Copyright Archive - Page 3 of 6 - BOEHMERT & BOEHMERT

Commentary on EU Portability Regulation published and accessible here

26. October 2018/in Publications Copyright

The English-language edition of the commentary on the EU Portability Regulation (2017/1128) has just been published. The authors, Prof. Dr. Jan Bernd Nordemann and Dr. Sebastian Engels, are attorneys at BOEHMERT & BOEHMERT. They already contributed the German-language commentary for the 12th edition 2018 of the renowned Fromm/Nordemann Copyright Commentary.

The freely accessibly online magazine Journal of Intellectual Property, Information Technology and E-Commerce Law (JIPITEC) has now published the English-language commentary. Like every article in the JIPITEC, this is also freely accessible.

The comment can be accessed here; a pdf of the article can be found at the end of the page.

Fromm/Nordemann: Copyright law. Commentary on Copyright Act in 12th edition and 50th anniverary – with various contributions from BOEHMERT & BOEHMERT

18. October 2018/in Publications Copyright

The 12th edition of the renowned commentary has now been published by Prof. Dr. Axel Nordemann, Prof. Dr. Jan Bernd Nordemann and Prof. Dr. Christian Czychowski and (with the exception of the section on copyright crime) has been revised exclusively by BOEHMERT & BOEHMERT lawyers.

This standard commentary for copyright practice includes all statutory innovations – including the Knowledge Society Copyright Act (UrhWissG) enacted on 30 June 2017 – as well as current German and European jurisprudence. The Publishing Act (VerlG) is also commented as is the Portability Ordinance, the first EU regulation in the field of copyright law. New additions include comments on Open Source Software as well as on plagiarism.

Editors from BOEHMERT & BOEHMERT:

Dr. Thomas W. Boddien
Prof. Dr. Christian Czychowski
Dr. Andreas Dustmann, LL.M.
Dr. Sebastian Engels
Prof. Dr. Axel Nordemann
Prof. Dr. Jan Bernd Nordemann, LL.M.
Dr. Anke Nordemann-Schiffel
Dr. Martin Schaefer
Dr. Volker Schmitz-Fohrmann, M. Jur.
Dr. Julian Waiblinger
Dr. Martin Wirtz

You can read an interview about the needs for the revision after just four years on the Beck Verlag website here.

No infringement of copyright protected product at (international) trade fair in Germany

1. February 2018/in Issue February 2018 Copyright

In a recent decision (file number I ZR 92/16), the German Federal Court of Justice ruled that the mere presentation of a product at a trade fair in Germany does not imply that the exhibitor specifically offers this product with the purpose to allow trade fair visitors to (later) purchase the product in the domestic market. Such deliberate advertising is not to be expected if the exhibitor clearly points out to the trade fair visitors that they cannot purchase or order the exhibited product because it reserves the right to make changes to the product.

The applicant is the legal successor of the licensee with the right to manufacture and distribute legless steel tubular chairs, following the example of a famous chair created in 1926, so called Mart-Stam-Chair.

The Defendant is a Polish company, which exhibited a similar chair model named “Zoo” in different versions at the international trade fair ORGATEC, Cologne, for trade professionals only, during the period from 21st to 25th October 2014, and depicted respetive chairs in various advertising materials and product catalogs, however, with the notice that (i) the collection could only be ordered from 2015 on, and that (ii) the “Zoo” series is still in the development stage. Further, on the floor of the defendant’s exhibition stand, right next to the chairs, the notice “prototype” was located.

Against this background, the plaintiff handed over a warning letter at the trade fair on 21 October 2014, setting a deadline to provide a signed cease and desist declaration until 8 pm on the same day. Following this, the parties started arguing about the reimbursement of the cost regarding the preparation of the warning letter.

Decision

In the first-instance proceedings before the district court of Dusseldorf (judgment of 18 June 2015, file number 14 c O 184/14) the court issued a partial dismissal of the claim based on the consideration that the warning letter was legitimate regarding the distribution and bringing to public of the pictures of the chairs, but not with respect to the reproduction of pictures of the chairs (reason: the calatogues were printed in Poland and not in Germany) and also not regarding the offering and distribution of the chairs. The appeal before the Düsseldorf Higher Regional Court, (judgment of 19 April 2016, file number I-20 U 99/15) by the plaintiff was unsuccessful. With the further appeal, the plaintiff continues to pursue its claims for reimbursement of additional costs, but in the end without success.

The further appeal was rejected by the German Federal Court of Justice, basically confirming the reasoning of the Court of Appeal. While the chairs shown on the trade fair do fall within the scope of the chairs of the plaintiff which are protected by copyright, neither the fact that the chairs were shown on the trade fair nor the fact that they were depicted in catalogues were considered an infringement of the plaintiffs rights of distribution, which means the right to offer the original or copies of the work to the public or to bring it to the market, according to Sec. 17 German Copyright Law. Instead, due to the notice “prototype” it is clear that the chairs were not dedicated to be delivered to (German) customers. Therefore, the defendant did not advertise for the acquisition of the chairs still to be produced later. Further, it cannot be established that the chairs in their final design fall into the scope of protection of the Mart-Stam-chair.

With reference to the earlier Keksstangen decision (GRUR 2015, 603 par. 21), the Federal Court of Justice stated that there is no empirical premise that the presentation of a product at an national trade fair should always encourage visitors to purchase this product in the domestic market. Thus, there is a regular lack of targeted advertising for the purchase of the exhibited product, if not a ready-for-sale product, but only a prototype or a design study is exhibited in order to test the reactions of the market to a product that is still in the devlopment stage (BGH, GRUR 2015, 603 ff. Par. 22 – Keksstangen). This applies in particular to international fairs, which also service to establish business relations between foreign parties without domestic reference.

