    See Kohn on Music Licensing, p. 97; furthermore, self-contained artists often had no choice but to contract with the music publisher affiliated with their record label.

  20. 20.

    See Passman, All You Need to Know About the Music Business, p. 71; Büscher, in: Raue/Hegemann, MAH Urheber- und Medienrecht, § 9 note 3; Dahl, The Future of Copyright and Artist Rights in the Music Industry, p. 37; see also above Sect. 1 A.

  21. 21.

    Waldfogel, 55 J.L. & Econ. 715, 717, 735–736 (2012); Dahl, The Future of Copyright and Artist Rights in the Music Industry, p. 32; Cvetkovski, The Political Economy of the Music Industry, pp. 12–14.

  22. 22.

    Passman, All You Need to Know About the Music Business, p. 71, noting that “young artists are proving more savvy in this area than a lot of established companies”; see also Cvetkovski, The Political Economy of the Music Industry, pp. 14–15.

  23. 23.

    Kohn on Music Licensing, p. 97.

  24. 24.

    Passman, All You Need to Know About the Music Business, p. 71; see also Cvetkovski, The Political Economy of the Music Industry, p. 72 (citing a major record company executive admitting that some musicians signed to majors “could have made more money DIYing the project carefully”).

  25. 25.

    Id., pp. 71–72.

  26. 26.

    See Cvetkovski, The Political Economy of the Music Industry, pp. 69–71 (discussing that “most artists signed to majors do not chart well” and “most songs released do not yield any financial return”, which makes it irrational for a creator “to subscribe to the dominant model which essentially requires ultimate submission to the majors”).

  27. 27.

    See below Sect. 5 D II 1 d ee on the statutory split of proceeds from statutory licensing between “copyright owners”, “featured artists” and the fund for “non-featured artists” regulated in Sec. 114(g)(2) CA.

  28. 28.

    See below Sects. 4 B I, 6 C I 2 b and 6 D I 2 d.

  29. 29.

    Passman, All You Need to Know About the Music Business, p. 303.

  30. 30.

    See Kohn on Music Licensing, pp. 106–110; Passman, All You Need to Know About the Music Business, p. 297; Krasilovsky/Shemel/Gross/Feinstein, This Business of Music, p. 172; Walker, This Business of Urban Music, p. 30.

  31. 31.

    Kohn on Music Licensing, p. 104; Passman anecdotally describes the first talk between the publisher and the author in the following entertaining passage: “A publisher makes the following speech to a songwriter: ‘Sit down, kid. Nice shirt. You got great taste.’ The publisher leans forward, rattling the gold chains on his neck. ‘You’re a smart guy, so you’ll get this right away. Your strength is writing songs, and mine is taking care of business. So let’s make the following deal: You assign the copyright in your song to me, and I’ll get people to use your songs. Then I give ’em licenses, make sure they pay up, and we split the dough. Simple, huh? Now sign this perfectly standard agreement. Wanna cigar?’, see Passman, All You Need to Know About the Music Business, p. 233.

  32. 32.

    Kohn on Music Licensing, pp. 110–111; Passman, All You Need to Know About the Music Business, p. 89.

  33. 33.

    Passman, All You Need to Know About the Music Business, p. 303.

  34. 34.

    Kohn on Music Licensing, pp. 106.

  35. 35.

    Passman, All You Need to Know About the Music Business, p. 304.

  36. 36.

    Kohn on Music Licensing, 135; Passman, All You Need to Know About the Music Business, p. 304; see also Nimmer on Copyright, § 30.02[B], Form 30.02B(1) Exclusive Songwriting Agreement, clause 3.

  37. 37.

    See Sect. 3 D III; see also Kohn on Music Licensing, pp. 136–138.

  38. 38.

    Kohn on Music Licensing, p. 146; Passman, All You Need to Know About the Music Business, pp. 304–307.

  39. 39.

    Kohn on Music Licensing, p. 86; Passman, All You Need to Know About the Music Business, p. 297; Nimmer on Copyright, § 30.02[B].

  40. 40.

    Kohn on Music Licensing, pp. 110–111; Passman, All You Need to Know About the Music Business, pp. 297, 255 (also noting that “[t]his is designed to protect the writer (which it does nicely) from flaky publishers who might steal the money”); see also below Chap. 6 footnote 243.

  41. 41.

    Kohn on Music Licensing, p. 105; Nimmer on Copyright, § 30.02[A].

  42. 42.

    Kohn on Music Licensing, p. 105; Nimmer on Copyright, § 30.02[A].

