1. Conference on Extended Collective Licensing organized by the World Intellectual Property Organization (WIPO) in co-peration with the Ministry of Culture and National Heritage of Poland Warsaw, March 16-17, 2016 EXTENDED COLLECTIVE MANAGEMENT UNDER THE INTERNATIONAL TREATIES AND THE E.U. DIRECTIVES Dr. Mihály Ficsor, Member of the Board and Hon. President, Hungarian Copyright Experts Council, former Assistant Director General of WIPO

2. Outline  Not to lose sight of: the raison d'être and key functions of collective management.  The role of governments under treaty obligations.  The objectives and nature of WIPO activities.  The role of governments under the legislative framework of the EU.  Voluntary, mandatory and extended collective management.  One organization (de facto or de iure monopoly) or more – to manage the same right of the same category of rightholders?  Why the EU Directive on Services is not (and should not be) applicable for collective management.  Special conditions of, and rules on, online licensing of music.  The number of CMOs and the application of mandatory and extended collective management. M. Ficsor, Warsaw, March 16-17, 20162

3. References in the presentation (1) M. Ficsor, Warsaw, March 16-17, 20163

4. References in the presentation (2) M. Ficsor, Warsaw, March 16-17, 20164

5. References in the presentation (3) M. Ficsor, Warsaw, March 16-17, 20165 I

6. References in the presentation (4) M. Ficsor, Warsaw, March 16-17, 20166

7. Raison d'être of collective management  Collective negotiation with users  Beaumarchais ; 1777; SACD  Professional forum; representation of authors’ interests  Balzac, Dumas, Victor Hugo, 1837, SGDL  Full collective management of rights  Henrion, Parizot, Bourget, 1847-1850, SACEM 7M. Ficsor, Warsaw, March 16-17, 2016

8. Main functions of CMOs  Negotiations with users on remuneration and other licensing conditions  Setting and publishing tariffs  Monitoring of uses  Enforcement of rights  Collection of remuneration  Distribution of remuneration ______________________________________________  Professional representation of members’ interests  Promotion of creativity  Legal and social assistance for members 8M. Ficsor, Warsaw, March 16-17, 2016

9. Main fields of collective management  Authors’ musical „performing” rights  Authors’ musical „mechanical” right  Performers’ and producers of phonograms’ right to single equitable remuneration concerning broadcasting and communication to the public of phonograms published for commercial purposes  Interactive right of making available to the public in musical works and concerning the rights of performers  Cable retransmission right  Public performance right in dramatic works  Reprographic reproduction right  Right to remuneration for private copying  Authors’ and performers’ „residual” right to remuneration after the transfer of their rental right to producers  Resale rights (droit de suite) 9M. Ficsor, Warsaw, March 16-17, 2016

10. Main forms of collective management  Fully fledged and partial  partial: „performing” rights of dramatic works, remuneration rights.  Voluntary, extended and mandatory (obligatory).  Independent (separate) and „coalitions”  coalitions: right to single remuneration of performers and producers of phonograms; remuneration rights for public performance, cable retransmission rights.  National and transborder  transborder: AGICOA  transborder: CELAS, Armonia, etc. 10M. Ficsor, Warsaw, March 16-17, 2016

11. Governments, treaty obligations and collective management  Article 36 of the Berne Convention „(1) Any country party to this Convention undertakes to adopt, in accordance with its constitution, the measures necessary to ensure the application of this Convention. (2) It is understood that, at the time a country becomes bound by this Convention, it will be in a position under its domestic law to give effect to the provisions of this Convention.”  Similar provisions in other treaties on copyright and related rights.  Certain rights provided in the treaties can only be applied appropriately through collective management.  This is supposed to determine the attitude of governments concerning the establishment (authorization/accreditation/registration), and the supervision of the operation, of CMOs. M. Ficsor, Warsaw, March 16-17, 201611