As a result, the Federal Court of Justice concluded that the Court of Appeals, without error of law, assumed that the exhibition of the chair model “Zoo” at the trade fair did not constitute a risk of first infringement of the exclusive right of the owner of the copyright to distribute the Mart-Stam-Chair.

Conclusions

Already back in 2010 the Federal Court of Justice ruled in the Pralinenform II decision (22 April 2010, file number I ZR 17/05 – a trademark infringement case) that like in the above mentioned Keksstangen decision (a case regarding infringement of the Act against Unfair Competition) the mere presentation of a product at a German trade fair cannot automatically be considered an offer of these products or a putting of these products on the German market. With the above mentioned decision the Federal Court of Justice now extents those reflections to copyright cases and confirms that even in the case of a product presentation in Germany, an initial risk of copyright infringement (and, possibly, other legal violations) may not be accepted, even if the exhibited product falls within the scope of a copyrighted work. This applies, in particular, to an international trade fair, which is characterized by the fact that exhibitors from various countries are addressing domestic and foreign customers. This decision is in line with the above mentioned earlier decisions, which as a result seem to indicate a trend to a more restrictive assessment of intellectual property infringements on trade fairs. However, while the Federal Court of Justice until now has not issued a corresponding judgment in a patent infringement case, according to settled case law of the Higher Regional Courts the presentation of a product at a domestic trade fair constitutes an offer within the meaning of Sec. 9(2) No. 1 German Patent Act, unless the trade fair is a mere performance show. It remains to be seen whether the Federal Court of Justice will expand the above considerations also to corresponding patent infringement cases.

Nevertheless, it shall be noted that also in the above mentioned case regarding the Mart-Stam-Chair the infringement claim was legitimate as regards the distribution (Verbreiten) and bringing to public (Öffentlich-Zugänglichmachen) of the pictures of the chairs in catalogues. Thus, exhibitors and right holders participating in German trade fairs in the future should carefully consider the above, in particular the exhibitor should avoid to hand out or present on the exhibition stand catalogues and advertisement material containing the respective potential infringing product, while in contrast, the right holder should specifically look for respective materials because he might not be able to claim infringement due to the mere exhibition of the product itself.

The German Federal Supreme Court rules on World of Warcraft

2. July 2017/in Issue July 2017 Copyright

Computer games are becoming more and more important, not only in everyday life but also in legal theory. The German Federal Supreme Court (BGH) has now issued a decision on the online game World of Warcraft (I ZR 25 / 15 – World of Warcraft I). In this decision, the Court addressed questions regarding the interaction between software copyright, copyright contract law and general contract law.

The decision is to be interpreted against the background of the SAS decision of the Court of Justice of the European Union (C-406 / 10 – SAS Institute Inc./ World Programming Ltd), as well as the Half Life decision of the Federal Supreme Court (BGH, MMR 2010, 771 – Half Life 2) and the series of decisions regarding so-called used software (the UsedSoft cases) (C-128 / 11 – UsedSoft / Oracle; BGH, GRUR 2011, 418 – Used Soft; BGH, GRUR 2014, 264 – Used Soft II; BGH, GRUR 2015, 772 – Used Soft III). Finally, Germany has a robust law with regard to general terms and conditions which has to be interwoven into this set of legal questions and which has a significant impact on the dogmas of copyright contract law.

The issue in dispute addressed in this decision relates to typical online games, in addition to the game Diablo (one of the most well-known) and the computer game World of Warcraft. Such games sometimes achieve more revenue than a Hollywood film. As with all computer games, they comprise – in addition to the software controlling the game – what the Federal Supreme Court has termed game data, i.e. graphics, music and text, but also – as expressed by the Federal Supreme Court – “film sequences” and “models”. These types of games are always operated with so-called EULAs (end user licence agreements). In the case in question, the EULA for the computer game World of Warcraft contains the phrases that rights of use granted would be “revocable” and “not transferable” and also an express ban on pursuing a commercial purpose with the game. The EULA for the computer game Diablo also contained an express ban on the use of so-called bots. Bots are themselves computer programs; their purpose is to enable automation with which the player can further develop his game character simply and without time-consuming and – as the Federal Supreme Court puts it – “playfully charming” actions. They are widely distributed in online games. In the case at issue, the defendant operated bots of this kind.

The only issue in dispute was the unauthorised duplication of the computer games. The claims before the Federal Supreme Court only concerned copyright law. Claims of a contractual nature had in the meantime been referred to another court.

In accordance with the implementation of representative action and with regard to issues of the abuse of legal rights due to various other pending proceedings, which are not of interest here, the Federal Supreme Court first addressed an important topic in practice, the definition of the writ of summons in disputes regarding computer programs and other technical subjects. The Federal Supreme Court emphasised that a writ of summons is only adequately defined within the meaning of § 253 of the German Code of Civil Procedure if it uses general terms to describe the action to be prohibited. Nevertheless, it is a prerequisite that the meaning of the terms used not be in doubt, with the result that the scope of the claim and decision is certain (I ZR 25 / 15, marginal number 29 – World of Warcraft I). This aspect of jurisprudence, which up to now has fundamentally applied to questions of competition law, can now also be used in copyright law, as designations such as the name of the software and (also in detail) a restriction “for commercial purposes” are adequately defined within the meaning of the case law of the Federal Supreme Court (I ZR 25 / 15, marginal number 30ff. – World of Warcraft I).