  43. 43.

    See Passman, All You Need to Know About the Music Business, pp. 331–332.

  44. 44.

    See Hilpert-Kruck, in: Raue/Hegemann, MAH Urheber- und Medienrecht, § 10 notes 36–64; Homann, Praxis-Handbuch Musikrecht, pp. 232–244; Lichte, in: Moser/Scheuermann, Handbuch der Musikwirtschaft, pp. 1068–1069.

  45. 45.

    Hilpert-Kruck, in: Raue/Hegemann, MAH Urheber- und Medienrecht, § 10 note 59.

  46. 46.

    See above Sect. 4 A.

  47. 47.

    Hilpert-Kruck, in: Raue/Hegemann, MAH Urheber- und Medienrecht, § 10 notes 44, 51; Lyng/Heinz/Rothkirch, Die neue Praxis im Musikbusiness, pp. 88, 330–333; Lichte, in: Moser/Scheuermann, Handbuch der Musikwirtschaft, pp. 1067, 1069–1070.

  48. 48.

    GEMA (Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte, in English: Society for musical performing and mechanical reproduction rights) is the German CMO in the field of musical works.

  49. 49.

    See BGH GRUR 2009, 939—Mambo No. 5; Hilpert-Kruck, in: Raue/Hegemann, MAH Urheber- und Medienrecht, § 10 note 45; Homann, Praxis-Handbuch Musikrecht, p. 233.

  50. 50.

    Hilpert-Kruck, in: Raue/Hegemann, MAH Urheber- und Medienrecht, § 10 note 45.

  51. 51.

    Hilpert-Kruck, in: Raue/Hegemann, MAH Urheber- und Medienrecht, § 10 notes 31, 55.

  52. 52.

    KG GRUR-RR 2017, 94—Musikverlegeranteil.

  53. 53.

    See GEMA, Verlegerbeteiligung, available at: https://www.gema.de/aktuelles/verlegerbeteiligung/; GEMA, Urteil KG Berlin Verlegerbeteiligung, Presentation of January 23–27, 2017, available at: https://www.gema.de/fileadmin/user_upload/Musikurheber/Informationen/GEMA_Roadshow_Verlegerbeteiligung.pdf.

  54. 54.

    On GEMA cession see Hilpert-Kruck, in: Raue/Hegemann, MAH Urheber- und Medienrecht, § 10 notes 55, 59–61; Homann, Praxis-Handbuch Musikrecht, pp. 243–244 (deeming it a standard provision for exclusive author agreements); Lyng/Heinz/von Rothkirch, Die neue Praxis im Musikbusiness, p. 81.

  55. 55.

    Hilpert-Kruck, in: Raue/Hegemann, MAH Urheber- und Medienrecht, § 10 notes 65–79; Homann, Praxis-Handbuch Musikrecht, pp. 244–246; Lichte, in: Moser/Scheuermann, Handbuch der Musikwirtschaft, pp. 1067, 1083–1085.

  56. 56.

    BGH GRUR 2010, 1093—Concierto de Aranjuez (still qualifying such an agreement as the publishing agreement); Hilpert-Kruck, in: Raue/Hegemann, MAH Urheber- und Medienrecht, § 10 notes 80–83.

  57. 57.

    Nimmer on Copyright, § 30.03 (also referring to them as master recording agreements, although this title in this context appears misleading, running the risk of confusing the traditional recording agreement with the tape lease deal [for a discussion of the latter see Sect. 4 B II 2]); these agreements are also known as recording artist agreements (Aczon, The Musician’s Legal Companion, p. 49), record deals (see Passman, All You Need to Know About the Music Business, p. 63) or standard agreements (see Krasilovsky/Shemel/Gross/Feinstein, This Business of Music, p. 14).

  58. 58.

    Nimmer on Copyright, § 30.03[A]; on the term of the agreement and the options of the record label to prolong it and require the recording of further albums (which is usually detrimental to the artist as it binds him to the production of further recordings regularly under his market value) see Passman, All You Need to Know About the Music Business, pp. 112–118.

  59. 59.

    See Nimmer on Copyright, § 30.03[A]; see also Nimmer on Copyright, § 30.03 Form 30.03A(2) Recording Agreement Exclusive Services / Long Form, clauses 10.1 and 10.2, and Form 30.03A(3) Recording Agreement Non-exclusive Services / Short Form, clauses 8.1–8.3.

  60. 60.

    See Sect. 3 D III.

  61. 61.