12. WIPO’s activities and collective management (1)  WIPO, from the second part of the 1980th devoted growing attention to collective management of copyright and related rights.  Three main objectives:  in view of the ever broader application of collective management and its growing importance for the exercise and enforcement of rights, determining the conditions to be fulfilled under the international treaties;  advising governments and legislators on the regulation of establishment and operation of CMOs;  „institution building”; assisting developing and „transition” countries to establish and develop their collective management systems. M. Ficsor, Warsaw, March 16-17, 201612

13. WIPO’s activities and collective management (2)  In the second part of 1980s, a number of studies, articles, meetings and model provisions.  First WIPO book with 19 summary recommendations: „Collective administration of copyright and neighboring rights”, WIPO publication No. 688 (E), 1990.  After the adoption of the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT) in December 1996: „WIPO International Forum on the Exercise and Management of Copyright and Neighboring Rights in the Face of Challenges of Digital Technology” organized in Seville, Spain in May 1997 (WIPO publication 756 (E), 1998). M. Ficsor, Warsaw, March 16-17, 201613

14. WIPO’s activities and collective management (3)  Second WIPO book with 26 summary recommendations: „Collective management of copyright and related rights”, WIPO publication No. 855 (E), 2002.  Intensive „institution building” projects for developing and „transition” countries.  WIPO’s Tag of Excellence project.  Proposals to include collective management in the future agenda of the WIPO Standing Committee on Copyright and Related Rights (SCCR). M. Ficsor, Warsaw, March 16-17, 201614

15. EU directives on collective management (1)  The EU now has got a directive containing comprehensive rules on the role of the governments of Member States concerning the establishment and operation of collective management systems: DIRECTIVE 2014/26/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 26 February 2014 on collective management of copyright and related rights and multi- territorial licensing of rights in musical works for online use in the internal market (hereinafter: Collective Manegement Directive).  However, as presented below, there are some other older EU directives which also include provisions on collective management (inter alia, on such issues – quite relevant from the viewpoint of establishment of CMOs – as mandatory and extended collective management). M. Ficsor, Warsaw, March 16-17, 201615

16. EU directives on collective management (2)  The objectives of the EU directives in respect of collective management are partly the same as those reflected in WIPO publications: to guarantee that the establishment and operation of CMOs are in accordance with the treaty obligations of the Union and its Member States.  Beyond this, the objectives of the directives also extend to:  harmonization of the copyright and related rights legislation of Member States – in accordance with the three basic principles (conferral, subsidiarity and proportionality) – necessary for due operation of the internal market and the application of the four freedoms (free movement of people, goods, services and capital);  establishing adequate conditions for healthy competition; and  removing any unjustified obstacles to due functioning of the internal market. M. Ficsor, Warsaw, March 16-17, 201616

17. General provisions in EU Directives on mandatory and extended collective management (1) Recital (12) of the Collective Management Directive: „(12) This Directive, while applying to all collective management organisations, with the exception of Title III, which applies only to collective management organi­sations managing authors’ rights in musical works for online use on a multi-territorial basis, does not interfere with arrangements concerning the management of rights in the Member States such as individual management, the extended effect of an agreement between a representative collective management organisation and a user, i.e. extended collective licensing, mandatory collective management, legal presumptions of representation and transfer of rights to collective management organisations.” M. Ficsor, Warsaw, March 16-17, 201617

18. General provisions in EU Directives on mandatory and extended collective management (2) Recital (18) of the Information Society (Copyright) Directive (Directive 2001/29/EC): „(18) This Directive is without prejudice to the arrangements in the Member States concerning the management of rights such as extended collective licences.” Recital (24) of the Orphan Works Directive (Directive 2012/28/EU): „(24)This Directive is without prejudice to the arrangements in the Member States concerning the management of rights such as extended collective licences, legal presumptions of representation or transfer, collective management or similar arrangements or a combination of them, including for mass digitisation.” M. Ficsor, Warsaw, March 16-17, 201618