After this procedural recital, the Federal Supreme Court next addressed the object of protection in the dispute, namely the computer game. It is at this point that we already start to see the unanswered questions that the decision generates. The Federal Supreme Court started its discussion regarding the object of protection by saying that it is talking about the “client software” for the online games “World of Warcraft” and “Diablo 3”. It then goes on to state that this software consists of not only a computer program, but also of audiovisual game data. Even this formulation is imprecise as it is not the client software that consists of a computer program and game data, rather the computer game itself consists of the computer program controlling it and the game data that enables the game result. It is true that the Federal Supreme Court differentiates between the components of a computer game, i.e. the text and the music among other things, and argues that these components can be protected by copyright “or participate in the originality of the overall work and enjoy copyright protection together with the latter” (I ZR 25 / 15, marginal number 34 – World of Warcraft I with reference to CJEU, C-355 / 12, marginal note 23 – Nintendo / PC-Box and 9net and BGH, GRUR 2013, 1035, marginal note 20 – Videogame / Consoles I amongst others). Unfortunately, however, the Federal Supreme Court does not continue with this statement. Although it recognises that a computer game represents an overall whole unit consisting of several components relevant under copyright law, it does not address the question as to whether separate complete work protection applies to this overall whole unit or whether each of the parts enjoys individual protection. This would have been important to clarify the question as to whether the separate respective copyright standards apply for each of these components of the overall whole or whether – as supported by Bullinger and the authors – one must decide on certain issues under copyright law and one cannot cumulatively use all the feasible applicable copyright law standards (Bullinger /Czychowski, GRUR 2011, 19, 22–24). It is too simplistic for the Federal Supreme Court to refer in this respect to the CJEU’s Nintendo decision; this had not recognised the importance of the question and is not immediately relevant in this case (I ZR 25 / 15, marginal number 34 – World of Warcraft I with reference to CJEU, C-355 / 12, marginal note 23 – Nintendo / PC-Box and 9net).

The fact that the Federal Supreme Court is not consistent in this respect is also evident from its arguments with respect to the intrusions into the rights of the computer game manufacturer. It identifies the latter as duplication rights and does not quote either § 16 or § 69c (1) of the UrhG (German Copyright Act), but instead talks about a “duplication of the client software” in accordance with §§ 69c (1), 15 (1), of the UrhG (I ZR 25 / 15, marginal number 36 – World of Warcraft I). It therefore cumulatively uses general rights of use under copyright law with the special duplication right for computer programs, without differentiating which right is to be applied to which component of the computer game.

The Federal Supreme Court quite rightly makes clear in this context that the mere display on the screen of works contained in the client software does not represent independent duplication, which is completely in line with existing case law up to this point and with overwhelming opinion in the literature (I ZR 25 / 15, marginal number 38 – World of Warcraft I).

A dogmatic but fully correct position is then taken by the Federal Supreme Court as to whether there is a justification for the manufacture of automation software and the use thereof, if not in the licence agreement (cf. under Clause 3 in this respect), then from § 69d (3) of the UrhG. It outlines the scope of § 69d (3) of the UrhG, which has only been the subject of a few decisions, and states that § 69d (3) of the UrhG only covers forms of program analysis that are not connected with an intrusion on the program code (I ZR 25 / 15, marginal number 57 – World of Warcraft I). This can be readily agreed with – in particular the Federal Supreme Court makes clear that invoking § 69d (3) of the UrhG does not require access to the source code and certainly does not grant this (I ZR 25 / 15, marginal number 61 – World of Warcraft I).

The Federal Supreme Court thus goes so far as permitting duplications via § 69d (3) of the UrhG that go far beyond the actual objective of § 69d (3) of the UrhG, namely to enable interoperability. The Federal Supreme Court compares the current case with the CJEU case SAS Institute (I ZR 25 / 15, marginal number 61 – World of Warcraft I). In this case, the CJEU determined that functionalities of computer programs cannot be part of protection under copyright law. The Federal Supreme Court applies this idea: not only is the development of alternative software permitted, but also the development of additional software. This goes a long way, but appears to be correct according to the provisions of the Software Directive. These can be clearly recognised in recitals 10 and 15, to the effect that it wants to promote the interoperability and interaction between independently created computer programs. Even though the Federal Supreme Court does not mention this, the argument must be accepted.

The Federal Supreme Court also takes from this decision that, in the current case, the manufacture of automation bots in accordance with § 69d (3) of the UrhG would actually be permissible even though commercial use had been banned under the licence agreement (as general terms and conditions, although not included) (I ZR 25 / 15, marginal number 63 – World of Warcraft I). It is clear at this point that the plaintiff has achieved a pyrrhic victory, as the Federal Supreme Court is basically of the opinion that the development of bots in accordance with § 69d (3) of the UrhG is permissible – a very broad view.

This article was first published on the Kluwer Copyright Blog.

CJEU Filmspeler: Landmark ruling on streaming and preparatory acts to copyright infringements

2. July 2017/in Issue July 2017 Copyright

CJEU Filmspeler is a ground-breaking copyright decision in many ways. By qualifying the distribution of technical devices (intended to make streaming of copyright infringing content possible) as a making available of works to the public, the CJEU has once again shown that it interprets exploitation rights broadly and from an economical point of view. Furthermore, the CJEU has clarified that streaming on structurally copyright infringing websites is a copyright infringement itself. CJEU Filmspeler is a good decision for rights holders and could even become a game-changer with respect to enforcement of copyrights.

CJEU Filmspeler (ECLI:EU:C:2017:300, judgment dated 26 April 2017, Case C-527 / 15 – Stichting Brein [Filmspeler]) is a groundbreaking decision in many ways. It concerned the distribution of a multimedia player (sold as “Filmspeler”, Dutch for “film player”) in the Netherlands enabling its users to stream copyright infringing content on their TVs and the question of whether individuals streaming clearly copyright infringing content violates copyright by doing so.