    See Nimmer on Copyright, § 30.03 Form 30.03A(2) Recording Agreement Exclusive Services / Long Form, clauses 10.1 and 10.2, and Form 30.03A(3) Recording Agreement Non-exclusive Services / Short Form, clauses 8.1–8.3; Krasilovsky/Shemel/Gross/Feinstein, This Business of Music, p. 27.

  62. 62.

    Passman, All You Need to Know About the Music Business, pp. 104–108.

  63. 63.

    This fund can be in the range of $25,000 to $100,000 for new artists signing to an independent label and can run into millions of dollars for superstars according to Passman, All You Need to Know About the Music Business, p. 99.

  64. 64.

    Passman, All You Need to Know About the Music Business, p. 89; Krasilovsky/Shemel/Gross/Feinstein, This Business of Music, p. 23.

  65. 65.

    Passman, All You Need to Know About the Music Business, p. 76; previously (and still effective for some old deals) artist royalties in the U.S. were calculated as a percentage from the retail price, with complex deductions applicable (e.g. for packaging or breakage of physical goods), see Passman, All You Need to Know About the Music Business, pp. 76–86; with the (higher) retail price as the royalty basis, base percentages expressing the artist royalty were correspondingly lower, starting at 9% for new artists, see Krasilovsky/Shemel/Gross/Feinstein, This Business of Music, p. 19.

  66. 66.

    Passman, All You Need to Know About the Music Business, p. 94.

  67. 67.

    Id., pp. 153–157; while this reflects current industry practice and the current language of recording agreements, some old agreements that failed to regulate this issue explicitly occasionally led to a different result: in particular, in the Eminem case downloading revenue was ultimately treated not as sales income but as licensing income (permanent downloads were qualified as “sales”, but the agreement that permitted download distributors to produce and sell permanent downloads was qualified as “license” and deemed decisive for the royalty split between the label and the artist), see F.B.T. Prods., LLC v. Aftermath Records, 621 F.3d 958, 964 (9th Cir. 2010). As mentioned by Passman, this ruling does not affect as many artists as one might think because many record deals have, meanwhile, been renegotiated or the audits of the record labels by artists have already been settled, see Passman, All You Need to Know About the Music Business, p. 155.

  68. 68.

    See Sect. 5 D II 1 for further details on this statutory license.

  69. 69.

    Passman, All You Need to Know About the Music Business, p. 98; see also Krasilovsky/Shemel/Gross/Feinstein, This Business of Music, pp. 21, 35.

  70. 70.

    Day, Net Profit Deals.

  71. 71.

    See Donnelly, 25(12) Entertainment Law Reporter 4 (2004); Day, Net Profit Deals; Passman, All You Need to Know About the Music Business, pp. 126–127 (mentioning that this profit share means a lot more money if the artist is a big success); Krasilovsky/Shemel/Gross/Feinstein, This Business of Music, p. 22.

  72. 72.

    See Donnelly, 25(12) Entertainment Law Reporter 4 (2004); Day, Net Profit Deals.

  73. 73.

    On this topic see below Sect. 8 B I 2 a bb (2).

  74. 74.

    Donnelly, 25(12) Entertainment Law Reporter 4, 4–5 (2004); Day, Net Profit Deals.

  75. 75.

    Passman, All You Need to Know About the Music Business, p. 127; see also the sample comparative calculations of artist royalties made by Day, Net Profit Deals and by Donnelly, 25(12) Entertainment Law Reporter 4, 5–7 (2004).

  76. 76.

    See Nimmer on Copyright, § 30.03 Form 30.03A(3) Recording Agreement Non-exclusive Services / Short Form.

  77. 77.

    Passman, All You Need to Know About the Music Business, p. 129; Krasilovsky/Shemel/Gross/Feinstein, This Business of Music, p. 34.

  78. 78.

    See above Sect. 3 D II.

  79. 79.

    See Nimmer on Copyright, § 30.03[B] Form 30.03B(1) Record Producer Agreement, clause 6.1.

  80. 80.

    See above footnote 69.

  81. 81.

    Lyng/Heinz/Rothkirch, Die neue Praxis im Musikbusiness, pp. 262–267; Lyng/Rothkirch/Heinz, Musik & Moneten, pp. 29–31, 43–55; Gilbert/Scheuermann, in: Moser/Scheuermann, Handbuch der Musikwirtschaft, p. 1098; Büscher, in: Raue/Hegemann, MAH Urheber- und Medienrecht, § 9 notes 15–16; see also Homann, Praxis-Handbuch Musikrecht, p. 259 (seeing it as a grant of an exclusive license).