19. Voluntary collective management Principles in the Conclusions chapter of the WIPO book on CMOs: „(1) Collective management… of copyright and related rights is justified where individual exercise of such rights – due to the number and other circumstances of uses – is impossible or, at least, highly impracticable.” „(4) As regards the choice of rights owners between individual exercise and collective management of rights, their freedom of association should be respected. Collective management management should not be made obligatory in respect of exclusive rights which, under the international norms on the protection of copyright and related rights, must not be restricted to a mere right to remuneration, and, in the case of which individual exercise is possible.” M. Ficsor, Warsaw, March 16-17, 201619

20. Mandatory collective management (1)  In the case of mere rights to remuneration, mandatory collective management is a normal way of exercising rights (there is no need for authorization, just the remuneration is to be collected and distributed).  In the case of an exclusive right – where the owners of rights have the right to authorize or prohibit the acts covered by such rights and to determine the conditions of authorization – mandatory collective management is a limitation of such a right. 20M. Ficsor, Warsaw, March 16-17, 2016

21. Mandatory collective management (2)  (i) Is it determining/imposing a condition if somebody is in the position of doing something but it is provided in the law that he can only do so in a certain way?  (ii) Is it determining/imposing a condition if somebody owns something but it is provided in the law that he can only use it in a certain manner?  (iii) Is it determining/imposing a condition if somebody is granted a right but it is provided in the law that he can only exercise it through a certain system?  The answers are obviously affirmative to these questions. 21M. Ficsor, Warsaw, March 16-17, 2016

22. Mandatory collective management (3) Article 11bis(2) of the Berne Convention: “It shall be a matter for legislation in the countries of the Union to determine the conditions under which the rights mentioned in the preceding paragraph may be exercised, but these conditions shall apply only in the countries where they have been prescribed. They shall not in any circumstances be prejudicial to the moral rights of the author, nor to his right to obtain equitable remuneration which, in the absence of agreement, shall be fixed by competent authority.”  Under the “preceding paragraph – paragraph (1) of the same Article – the exclusive right of authorizing the broadcasting and certain other related acts. 22M. Ficsor, Warsaw, March 16-17, 2016

23. Mandatory collective management (4) Article 13(1) of the Berne Convention: “Each country of the Union may impose for itself reservations and conditions on the exclusive right granted to the author of a musical work and to the author of any words, the recording of which together with the musical work has already been authorized by the latter, to authorize the sound recording of that musical work, together with such words, if any; but all such reservations and conditions shall apply only in the countries which have imposed them and shall not, in any circumstances, be prejudicial to the rights of these authors to obtain equitable remuneration which, in the absence of agreement, shall be fixed by competent authority.” 23M. Ficsor, Warsaw, March 16-17, 2016

24. Mandatory collective management (5)  The a contrario principle of interpretation of treaties: If a treaty has the same provisions on a, b, c, d, e, f, g and h, and only provides for an exception concerning a and b, the exception obviously is not applicable concerning c, d, e, f, g and h.  Consequently, where an international treaty (Berne and Rome Conventions, TRIPS Agreement, WIPO „Internet Treaties” (WCT, WPPT)) provides for exclusive rights and allows determining/imposing conditions (compulsory licenses, mandatory collective management) for the exercise of such rights only in two cases, in the other cases it is not allowed to determine/impose conditions. 24M. Ficsor, Warsaw, March 16-17, 2016

25. Mandatory collective management (6) Mandatory collective management under the EU Directives:  The Rental, Lending and Related Rights Directive on the „unwaivable right to remuneration” for rental in favor of authors and performers when they transfer their exclusive right of rental to producers:  Article 4(3): „The administration of this right to obtain an equitable remuneration may be entrusted to collecting societies representing authors or performers.”  Article 4(4): “Member States may regulate whether and to what extent administration by collecting societies of the right to obtain an equitable remuneration may be imposed…”  „May regulate”: a permission (a contrario !)  This is in accordance with the international norms, since it does not concern the exercise of exclusive rights itself directly. 25M. Ficsor, Warsaw, March 16-17, 2016