Preparatory acts to copyright infringements can be copyright infringements themselves

First, the CJEU has ruled that the mere distribution of technical devices enabling the user of the technical device to stream copyright infringing content itself violates of the right of making works available to the public. This means that preparatory acts alone can constitute copyright infringement, if they are aimed at enabling copyright infringement. Also, the CJEU has confirmed earlier decisions according to which statutory copyright provisions have to be interpreted broadly and rather from an economic than from a technical or formal point of view to ensure a high level of copyright protection.

Streaming is illegal reproduction and therefore a copyright infringement

Second, the CJEU ruled that streaming of clearly copyright infringing content violates the author’s right of reproduction in his or her respective work. No legal exception for reproduction through streaming applies. By this, the priorly prevailing opinion in Germany considering mere streaming of illegal content to be legal is clearly overruled.

CJEU Filmspeler could have wide-reaching consequences on liability for copyright infringements in general

Furthermore, CJEU Filmspeler could have great influence on the general classification of acts contributing to copyright infringements. The German Federal Supreme Court (BGH) differentiates between perpetrators, (persons who directly perform the infringing act), aiders (persons willfully contributing to the infringing act) and abettors (persons abetting others to commit infringing acts) and “Stoerer” (persons causally contributing to the infringing act without doing this (necessarily) willfully), who unlike perpetrators, aiders and abettors are not liable for damages. This differentiation may be inconsistent with CJEU Filmspeler. It appears that the CJEU considers every person who is willfully (and substantially) contributing to copyright infringing acts to be a perpetrator. It remains to be seen if the German Federal Supreme Court will react to CJEU Filmspeler. Until now, the BGH has been of the opinion that the classification of persons contributing to copyright infringements as perpetrators, aiders, abettors or “Stoerer” is not regulated by EU law and can therefore freely be determined by German courts. However, this opinion seems difficult to reconcile with CJEU Filmspeler.

CJEU Filmspeler could favour website blocking through access providers

Lastly, CJEU Filmspeler may substantially affect future website blocking cases against access providers. So far, the BGH opines that it is unreasonable to require access providers to take any blocking measures if the rights holder cannot prove that he has taken sufficient actions against the operators of the structurally copyright infringing website to be blocked and the hosting provider of that website (BGH, GRUR 2016, 268 n. 82 et seq., – Stoerer-Liability of the Access Provider). This factual subsidiarity requirement of the BGH can (partly) be justified on the grounds that access providers have no contractual relationship to the perpetrators and are therefore “far away” from the infringement. The BGH did not consider copyright infringements by users through streaming in its decision.

Since streaming is a copyright violation (by reproduction) under CJEU Filmspeler, the BGH will now have to consider copyright infringement by users through streaming. This will put access providers much “closer” to infringing copyrights. Furthermore, since access providers are contractual partners of the individuals streaming, they may be infringing copyrights by simply providing internet access. Consequently, the factual subsidiarity requirement of the BGH could fall in cases against access providers or at least be limited to requiring them to prove that sufficient action has been taken to hold the operators of the structurally copyright infringing website liable.

Conclusion

By qualifying the distribution of technical devices (intended to make streaming of copyright infringing content possible) as a making available to the public, the CJEU has again shown that it interprets the making available right broadly from an economical point of view, as opposed to a less technical or formal one. Furthermore, the CJEU has clarified that streaming on structurally copyright infringing websites itself constitutes copyright infringement. Even though the decision gives answers to important questions, it also raises a number of new legal questions. In sum, however, CJEU Filmspeler can be regarded a good decision for rights holders and may even become a game-changer with respect to copyright enforcement.

Reform of copyright contract law enters into force

2. July 2017/in Issue July 2017 Copyright

On 1 March 2017, the reform of German copyright contract law took effect. The reform brings along new challenges, in particular, new claims to information and accountability as well as new provisions regarding the granting of exclusive rights. Specific changes regarding the remake right are of particular interest for the film industry.<

Why another reform?

The (previous) reform of copyright contract law in 2002 fundamentally revised German copyright law in the interests of strengthening the rights of authors. It introduced the claim for “reasonable remuneration” (§ 32 German Copyright Act, “GCA”) of authors and performing artists. In addition, the instrument of “common remuneration rules” (§ 36 GCA) was created. This has made it possible for associations representing authors and performing artists to establish agreements on appropriate branch specific adequate fees with user-associations.

From the legislature’s viewpoint, the 2002 reform failed to strengthen authors’ rights. In particular, the legislature identified a “disrupted contractual parity” as problematic. As a result, creatives were still required to partly enter into contract terms, wherein they transferred the exclusive rights to a work for an unreasonable one-time payment (“total buy-outs”). In particular, self-employed authors and performing artists lacked the necessary market and negotiating power to actually enforce their right to reasonable remuneration. Consequently, authors and performing artists were receiving unreasonably low remuneration. Against this background, the legislature sought to strengthen the protection of authors and performing artists with the current reform.

It goes without saying that the above mentioned assumptions were highly controversial during the legislative process. Publishers, producers, etc. have repeatedly pointed out that the principle of participation does not necessarily work in the creative’s favor. Authors and performing artists often prefer a (final) one-off payment immediately after they deliver their contribution rather than a participation solution in which they depend on the success or failure of production. It should, however, be noted that the copyright industries were not able to assert their objections in the legislative process.