  82. 82.

    Lyng/Heinz/Rothkirch, Die neue Praxis im Musikbusiness, p. 60; see also Büscher, in: Raue/Hegemann, MAH Urheber- und Medienrecht, § 9 note 36, referring to a 10% label share as common.

  83. 83.

    Lyng/Rothkirch/Heinz, Musik & Moneten, pp. 102–108; Büscher, in: Raue/Hegemann, MAH Urheber- und Medienrecht, § 9 note 38; Homann, Praxis-Handbuch Musikrecht, pp. 268–269.

  84. 84.

    See Lyng/Rothkirch/Heinz, Musik & Moneten, p. 118; Gilbert/Scheuermann, in: Moser/Scheuermann, Handbuch der Musikwirtschaft, p. 1111; Homann, Praxis-Handbuch Musikrecht, p. 266; Haller, Urheberrechtsschutz in der Musikindustrie, pp. 42–43.

  85. 85.

    See Lyng/Rothkirch/Heinz, Musik & Moneten, p. 119, stating that such a reduction may range between 25 and 30%, significantly lowering the artist royalty; see also Lyng/Heinz/Rothkirch, Die neue Praxis im Musikbusiness, p. 276 (clause 8.10 of the standard exclusive artist agreement providing for a halved royalty rate of the artist in the case of downloading and streaming).

  86. 86.

    Homann, Praxis-Handbuch Musikrecht, p. 265.

  87. 87.

    Kuhn/Kunisch, in: Raue/Hegemann, MAH Urheber- und Medienrecht, § 9 note 79; Gilbert/Scheuermann, in: Moser/Scheuermann, Handbuch der Musikwirtschaft, p. 1095; differently Homann, Praxis-Handbuch Musikrecht, p. 278.

  88. 88.

    Kuhn/Kunisch, in: Raue/Hegemann, MAH Urheber- und Medienrecht, § 9 note 66.

  89. 89.

    Lyng/Rothkirch/Heinz, Musik & Moneten, p. 118; Gilbert/Scheuermann, in: Moser/Scheuermann, Handbuch der Musikwirtschaft, p. 1111; Homann, Praxis-Handbuch Musikrecht, p. 278; Haller, Urheberrechtsschutz in der Musikindustrie, pp. 42–43.

  90. 90.

    Homann, Praxis-Handbuch Musikrecht, p. 275.

  91. 91.

    See Passman, All You Need to Know About the Music Business, pp. 203–211; Krasilovsky/Shemel/Gross/Feinstein, This Business of Music, p. 35.

  92. 92.

    Gilbert/Scheuermann, in: Moser/Scheuermann, Handbuch der Musikwirtschaft, p. 1096; Lutz, Grundriss des Urheberrechts, paras. 1188–1189.

  93. 93.

    Kuhn/Kunisch, in: Raue/Hegemann, MAH Urheber- und Medienrecht, § 9 note 128.

  94. 94.

    Homann, Praxis-Handbuch Musikrecht, p. 281; Kuhn/Kunisch, in: Raue/Hegemann, MAH Urheber- und Medienrecht, § 9 note 128.

  95. 95.

    Or from publication of the work, if the right of publication of the work was covered by the transfer, see Sec. 203(a)(3) CA. The termination right may be exercised within a five-year time period. The provision applies to transfers executed on or after January 1, 1978, so that the first terminations could be effected from January 1, 2013—on these recent terminations see Rother, Record Industry Braces for Artists’ Battles Over Song Rights, The New York Times of August 15, 2011, available at: http://www.nytimes.com/2011/08/16/arts/music/springsteen-and-others-soon-eligible-to-recover-song-rights.html?_r=0; Rother, A Copyright Victory, 35 Years Later, The New York Times of September 10, 2013, available at: http://www.nytimes.com/2013/09/11/arts/music/a-copyright-victory-35-years-later.html; Webster-Jones, Post-1978 Copyright Reversions, The Music Business Journal of March 2015, available at: http://www.thembj.org/2015/03/post-1978-copyright-reversions/.

  96. 96.

    See Hall, 25 Hastings Comm. & Ent. L.J. 189, 195 (2002); Bouton, 9 Va. Sports & Ent. L.J. 312, 314 (2009) with further references.

  97. 97.

    See Bouton, 9 Va. Sports & Ent. L.J. 312, 314–315 (2009); see also Neu, Der Zwang zur angemessenen Vergütung und weiteren Beteiligung nach der Urheberrechtsreform, pp. 122–123 with further references.

