法律英语Newcopyrightcontractlegislation.doc

European Intellectual Property Review
2003
New copyright contract legislation in Germany: rules on equitable remuneration provide "just rewards" to authors and performers
Karsten Gutsche
© 2012 Sweet & Maxwell and its Contributors
Subject: Intellectual property
Keywords: Authors; Copyright; Germany; Licensing; Royalties
Legislation: Reinforcement of the Contractual Position of Authors and Artists Act 2002 (Germany)  
Copyright Act 1965 
*366 In July 2002 the German Copyright Act was amended when the Act on Strengthening the Contractual Position of Authors and Performers1 came into effect. The new law was designed to balance the contractual relationship in favour of authors and performers with regard to their licensees. It secures equitable returns accruing from exploitation of their works and performances by protecting them against unfair licensing conditions. The extent to which the legislative amendments implement the long-awaited copyright contract law in Germany will be discussed below on the basis of the new key provisions. First, however, the background to the legislation will be detailed and the legislative concept explained.
Background
The records of the legislative history of the German Copyright Act of 1965 verify that already at that time a law regulating copyright contracts was called for. As contract law for authors was considered inadequate, legislation covering all copyright contracts was required to be enacted in the near future.2 Since then requests from lobbyists of authors' associations and from copyright experts for this legislative task to be tackled went unheeded.3 More than three decades passed before the Federal Ministry of Justice finally confronted the issue after the change in federal government in 1998. Once they took account of the various opinions of the pressure groups of authors' associations and the media industries' at a public hearing in February 2000, the ministry commissioned five renowned copyright experts to shape a draft copyright contract law. The most important demands from the experts' point of view were to grant authors equitable remuneration and to make authors' associations and the media industries agree as to what is “equitable” in each individual case.4
The copyright experts' draft provoked heated debate. Lobbyists on both sides penned voluminous comments and referred to opinions in order to strengthen their claims and demands during the subsequent legislative procedure.5 Finally, the Federal Government presented its draft legislation after more than one year of preparatory work in the summer of 2001.6 In keeping with the experts' draft, authors were to be permitted to terminate copyright agreements after a period of 30 years.7 It also contained a statutory claim to equitableremuneration coupled with an obligation, to be imposed on authors' and media industries' associations, to specify the level of “equitable” reward by establishing common standards. The copyright industry then became anxious that its members would be exposed to countless compensation claims made by authors and performers as the governmental draft did not incorporate clear criteria for “equitable” benefit. They strongly attacked the proposals and even addressed the general public through a large-scale advertising campaign to promote their case.
Despite the expression of these numerous reservations, the Federal Government was determined to finalise the legislative revision before the end of the parliamentary term. Thus the measures of reform needed to be less drastic, with the result that redrafting continued right up until the last session of the legal committee in charge on January 23, 2002.8 The claim to equitable remuneration was toned down and could no longer be asserted against just any user of a work, but only against the author's contracting partners. In addition, “equitable”remuneration was defined. Therefore the outcome represents a compromise between the rights appertaining to authors and the interests of the media industries. Consequently the Lower House of the Federal Parliament (“Deutscher Bundestag”) was able to pass the new copyright contract legislation on January 25, 2002.9 It entered into force on July 1, 2002, having been passed by the Upper House of the Federal Parliament (“Deutscher Bundesrat”) without further debate.10
*367 Concept of the Legislation
Previously the German Copyright Act comprised only a small number of mandatory provisions on copyright contracts. One of them is the rule that the grant of exploitation rights for unknown types of use and the relevant obligations are invalid.11 Besides, the unwaivable right to additional remuneration when the agreed rate was grossly disproportionate to the income from use of the work,12 the revocation right in case of nonexercise13 or by reason of changed conviction,14 should also be mentioned here. In the light of this situation, the legislative reform aimed to strengthen the legal position of authors and performers, who are for the most part the weaker contracting party, vis-à-vis those enterprises they entrust with the exploitation of their works. This structural imbalance to the detriment of creators was to be rectified.
The concept of the copyright contract legislation recognised that freelance authors and performers are independent from the legal point of view. In reality, however, what they most resemble are salaried employees. Since they are not protected by a statutory remuneration regime in comparison with other independent professions, they are usually exposed to the unequal forces at play in business life. At times this imbalance resulted in agreements for non-recurrent payments under buy-out contracts which were often unreasonable with regard to the tremendous exploitation opportunities afforded by digitalisation, multimedia and the internet.15
The prime goal of the legislative revision was to safeguard effectively the legal position of authors and performers regarding their remuneration interests ensuing from the exploitation of their works. This objective itself implements the principle anchored in Art.14(1) of the German Constitution (“Grundgesetz ”). Accordingly, copyright--in the sense of an author's right--based on the principle of a creator, confers extensive rights of participation and exploitation to the authors. Consequently they are entitled to equitable remuneration for each and every use of their work, irrespective of yields generated by such use.16 Since the commercial success of copyrighted works and performances is often unpredictable, the legislature wanted to enable authors and performers to participate equitably in the proceeds and benefits deriving from exploitation of their works and performances respectively. Therefore provisions were introduced to correct initially inequitable remuneration and to redress inequities that ensue during the course of use of a work. Furthermore, the legislation ensures by requiring common provisions on remuneration between authors and their licensees, that standards for equitable reward will be determined for the future.