An overview of the most important changes

The legislative reform entails an increase of legal provisions at the expense of copyright industries. To the extent that the amendments to the law were designed by the legislature as mandatory rules, they can only be waived or attenuated in favor of collective agreements within the meaning of Art. 36 GCA. This entails joint remuneration provisions between associations of creatives and users. Some industries do not have representative associations. The German Federal Court (BGH) recently decided that collective agreements with non-representative associations only have a limited scope (BGH GRUR 2016, 1296 – GVR Tageszeitung III). Thereby the tightened legal rules are not yet alterable by mutual consent in these industries. On the contrary, they are unremittingly obligatory.

New claims to information and accountability – Articles 32d, 32e of the new German Copyright Act (GCA new)

One of the main changes is the introduction of two new claims to information.

The new § 32d GCA new implements an author’s claim to information and accountability against his contractual partner. This extends to the scope of the use of the work and the income derived from it. Accordingly, an author who has licensed or assigned his right to another against payment of a fee can annually request information and accountability on the extent of the use of the work and the income and benefits derived from it.

This request for information applies to all cases of transfers and assignments of rights of use, even in the case of fixed fees. Previously, contractual partners were not required to provide information in case of a fixed remuneration, according to rulings of the German Federal Court.

Corresponding to the wording of the introduced claim, the duty to provide information and accountability refers to such information that is normally already available to the contractual partner “within the scope of the proper course of business”.

The statute provides some exceptions from the duty to provide information. For instance, authors or performing artists will not benefit from the new claim when their contribution to the respective work, production or service was minor (i.e. of “subordinate importance”). According to the statute, a contribution is “subordinate” especially “if it has little influence on the overall impression of a work”. For instance, it is not part of the representative content of a work. According to the grounds of the draft bill (decision of the 6th Committee on Legal Affairs and Consumer Protection), the concept of “subordinated contribution” does not entail a qualitative evaluation. As examples of “subordinate contributions”, the draft mentions a minor text contribution by a journalist or the appearance of extras in a film. The exact criteria of a “subordinate contribution” and when this is exceeded will have to be defined by case law. Another exemption to these claims is established for authors of computer programs (§ 69a (5) GCA new). Referring to the industry’s high demand for employees, the legislature is less worried about the contractual parity between creators and their contractual partners in the software industry than in other creative industries. Finally, the claim to information is precluded if its disclosure would be disproportionate for the contractual partner. This may be the case if the provision of the information appears unacceptable to the contracting party, if there is an opposing legal obligation, if the assertion of the claim is a misuse of rights, or if justified interests in the confidentiality are impaired.

The new claim to information in § 32d GCA new is compulsory in that deviating agreements detrimental to the interests of the author (or performing artist) can only be made within the framework of joint remuneration rules or collective agreements.

According to § 32e GCA new, third parties that substantially determine the exploitation in the licensing chain are also obliged to provide the respective information. An example of this would be broadcasting companies in the case of commissioned productions. The same applies to third parties who enter into the licensing chain in the “bestseller case” of § 32a GCA. Thus, § 32e GCA new widens the scope of those subject to these obligations to include businesses in the licensing chain that have no direct contractual relationship with the author.

Practical Note
Companies must be in a position to annually provide authors and performing artists with the relevant information and account for the extent of their use and their income. It is therefore advisable to review the internal processes for the provision of information (accounting, software, etc.) and, if necessary, to adjust these respectively.

Infringements of joint remuneration rules (§§ 36b, 36c GCA new)

Further amendments concern the instrument of common remuneration rules between associations of authors and associations of users.

Particular mention should be made of § 36b GCA new, which provides injunctive relief for violations of common remuneration rules. Accordingly, associations of authors or users can demand default against companies which do not comply with the applicable common remuneration rules. They start by filing a representative action. This action is not only open to authors’ associations which are parties to corresponding remuneration rules, but also to associations of users and individual users.

The newly created § 36c GCA new regulates the individual contractual penalties in case of an infringement of the common remuneration rules. Under this provision, the author may require his contractual partner to agree to an amendment of the contract by which the user deviates from a common remuneration rule to the detriment of the author. Thus, § 36c GCA new provides for a new claim to adjust a contract when companies deviate from the joint remuneration rules which apply to them.

The right to further exploitation after ten years (§ 40a GCA new)

The newly implemented § 40a GCA new provides the author with the possibility to exploit his work in further ways after the expiration of ten years. This rule applies to authors who have granted an exclusive right of use for a period of more than ten years against a lump sum payment. The right of the first entitled user continues for the remaining duration of use as a non-exclusive license. Therefore, he can continue with the current use but cannot continue such use on an exclusive basis. The original contractual partner must therefore accept and expect that the author can grant a third party a corresponding non-exclusive exploitation right. Thus, as of the 11th year, the exploitation of the work is no longer exclusive.

The new provision also allows contracting parties to agree to extend the exclusive rights to the entire duration of the contract at the earliest after five years. § 40a GCA new is also a compulsory provision. Differing agreements to the detriment of the copyright holder are only permissible in the form of collective remuneration rules or collective agreements.

Nevertheless, § 40a GCA new also contains some exceptions. The right to further use after ten years is not valid if the work in question is “only a subordinate contribution”, a computer program or a work of architecture. § 40a GCA new is also inapplicable to movie rights. Additionally, § 40a GCA new is also inapplicable when an artist gives consent granting rights concerning a work intended as a trademark (or other mark) or design.

Practical Note
A clause stipulating that the work created by the artist is intended to be a trademark (or other mark) or as a design must now be expressly included in contracts with brand designers, logo designers and product designers etc. Otherwise, the exclusivity ends after ten years and the author can otherwise exploit the work in question.