  98. 98.

    See Hall, 25 Hastings Comm. & Ent. L.J. 189 (2002); Anorga, 24 Whittier L. Rev. 739 (2003); Bouton, 9 Va. Sports & Ent. L.J. 312 (2009); Brereton, 27 Cardozo Arts & Ent. L.J. 167 (2009); Neu, Der Zwang zur angemessenen Vergütung und weiteren Beteiligung nach der Urheberrechtsreform, pp. 124–125.

  99. 99.

    See Anorga, 24 Whittier L. Rev. 739, 740 (2003); Bouton, 9 Va. Sports & Ent. L.J. 312, 313 (2009); Neu, Der Zwang zur angemessenen Vergütung und weiteren Beteiligung nach der Urheberrechtsreform, p. 124.

  100. 100.

    Available at: https://www.afm.org/wp-content/uploads/2016/03/Sound-Recording-Agreement.pdf.

  101. 101.

    See Sound Recording Special Payments Fund, Record Companies (Signatories) Info, available at: http://www.sound-recording.org/signatories.html?auth_sid=41a6f89bfd0177b13b11f3facbfba96f.

  102. 102.

    See AFM, Our Musicians: Sound Recordings, available at: https://www.afm.org/our-musicians/recording-digital-media/sound-recordings/.

  103. 103.

    See Sound Recording Special Payments Fund, Record Companies (Signatories) Info, available at: http://www.sound-recording.org/signatories.html?auth_sid=41a6f89bfd0177b13b11f3facbfba96f.

  104. 104.

    See Sound Recording Special Payments Fund, Distributions, available at: http://www.sound-recording.org/distributions.html.

  105. 105.

    See Passman, All You Need to Know About the Music Business, p. 197.

  106. 106.

    See AFM, Sound Recording Labor Agreement, pp. 111–112, available at: https://www.afm.org/wp-content/uploads/2016/03/Sound-Recording-Agreement.pdf and AFM, SRLA, Memorandum of Understanding, Appendix A, p. 3, available at: http://www.afm.org/uploads/file/SRLA-%20Memorandum%20of%20Understanding-%20(February%201_2006%20-%20January%2031_%202009).pdf.

  107. 107.

    See AFM, New Recording Agreement, available at: https://www.afm.org/2017/01/new-recording-agreement-3/. On non-interactive streaming covered by the statutory license of Sec. 114 CA and the respective AFM & SAG-AFTRA Intellectual Property Rights Distribution Fund for non-featured artists see below Sect. 5 D II 1 d ee.

  108. 108.

    SAG-AFTRA, Sound Recordings, available at: https://www.sagaftra.org/production-center/contract/806/getting-started.

  109. 109.

    For exact rates see SAG-AFTRA, Sound Recordings Code Rates 2017-2020, available at: https://www.sagaftra.org/files/SR%20Rates%20Summary%202017-2020.pdf.

  110. 110.

    SAG-AFTRA, Sound Recordings Code, available at: https://www.sagaftra.org/files/sound_recordings_onesheet.pdf.

  111. 111.

    See Memorandum of Agreement, 2015-2017 SAG-AFTRA National Code of Fair Practice for Sound Recordings, available at: https://www.sagaftra.org/files/2015-2017_sound_recordings_moa.pdf, pp. 1–4. The rates i.a. amount to 0.07% of receipts for permanent audio downloads and between 0.36% and 0.55% of receipts for (interactive) audio streams, with receipts being designed to resemble the wholesale price. On non-interactive streaming covered by the statutory license of Sec. 114 CA and the respective AFM & SAG-AFTRA Intellectual Property Rights Distribution Fund for non-featured artists see below Sect. 5 D II 1 d ee.

  112. 112.

    On the background of the 2002 German reform of copyright contract law see Hilty/Peukert, 22 Cardozo Arts & Ent. L.J. 401, 411–415 (2004); Dietz, 33 IIC 828, 829–831 (2002); Gutsche, 25 EIPR 366 (2003).

  113. 113.

    See Czychowski, in: Fromm/Nordemann, Sec. 32 UrhG note 19; Wandtke/Grunert, in: Wandtke/Bullinger, Sec. 32 UrhG note 7, Schulze, in: Dreier/Schulze, Sec. 32 UrhG note 8; Schricker/Haedicke, in: Schricker/Loewenheim, Sec. 32 UrhG note 4.

  114. 114.