26. Mandatory collective management (7) Mandatory collective management under the EU Directives:  Satellite and Cable Directive:  Article 9(1): “Member States shall ensure that the right of copyright owners and holders of related rights to grant or refuse authorization to a cable operator for a cable retransmission may be exercised only through a collecting society.”  This is in accordance with the international norms, due to Article 11bis(2) of the Berne Convention. 26M. Ficsor, Warsaw, March 16-17, 2016

27. Mandatory collective management (8) Mandatory collective management under the EU Directives:  Resale Right Directive:  Article 6(2): “Member States may provide for compulsory or optional collective management of the royalty provided for under Article 1.”  „May provide…”: a permission (a contrario!)  This is in accordance with the international norms, since both the Directive and the underlining provision of the Berne Convention (Article 14ter) only provides for a right to remuneration. 27M. Ficsor, Warsaw, March 16-17, 2016

28. Extended collective management (1)  Extended collective management is based the existence on voluntary collective management. The effect of licenses granted by the collective management organization on behalf of the owners of rights represented by it is extended by law also to those who are not represented.  In the case of exclusive rights, extended collective management is in accordance with the international norms  if collective management is the normal way of exercising the right concerned;  if the repertoire of the organization is sufficiently representative; and  if the owners of rights may „opt out” (leave the collective system) under reasonable conditions. 28M. Ficsor, Warsaw, March 16-17, 2016

29. Extended collective management (2) An example for extended collective management under the acqui communautaire: Satellite and Cable Directive:  Article 3(2): “A Member State may provide that a collective agreement between a collecting society and a broadcasting organization concerning a given category of works may be extended to rightholders of the same category who are not represented by the collecting society, provided that: – the communication to the public by satellite simulcasts a terrestrial broadcast by the same broadcaster, and – the unrepresented rightholder shall, at any time, have the possibility of excluding the extension of the collective agreement to his works and of exercising his rights either individually or collectively.”  Article 3(3): “Paragraph 2 shall not apply to cinematographic works, including works created by a process analogous to cinematography.” (In this case, collective management is a normal way of exercising rights.) 29M. Ficsor, Warsaw, March 16-17, 2016

30. Extended collective management (3) Principle (13) in the Conclusion chapter of the WIPO book on CMOs: „(13) The operation of blanket licenses granted by duly established and sufficiently representative collective management organizations should be facilitated by a legal presumption that such organizations have the power to authorize the use of all works covered by such licenses and to represent all the rights owners concerned. At the same time, such collective management organizations should give appropriate guarantees to their licensees against individual claims of rights owners who are not represented by the organization but whose works are also covered by a blanket license.” M. Ficsor, Warsaw, March 16-17, 201630

31. Extended collective management (4) Principle (14) in the Conclusion chapter of the WIPO book on CMOs: „(14) The other possible form of settling the problem of non-members is the system of extended collective management. The essence of such a system is that, if there is an organization that is authorized to manage a certain right by a large number of owners of rights, and thus it is sufficiently representative in the given field, the effect of such collective management is extended by the law also to the rights of those owners of rights who have not entrusted the organization with the management of their rights. In an extended collective management system, there should be provisions for the protection of the interests of those owners of rights who are not members of the organization. They should have the possibility of “opting out” (that is, declaring – with a reasonable deadline – that they do not want to be represented by the organization) and/or claiming individual remuneration.” M. Ficsor, Warsaw, March 16-17, 201631

32. One organization (de facto or de iure monopoly) or more (1) Principle in the Conclusion chapter of the WIPO book on CMOs: „(11) Usually, there should be only one organization for the same category of rights for the same category of rights owners in each country. The existence of two or more organizations in the same field may diminish or even eliminate the advantages of joint management of rights.” M. Ficsor, Warsaw, March 16-17, 201632