Changes to the remake right (§ 88 GCA new)

The reform also strengthens the position of authors in the area of film remakes. It grants the author the right to have his work re-filmed after ten years. This is a compulsory rule. Deviation is only possible in the form of an agreement based on a common remuneration rule. The new provision makes it impossible to grant unlimited rights to producers. However, it should be pointed out that the provision only refers to “real re-filming”, not to prequels or sequels. Producers can continue to enjoy exclusive rights of use for such subsequent films if the agreement is properly designed.

Remuneration of the performing artist for later known types of use (§ 79b GCA new)

§ 79b GCA new regulates the remuneration of (granted) rights of use for unknown ways of use. It complies with § 32c GCA, so that the performer is entitled to a separate reasonable remuneration if the contractual partner, who acquired the rights to unknown uses, takes up a new kind of use, if such use was unknown at the
time the contract was concluded. If the right of use is transferred to a third party,
the claim of the performing artist shall be subject to a separate reasonable remuneration against the third party as soon as the latter takes up the new type of use.

Entry into force on 1 March 2017

The new copyright contract law in principle only applies to contracts concluded after it went into force, (i.e. after 1 March 2017). Exceptions to this rule apply only for the right of recall due to non-exercise. In that case the new legal situation is applied to the old contracts, but only when circumstances arose one year after the entry into force.

Conclusion

Companies should examine their internal processes, and whether they are able to fulfill the annual claim to information now available to authors and performing artists. In addition, the new right to other exploitation after ten years (§ 40a GCA new) must be taken into account when drafting copyright licensing agreements. Where proper contractual arrangements have been reached, rights of use can be granted exclusively for more than ten years. In particular, an unlimited license, (i.e. unlimited in time), is still possible for works which are to be used as trademarks or for design when such purpose of the license is stated in the license agreement. In sum, the new copyright law brings along a number of challenges for companies using and exploiting copyrights and related rights. These challenges should be manageable by re-evaluating internal processes regarding information and accounting duties and diligently drafting new agreements.

Conference transcript of ALAI with contribution from Dr M Schaefer.

25. March 2017/in Publications Copyright

In June 2015, the Association Littéraire et Artistique Internationale (ALAI) held an international conference in Bonn on “Remuneration for the use of works: Exclusivity vs. other approaches”. Walter de Gruyter Verlag has now published the conference transcript, which contains contributions to the two conference days on 18.06. and 19.06.2015 and which illustrates issues from an international perspective. Here, Dr Martin Schafer publishes his contribution on “Possible roles for CMOs in new business models” in which he sets out and analyses various functions of collection companies in novel business models. Dr Martin Schaefer is a Member of the Board of ALAI Germany; the rights of collection companies and collection agencies are among his special fields of interest.

Conference transcript “Remuneration for the use of works”. Silke von Lewinski (publisher). Walter de Gruyter GmbH & Co KG, 2016. 475 pages (print edition). ISBN 978-3110450019.

Article by Dr. M. Schaefer published in “Musik & Ästhetik” (01/2017).

10. February 2017/in Publications Copyright

BOEHMERT & BOEHMERT partner Dr. Martin Schaefer’s article “Who has a share in the exploitation of music on the internet? Copyright as an expression of ‘attribution of gain’” has been published in the journal “Musik & Ästhetik” (issue 81, January 2017, pages 100 et seq.). In his article, Dr. Schaefer uses the EU’s current draft directive on copyright in the digital single market as an opportunity to discuss the fact that platforms such as YouTube are used at two levels: “at user level by uploading and at platform level by marketing of the aggregated contents. There is still some work to do before the EU draft directive makes good on the promise of its heading for Article 13 ‘Certain uses of protected content by online services’”, writes Schaefer.

The technical journal “Musik & Ästhetik” is published by the Klett Cotta Verlag and examines the ranges of topics that make up “music” from technical, artistic, philosophical, cultural and political viewpoints. This issue and individual articles can be obtained from here.

What happens now after the German Federal Constitutional Court’s Metall-auf-Metall Decision?

1. December 2016/in Issue December 2016 Copyright

Sampling technology has become an integral part of today’s music production. It is not unusual in recording studios for artists and producers to recall sounds from other artist’s productions which they particularly liked, copy them from the original recordings and use them in their own productions via sampling software. The borrowed sound is used as a musical instrument. Often the particular fragment is so characteristic that it is meant to be recognised. A famous example is the production of “Hung Up” by Madonna who sampled the characteristic beginning of “Gimme! Gimme! Gimme” from ABBA – under licence from ABBA – as a leitmotif.

This decision of the Federal Constitutional Court dealt with a non-licensed sample, namely the copying of a two-second rhythm sequence from the recording “Metall auf Metall” by the band “Kraftwerk” which was played on a loop in two versions of the work “Nur mir” by Sabrina Setlur. The plaintiffs in the main proceedings were the two founders of the band “Kraftwerk”, pioneers of electronic music, and the case only concerned the neighbouring rights in sound recordings. In the “Metall auf Metall” decisions I and II (GRUR 2009, 403 and GRUR 2013, 614) the Federal Supreme Court of Justice held that the unauthorised use was not lawful.

The Federal Constitutional Court has now reversed these decisions. The standards which are specific to art required by Art. 5 Para. 3 Sec. 1 of the Federal Constitution stipulate that the use of an excerpt of copyright-protected subject matter can be recognised as a means of artistic expression and artistic design. If there is a conflict between artistic freedom on the one hand and an infringement of copyright or neighbouring rights on the other – an infringement which only slightly impairs the exploitation of those rights – the rightholder’s interest in exploiting those rights may have to give way to artistic freedom.

However, the verdict of the court is not the end of the matter. Although the Federal Constitutional Court can reverse laws or court decisions, it cannot enact laws or rewrite decisions.