    See Czychowski, in: Fromm/Nordemann, Sec. 32 UrhG note 19, Schulze, in: Dreier/Schulze, Sec. 32 UrhG note 9, Schricker/Haedicke, in: Schricker/Loewenheim, Sec. 32 UrhG 6; Wandtke/Grunert, in: Wandtke/Bullinger, Sec. 32 UrhG note 6.

  115. 115.

    Sec. 32(1)(1) UrhG.

  116. 116.

    Sec. 32(1)(2) UrhG.

  117. 117.

    Sec. 32(1)(3) UrhG.

  118. 118.

    See Rehbinder/Peukert, Urheberrecht, para. 961; Schricker/Haedicke, in: Schricker/Loewenheim, Sec. 32 UrhG note 24; Wandtke/Grunert, in: Wandtke/Bullinger, Sec. 32 UrhG note 26; Czychowski, in: Fromm/Nordemann, Sec. 32 UrhG notes 29–32.

  119. 119.

    Sec. 36(1)(1) UrhG; single exploiters (but not single authors) may also negotiate common remuneration standards according to this provision.

  120. 120.

    Sec. 36(2) UrhG.

  121. 121.

    Hilty/Peukert, 22 Cardozo Arts & Ent. L.J. 401, 428 (2004); following the copyright contract law reform of 2016, this also explicitly holds for contracts concluded prior to the time of application of the common remuneration standard, see Sec. 32(2a) UrhG.

  122. 122.

    Hilty/Peukert, 22 Cardozo Arts & Ent. L.J. 401, 428 (2004); Dietz/Haedicke, in: Schricker/Loewenheim, Sec. 36 UrhG note 45; Schulze, in: Dreier/Schulze, Sec. 32 UrhG note 36; Jakobs, NJW 2002, 1905, 1909.

  123. 123.

    Kotthoff, in: Dreyer/Kotthoff/Meckel, Sec. 32 note 22; Erdmann, GRUR 2002, 923, 926; Czychowski, in: Fromm/Nordemann, Sec. 32 UrhG note 32; Soppe, in: BeckOK UrhR, Sec. 32 UrhG note 43; Wandtke/Grunert, in: Wandtke/Bullinger, Sec. 32 UrhG note 26.

  124. 124.

    See Kotthoff, in: Dreyer/Kotthoff/Meckel, Sec. 32UrhG note 22.

  125. 125.

    Sec. 36(3) UrhG.

  126. 126.

    Sec. 36(4) UrhG.

  127. 127.

    Bundestags-Drucksache 14/8058, p. 20; Hilty/Peukert, 22 Cardozo Arts & Ent. L.J. 401, 429 (2004); Dietz/Haedicke, in: Schricker/Loewenheim, Sec. 36 UrhG note 92; Schulze, in: Dreier/Schulze, Sec. 36 UrhG note 36; Czychowski, in: Fromm/Nordemann, Sec. 36 UrhG note 46; Nordemann, Das neue Urhebervertragsrecht, Sec. 36 UrhG note 15; von Becker, ZUM 2007, 249, 255; Schmidt, ZUM 2002, 781, 790; similarly Soppe, in: BeckOK UrhR, Sec. 36 UrhG notes 109–111 (excluding cases where both parties rejected the proposal); contra Wandtke/Grunert, in: Wandtke/Bullinger, Sec. 36 note 30; Ory, AfP 2002, 93, 99.

  128. 128.

    Bundestags-Drucksache 14/8058, p. 18; OLG Munich ZUM 2007, 308; Schricker/Haedicke, in: Schricker/Loewenheim, Sec. 32 UrhG note 27 with further references; Wandtke/Grunert, in: Wandtke/Bullinger, Sec. 32 UrhG notes 41, 43 (holding that an objectively general prognosis possible at the time of contracting should also be part of this ex ante perspective); Schulze, in: Dreier/Schulze, Sec. 32 UrhG note 44; Rehbinder/Peukert, Urheberrecht, para. 962.

  129. 129.

    Bundestags-Drucksache 14/8058, p. 18.

  130. 130.

    Hilty/Peukert, 22 Cardozo Arts & Ent. L.J. 401, 430 (2004); similarly Czychowski, in: Fromm/Nordemann, Sec. 32 UrhG note 44 (noting that concrete determination of such customary practice may prove very difficult).

  131. 131.

    Bundestags-Drucksache 14/8058, p. 18.

  132. 132.