The motivation for and focus of copyright contract legislation is to establish a statutory and thus enforceable claim to equitable remuneration for all creators. The new provisions are confined to contractual relations between authors and performers on the one hand, and the users of works on the other. This law does not extend to rights management agreements with collecting societies, or to licence agreements concluded between two exploiting enterprises.17
Principle of Participation
The legislation first supplements the general clause of s.11 of the German Copyright Act. Accordingly copyright protects authors with respect to their intellectual and personal relationship to their work and with regard to its utilisation. The new second sentence states that copyright also serves to secure an “equitable remuneration” for utilisation of their work.18 The addition emphasises to the predominant role attributed to the principle of participation, which has now become decisive when standard terms and conditions in copyright contracts are reviewed. This principle must be observed as a fundamental concept in German copyright law and always has to be taken into account when contracts are interpreted.19 At the same time the purpose-of-grant theory20anchored in German copyright law is a further crucial criterion for ascertaining whether the balance between performance and consideration is equitable. In future we may expect a growing number of court proceedings for review of the standard terms and conditions in licence agreements, in which increased emphasis will be placed on the general clause in s.307, German Civil Code (“Bürgerliches Gesetzbuch ”), and on the prohibition of surprise clauses set out in s.305c of that Code.21
Claim to Equitable Remuneration
Section 32(1) of the German Copyright Act secures the claim to equitable remuneration on three levels. Initially, the benefit agreed by contract takes precedence over the claim to remuneration.22 In those rare cases in which no agreement on compensation was reached, an equitable remuneration is deemed to have been negotiated.23 Where a licence contract contains a rate which, however, does not provide for equitableremuneration, authors have a corrective claim for amendment of the deal.24 They may then require their licensee to assent to the contractual change in favour of reward at an equitable level.
Claim to contractual amendment
The claim to contractual amendment set forth in s.32(1), third sentence, German Copyright Act, provides authors with a contractual claim to equitable *368 remuneration. It is exclusively directed towards the contracting partner--but not against third party licensees. The aim is to close the gap between the rate as agreed and equitable remuneration. The licence agreement does not become invalid. It rather grants a shortchanged author with a supplementary claim for assent to the contractual amendment to ensure equitable compensation. This corrective claim covers the differential amount between the contractual reward andequitable remuneration. Yet should the negotiated recompense prove to be equitable, the claim lapses.25
The corrective claim is primarily of benefit to medium and long-term uses since it guarantees equitableremuneration for creators throughout the entire term of their contract. They can immediately sue for payment of the equitable remuneration to the extent that claims for payment have become due based on inappropriate reward.26 Since the date on which the contract was concluded is crucial to reviewing the equity of a remuneration, the corrective claim can only be asserted once during the term of a given contract.
The claim to equitable remuneration is well protected and cannot be waived.27 For example, a contractual term is considered null and void which restricts this claim to the detriment of the author. Nor can the claim be undermined by a transaction for the purpose of evading it since the licence deal remains valid.28 It is important to note, however, that the corrective claim for contractual amendment is not applicable to remuneration agreed on in collective bargaining agreements.29 The legislative history refers to the fact that their parties have sufficient negotiating power to guarantee fairly negotiated contractual terms.30
Equity of the remuneration
During the legislative procedure fierce disputes ensued as to the precise meaning of the term “equitable”remuneration. In order to end the controversy, finally a presumption and a legal definition were incorporated for the sake of clarification.
Presumption
According to s.32(2), first sentence, German Copyright Act, there is an irrefutable presumption that compensation determined by the common remuneration standards31 is equitable. Where a certain rate is provided for recompense, the amount will be deemed equitable if it lies within the defined scope.32 This presumption applies irrespective of whether or not the relevant author or exploiting enterprise took part--indirectly as a member of an interest association--in drawing up the provision on remuneration. Yet it appears that there is a breach against freedom of contract where at least one contracting partner is not a member of an association or where several associations consider themselves responsible for certain types of works and set up competing provisions. In order to overcome these legal uncertainties, the parties have to agree expressly or by implication on an existing remuneration standard.33
Legal definition
Unless the contracting parties have agreed on a common remuneration clause, or in the absence of such a rule,equitable remuneration has to be determined on the basis of the legal definition set out in s.32(2), second sentence, German Copyright Act. The definition turns on what is customary and fair in business when viewed objectively ex ante. This means that the reward is equitable “if it conforms at the time of contracting to what is regarded as customary and fair in business having regard to the type and scope of the permitted uses, and in particular their length and timing, as well as to all other circumstances”. Hence equity is no longer an abstract term but the description of the usual market price, a provable fact.34
It is first necessary to establish the amount of remuneration customary in the relevant area of business at the time the contract was concluded. In this respect, common practices cannot be the sole determining factor, since they are based on the financial superiority of the exploiting enterprises. If, for example, insufficient compensation has become the common use, this does not indicate that it will be deemed equitable. The further factor of “fairness” is to assist in correcting bad practices or obvious under-payment in certain areas of the media industries. In such cases the court has to adjust the value of the ordinary fees paid, being guided in its decision by the equally important interests of authors and performers.35 However, where there is no customary use within the area of business or if the practice is not fair, then the equitable remuneration will be determined according to reasonably exercised discretion on the basis of the aforesaid criteria. In this respect types of works and use in other fields as well as the reward paid there according to fair practices, can serve as comparative standards.36
Retroactive effect of the corrective claim
The claim to equitable remuneration does not only apply to deals concluded after this copyright contract legislation entered into force. In order to enable authors and performers to benefit from the revision as quickly as possible, the claim was originally to apply to contracts concluded within the last 20 years.37 However, following vituperative criticism from the media industries, the only viable solution was to provide for very restricted, pseudo-