One thing is certain: the contested Federal Court of Justice’s decisions on the “Metall-auf-Metall” case have been repealed. The Federal Court of Justice must now redetermine the case and navigate a middle course between the two sides which the Federal Constitutional Court has established. This corridor is still relatively wide. The Federal Constitutional Court literally said: “the permissibility of a free use of sound recordings for artistic purposes is not synonymous with the general permissibility of consent-free and free-of-charge sampling. A licensing requirement remains in cases of non-artistic use. Furthermore, Art. 24 Para. 1 German Copyright Act only allows a free use if a sufficient distance is kept to the extracted sequence or to the original recording.”

In fact, the Federal Constitutional Court describes two possibilities in its decision whereby the Federal Court of Justice could strike the requisite balance between artistic freedom on one hand and the rights of ownership of the recording companies on the other:

On the one hand, the Federal Supreme Court could carry on as it started and, within the framework of the right of “free use” (which is regulated in Art. 24 German Copyright Act), create the possibility of using samples without the consent of the recording company if to do so is necessary in the interest of artistic freedom. At any rate, in a case like this an artist would not be obliged to first try to recreate the sound himself (as the Federal Supreme Court had held in the contested decisions). Furthermore, he would not have to obtain a licence from the rightholder.
The Federal Supreme Court of Justice could alternatively start from a completely different point, in that it defined the scope of the neighbouring right of the producer of sound recordings more narrowly than it has been doing up to now, thus rendering the use of small fragments no longer an infringement of the right. In this case, however, and the Federal Constitutional Court has left no room for doubt, the Federal Court of Justice would have to call upon the European Court of Justice, as the scope of neighbouring copyright of producers of sound recordings is a subject matter harmonised throughout Europe.

One consideration which had already taken a prominent position in the press release of the Federal Constitutional Court is interesting: the court repeatedly emphasises that – even if the producer from whose recording the sample originates does not suffer a decline in sales because of the sampling – the legislator is not “barred at the outset” from linking the right to free use with a duty to pay a reasonable fee. Here, according to the Federal Constitutional Court, he could accommodate artistic freedom for example via “a subsequent obligation to pay a remuneration linked to the commercial success of a new work”.

It will certainly be worth keeping an eye on future developments in this case.

Interview in the journal Neue Juristische Wochenschrift (NJW) – Germany’s publishers take on Google

1. December 2016/in Issue December 2016 Copyright

It seems they will not be friends, Germany’s publishers and Google. In February, they met before the Regional Court of Berlin. Market abuse is the accusation made by 41 publishers against the search engine operator. At the end of the day, the publishers were on the losing side – and that despite the legislator equipping them with an ancillary copyright three years ago. The question is, however: how effective is that right if they are up against an enormously powerful search engine operator which is virtually able to dictate its conditions to publishers for the use of their journalistic content? That is what NJW wanted to know from Prof. Dr. Jan Bernd Nordemann, attorney at law specialising in, amongst other fields, copyright law and media law, who without representing publishers in court wrote an expert opinion for the small and mediumsized publishers involved in the proceedings before the Regional Court of Berlin.

NJW: Prof. Nordemann, press publishers have had an ancillary copyright for almost three years now. What does this right cover?

Nordemann: The ancillary copyright affords press publishers the exclusive right “to decide how, when and by whom the press content they produce is made available to the public”. This concerns primarily a use of press content on the internet. One group which the legislator had in mind in this respect was aggregators of news content, especially internet search engines. Internet search engines regularly make press content available to the public on the internet in that they display press content in their search results, at least in the form of extracts or thumbnails. The only exceptions are where “individual words” or “the smallest text extracts” are used, in which case the ancillary copyright would not apply. What precisely that means is a topic of much debate amongst us lawyers. The Board of Arbitration at the German Patent and Trade Mark Office was of the opinion, in a first landmark decision in September 2015, that the relevant threshold was seven words. This threshold would mean, for example, that Google’s search results would be covered by the ancillary copyright and Google would thus require authorisation to use the respective content, in particular insofar as the normal display of text extracts and thumbnails in the list of search results returned by Google are concerned.

NJW: Why do publishers need an additional protection right in addition to copyright?

Nordemann: Digitalisation has led to massive upheaval in the media industry. Press publishers are a good example of this. In the digital world, they have had to adapt their traditional business model. New opportunities for using, exploiting and monetising press content have emerged. When introducing the ancillary copyright, the German legislator wanted to protect press publishers against systematic access to publishers’ output free of charge, especially by search engines. Copyright would possibly not quite suffice in this context: according to the opinion of the Board of Arbitration, the ancillary copyright ensures, for example, that all press content which does not fall below the “seven word threshold” is protected. In the case of copyright, ascertaining what is protected is much more complex: a clear, quantitative threshold cannot be used as a basis, instead a distinction is drawn along qualitative lines as per Sec. 2 (2) German Copyright Act. Only personal intellectual creations are protected as text under copyright law. The CJEU once stated, in its Infopaq decision, that even just eleven words could be protected by copyright. However, that is only a “could” decision, which is further dependent on whether those eleven words also constitute a personal intellectual creation. The ancillary copyright has therefore created a much more reliable threshold above which any relevant use is said to begin. This in turn means that the ancillary copyright lends itself much more readily to mass monetisation, for example through a collecting society.

NJW: Nevertheless, Germany’s publishers recently lost a case against Google which concerned, amongst other things, precisely this ancillary copyright. What was that case about exactly?