    Bundestags-Drucksache 14/8058, p. 18; Hilty/Peukert, 22 Cardozo Arts & Ent. L.J. 401, 431 (2004); Schulze, in: Dreier/Schulze, Sec. 32 UrhG note 52; Wandtke/Grunert, in: Wandtke/Bullinger, Sec. 32 UrhG notes 29, 35.

  133. 133.

    Bundestags-Drucksache 14/8058, p. 18.

  134. 134.

    BGH GRUR 2002, 602, 604—Musikfragmente; see also Schricker/Haedicke, in: Schricker/Loewenheim, Sec. 32 UrhG note 30; Schulze, in: Dreier/Schulze, Sec. 32 UrhG note 53; Czychowski, in: Fromm/Nordemann, Sec. 32 UrhG note 47.

  135. 135.

    BVerfG GRUR 2014, 169, 173–174, para. 104—Übersetzerhonorare; BGH GRUR 2011, 328, 330, para. 17—Destructive Emotions; BGH GRUR 2009, 1148, 1151, para. 32—Talking to Addison.

  136. 136.

    See Hilty/Peukert, 22 Cardozo Arts & Ent. L.J. 401, 426 (2004).

  137. 137.

    See Wandtke, in: Wandtke (ed.), Urheberrecht, p. 345; Dreier, in: Dreier/Schulze, Sec. 79 UrhG note 11.

  138. 138.

    Dreier, in: Dreier/Schulze, Sec. 79 UrhG note 11.

  139. 139.

    The old version of Sec. 79 UrhG contained a reference to the mutatis mutandis applicability of selected copyright contract law provisions, including Sec. 32 UrhG, to performers in connection with the granting of licenses, but was omitted in connection with the transfer of rights. Since in practice structurally more powerful labels use the full spectrum of legally available means and force performers into transferring their economic rights, under such a literal interpretation of the law the right to equitable remuneration under Sec. 32 UrhG against labels would de facto not be regularly available to performers. However, the prevailing view in the scholarship pointed out that such a result would be contrary to the proclaimed purpose of the 2002 reform, which i.a. was to strengthen the contractual position of performers and to bring it more in line with the respective position of authors—therefore, this view applied Sec. 32 UrhG mutatis mutandis not only to exclusive licensing, but also to the transfer of rights from performers to labels, see Krüger, in: Schricker/Loewenheim, Sec. 79 UrhG note 5; Dünnwald/Gerlach, Sec. 79 UrhG note 6; Stang, in: BeckOK UrhR, Sec. 79 UrhG note 7; Büscher, in: Wandtke/Bullinger, Sec. 79 UrhG note 7; Dünnwald, ZUM 2004, 161, 169–170; implicitly Gerlach, ZUM 2008, 372, 375; in this direction also Hilty/Peukert, 22 Cardozo Arts & Ent. L.J. 401, 419 (2004) (suggesting that the legislator did not intend to limit the applicability of respective sections of UrhG to certain categories of exploitation contracts of performers and therefore Sec. 32 UrhG should equally apply to “assignment, license or other transfer of rights”); to a limited extent also Vogel, in: Loewenheim, Hdb. UrhR, § 38 note 87 (explicitly mentioning only the mutatis mutandis applicability of the “purpose of transfer rule” of Sec. 31(5) UrhG, but not of the right to equitable remuneration of Sec. 32 UrhG). However, Schaefer criticized such a teleological interpretation as being contra legem and rejected the applicability of copyright contract law provisions—which were indeed tailored to the (i.a. exclusive) licensing of rights—to the transfer of performers’ rights, see Schaefer, in: Fromm/Nordemann, Sec. 79 UrhG notes 49–56. At the same time, Schaefer suggested that copyright contract law provisions, including Sec. 32 UrhG, while not being directly applicable to performer agreements establishing the assignment of rights, should nevertheless serve as criteria when testing the immorality (Sittenwidrigkeit) of these agreements under Sec. 138 German Civil Code (BGB). Consequently, even this view found the right to equitable remuneration to be indirectly enjoyable by performers.

  140. 140.

    See Sec. 85(2)(3) UrhG omitting the reference to Sec. 32 UrhG.

  141. 141.

    See Schulze, in: Dreier/Schulze, Sec. 32 UrhG note 38; Schulze, GRUR 2005, 828, 830; Dietz/Haedicke, in: Schricker/Loewenheim, Sec. 36 UrhG note 93; Hilty, GRUR 2005, 819, 820–821; Schricker, 35 IIC 850, 856–857 (2004); Malevanny, GRUR Int. 2013, 737, 741.

  142. 142.