33. M. Ficsor, Warsaw, March 16-17, 201633 One organization (de facto or de iure monopoly) or more (2) versus

34. M. Ficsor, Warsaw, March 16-17, 201634 One organization (de facto or de iure monopoly) or more (3) versus

35. One organization (de facto or de iure monopoly) or more (4) Judgment of the Court of Justice of the EU (CJEU) in case C ‑ 351/12 (27 February 2014) in OSA (Czech authors’ society) v. Léčebné lázně Mariánské Lázně a.s. (a spa establishment)  One of the disputed issue was whether or not Article 98(6)(c) of the Czech Copyright Law – under which only one CMO may be registered for the management of the same right in relation to the same kind of works – is in accordance with the EU law.  The CJEU’s response: ”Article 16 of Directive 2006/123/EC [the Services Directive] and Articles 56 TFEU and 102 TFEU must be interpreted as not precluding national legislation, such as that at issue in the main proceedings, which reserves the exercise of collective management of copyright in respect of certain protected works in the territory of the Member State concerned to a single copyright collecting society and thereby prevents users of such works, such as the spa establishment in the main proceedings, from benefiting from the services provided by another collecting society established in another Member State.” M. Ficsor, Warsaw, March 16-17, 201635

36. One organization (de facto or de iure monopoly) or more (5) The OSA judgement was based, inter alia, on the judement of the European Court of Justice (ECJ) in the in the Ministère public v. Tournier case (case 395/87 of 13 July 1989) in which the Court stated, among other thing that  a national CMO may refuse to grant direct access to its own national repertoire to users established in another Member State – but only only for efficiency reasons (in particular, for the reason that it would be too difficult to organize the management of rights in another Member State);  the refusal by a CMO to grant domestic users – instead of blanket licenses – licenses limited solely to a certain foreign repertoire (managed on the basis of a bilateral contract with the corresponding CMO) is not prohibited under Article 81 of the EC Treaty – unless the interests of owners of rights could be safeguarded, also in case of such licenses, without increasing the costs of management. 36M. Ficsor, Warsaw, March 16-17, 2016

37. One organization (de facto or de iure monopoly) or more (6)  Both the Tournier and the OSA cases concerned the use of music in the traditional off-line environment.  The application of Directive on Services for collective management rejected both by the European Parliament and the CJEU.  In the case of online trans-border use of music, the reasons for which legal monopoly was justified under the Tournier judgment are not necessarily fulfilled: (i) it is not difficult to license the use of music for end-users in other countries, and (ii) the interests of rightholder may be safeguarded in the case of such licenses too.  Title III of the Collective Management Directive foreseeing parallel online (trans-border and paneuropean) licensing of music – is based on this recognition. M. Ficsor, Warsaw, March 16-17, 201637

38. The number of organizations and mandatory and extended collective management For adequate mandatory collective management of a given right of a given category of rightholders, it is necessary that only one CMO be authorized/accredited/registered in each country. More than two CMOs, due to the very nature of extended collective management, cannot be authorized/accredited/registered in a given country to manage, with extended effect, the same right of the same category of rightholders. Where still more than one CMO may have been established for the management of the same right of the same category of rightholders, specific legislative norms are needed to select a single CMO that may operate an extended collective management system. (See the provisions in the Hungarian Copyright Law and in a draft Ukrainian law – to be discussed in separate presentations.) M. Ficsor, Warsaw, March 16-17, 201638

39. M. Ficsor, Warsaw, March 16-17, 201639 THANK YOU FOR YOUR ATTENTION ceeca@t-online.hu www.copyrightseesaw.netDZIĘKUJĘ DĚKUJU ĎAKUJEM KÖSZÖNÖM TÄNAN AITÄH AČIŪ HVALA MULŢUMESC