Nordemann: The situation regarding the assertion of ancillary copyrights by press publishers is somewhat complicated. Many press publishers placed their rights with the collecting society, VG Media. VG Media set tariffs for the use of ancillary copyrights in the area of digital media, in particular by search engines. Those tariffs were then checked by the board of arbitration. The relevant decision is the one I mentioned earlier. As Google correctly assumed – as the board of arbitration later confirmed – that continuing to display search results would constitute a relevant use of the ancillary copyright and that consequently payment would be due to VG Media, Google approached the press publishers as the original rightholders. Google first demanded that the press publishers who had placed their rights with VG Media declare that they consented to their content being included in Google News free of charge (so-called “opt-in system level 1”). However, Google apparently did not pursue that system any further. Instead, Google later sent additional letters to the VG Media press publishers demanding that they declare their consent to snippets and preview images being made available to the public in Google search results for free. If consent was not forthcoming, Google announced, the press publishers’ content would not be completely removed from the search results but that they would at least completely refrain from displaying snippets and preview images (so-called “opt-in system level 2”), whilst the content of other press publishers would continue to be displayed, as before, with snippets and preview images in the search results. Faced with a potentially serious loss of traffic, all press publishers for whom VG Media administers the respective ancillary copyrights ultimately granted consent not only to “opt-in system level 1” but also to “opt-in system level 2”.

NJW: Why did the press publishers choose to take the antitrust law route?

Nordemann: In my opinion, that is indeed the correct legal remedy. Google was only able to insist that the publishers grant consent free of charge to the use of their ancillary copyrights because Google holds a dominant market position. In the case of an abuse of a dominant market position, however, antitrust law provides for claims, in particular claims for injunctive relief as are now being asserted in court proceedings. I cannot currently see any other grounds for action. In particular, search engines are not subject to any special regulation of market power under copyright law.

NJW: Does this not constitute somewhat contradictory behaviour on the part of the publishers as they first granted Google the right to use their content free of charge before then attempting to prohibit that company from abusing its market power by way of an action for injunctive relief?

Nordemann: I do not see that as being a contradiction. Google accounts for over 90% of all searches in Germany, thus it clearly has a dominant market position in respect of searches in Germany. A dominant market position is assumed, under the German Act Against Restraints of Competition (Sec. 18 (4) GWB) from as little as 40% market share – Google has over twice that. In fact, this can be described as a virtual monopoly. The virtual monopoly in search then also provides a dominant market position on the other affected markets, in particular on the relevant market for booking search related advertising and on the so-called indexing market, namely the market on which Google requests the listing of websites for its search engine. It is on this indexing market that Google encounters the press publishers who grant Google consent to use.

If they now have an unavoidable market partner in Google and that partner threatens them with restricted listing, in my opinion it is immediately understandable that the publishers would acquiesce to that request. That does not mean, however, that the request is lawful. It is precisely this which can be examined under antitrust law.

NJW: The court did not see any abuse of market position on the part of Google. Are you convinced?

Nordemann: The Regional Court did indeed assume a prevailing interest of Google in continuing to operate its business model in which there is no space for paying for the use of press content. According to the court, the equilibrium of the balanced system within which search engines operate would be disrupted by any obligation to pay remuneration to press publishers for indexing press content.

That may seem plausible at first glance, however it is not convincing upon further scrutiny. Google’s interest in continuing its business model of free-of-charge indexing of websites has now been pierced by the decision of the legislator only to allow that indexing generally with the consent of the proprietor of the ancillary copyright. This general decision on the part of the legislator must be afforded considerable weight when ascertaining whether an abuse of market power has occurred. No matter how controversial the ancillary copyright was politically and what one’s own political opinion of it is: the German legislator introduced the new right with the clear objective of enabling press publishers to monetise search machine use. With its introduction of the ancillary copyright, the German legislator thus specifically expressed a clear rejection of the free-of-charge display of press content in search engines.

In my opinion, one should not be allowed to deny Google the option of taking the business decision not to display any press content in search results or to reduce what is displayed so that it no longer falls within the ancillary copyright. In my opinion, however, Google cannot be permitted simply to force the publishers to grant consent to use free of charge. That is not in the interests of competition, namely keeping markets open, a factor which is always a key criteria considered when ascertaining an abuse of market power. By forcing publishers to grant consent free of charge, Google denies its competitors the chance of licensing the ancillary copyright and using it to its fullest extent in order to obtain a competitive advantage over Google. In fact, this consent free of charge even represents a competitive disadvantage for competing search engines because Google’s competitors do not possess enough market power to be able to demand free-of-charge consent from the publishers. In addition, it must be said in respect of the abuse of exploitation, that absolute rights generally may not be ceded free of charge.

NJW: What does that say about the significance of ancillary copyright?

Nordemann: The case before the Regional Court of Berlin shows that the German legislator has generally achieved its goal of creating an absolute right for press publishers which enables them to make the use of press content in the form of result lists or thumbnails by search engines monetisable. The fact that Google has been able to avoid this monetisation for now can only be attributed to the special market power which Google holds. In my opinion, antitrust law cannot allow the situation to continue as it is. Google’s current practice will also lead – as already mentioned – to an impediment of competing search engines.

NJW: Where do we go from here?

Nordemann: The case is going before the antitrust senate of the Court of Appeal in Berlin (“Kammergericht”). It is expected that the losing party will then take the case to the German Federal Court of Justice. The proceedings before the Board of Arbitration already mentioned will also proceed through the various legal stages. The ancillary copyright will have to prove itself. If one wants to take the legislator’s intention seriously, the result will likely be that Google will either pay the same fair amount as competing search engines or will no longer be able to use press content in a manner which has an ancillary copyright relevance. We can certainly expect an interesting few years ahead of us in clarifying the situation.