    These are the common remuneration standards for authors of fictional works in the German language (adopted in 2005 after somewhat unconventional mediation by the Federal Ministry of Justice, see Dietz/Haedicke, in: Schricker/Loewenheim, Sec. 36 UrhG note 93), for full-time freelance journalists of daily newspapers (adopted in 2010, for details see Schulze, in: Dreier/Schulze, Sec. 32 UrhG note 38) and for translators (adopted in 2014, see Schmidt, Übersetzer stimmen für die ausgehandelte Gemeinsame Vergütungsregel, Boersenblatt.net of March 30, 2014, available at: http://www.boersenblatt.net/790698/); for further examples of common remuneration standards concluded with single exploiters see Schulze, in: Dreier/Schulze, Sec. 32 UrhG note 38.

  143. 143.

    For an overview see Czychowski, in: Fromm/Nordemann, Sec. 32 UrhG note 98.

  144. 144.

    See above Sect. 6 C II 1 b.

  145. 145.

    See above footnote 134.

  146. 146.

    See above Sect. 4 B I 2 and below Sect. 6 C I 2 b.

  147. 147.

    Schricker/Haedicke, in: Schricker/Loewenheim, Sec. 32 UrhG note 34; Schricker, GRUR Int. 2002, 797, 807; Schricker, GRUR 2002, 737, 741–743; Reber, GRUR 2003, 393, 398; similarly Schulze, in: Dreier/Schulze, Sec. 32 UrhG notes 48 and 68; Wandtke/Grunert, in: Wandtke/Bullinger, Sec. 32 UrhG note 38.

  148. 148.

    See above Sect. 4 B II 2 and footnote 85.

  149. 149.

    See Schulze, in: Dreier/Schulze, Sec. 32 UrhG notes 1 and 43.

  150. 150.

    Schulze, in: Dreier/Schulze, Sec. 32a UrhG note 1 (“fairness paragraph”); see also Bundestags-Drucksache 14/8058, p. 19; Rehbinder/Peukert, Urheberrecht, para. 965 (“fairness compensation”); Schricker/Haedicke, in: Schricker/Loewenheim, Sec. 32a UrhG note 1 (“fairness compensation ex post”).

  151. 151.

    See Hilty/Peukert, 22 Cardozo Arts & Ent. L.J. 401, 417 (2004).

  152. 152.

    See above Sect. 4 C II 1.

  153. 153.

    See Hilty/Peukert, 22 Cardozo Arts & Ent. L.J. 401, 417 (2004); Peukert, 35 IIC 900, 904 (2004).

  154. 154.

    See above Sect. 4 C II 1 a.

  155. 155.

    BGH GRUR 2012, 496, 498, para. 25—Das Boot; BGH GRUR 2012, 1248, 1252, para. 55—Fluch der Karibik; Schulze, in: Dreier/Schulze, Sec. 32a UrhG note 37.

  156. 156.

    Sec. 32a(4)(1) UrhG.

  157. 157.

    See above Sect. 4 C II 1 b.

  158. 158.

    For an overview of the existing approaches see Schulze, in: Dreier/Schulze, Sec. 32a UrhG note 37.

  159. 159.

    See the proposal of the new version of Sec. 32(3) UrhG in the draft law on strengthening the contractual position of authors and performing artists (version of Mai 22, 2000), printed in GRUR 2000, 765–778.

  160. 160.

    See Schulze, in: Dreier/Schulze, Sec. 40a UrhG note 1.

  161. 161.

    Directive 2006/116/EC of the European Parliament and of the Council of December 12, 2006 on the term of protection of copyright and certain related rights (codified version), OJ L 372/12, December 27, 2006, as amended by the Directive 2011/77/EU of the European Parliament and of the Council of September 27, 2011 amending Directive 2006/116/EC on the term of protection of copyright and certain related rights, OJ L 265/1, October 11, 2011.

  162. 162.

    See Hilty/Kur/Klass/Geiger/Peukert/Drexl/Katzenberger, GRUR Int. 2008, 907, 914; Klass, ZUM 2008, 663, 664–665; Klass, ZUM 2008, 828, 831; Malevanny, GRUR Int. 2013, 737, 746.

  163. 163.

    See also below Sect. 6 D I 2.

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Malevanny, N. (2019). Limits to Exclusive Rights in the Internal Relationship Between Original and Derivative Rightholders. In: Online Music Distribution - How Much Exclusivity Is Needed?. Munich Studies on Innovation and Competition, vol 12. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-59699-9_4

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