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Extended collective licensing (ESL): guidance for relevant licensing bodies applying to run ECL schemes

Collective licensing works on the basis of rights holders mandating collecting societies to manage certain rights on their behalf. As such, those rights holders actively opt in to collective licensing schemes and become collecting society members.

The statutory extended collective licensing (ECL) framework allows a qualifying “relevant licensing body” to be granted an authorisation to license not just on behalf of member rights holders but also on behalf of non-member rights holders. This means that non-member rights holders covered by a scheme are assumed to be in it unless they opt out. In other words, the collecting society must already be holding the rights of a significant number of rights holders whose works are the subject of the scheme.

A collecting society can usually be said to represent a rights holder if it has a direct, express mandate from them. Such a mandate often comes in the form of an assignment of rights, a transfer, a grant of exclusivity, or some other contractual arrangement, from the rights holder to the collecting society. Although the significant representation definition does not require those a collecting society represents to be members, it is anticipated that in the vast majority of cases membership is a corollary of a grant of authority or a grant of rights.

Where ECL schemes are extensions of existing collective licences, it is anticipated that collecting societies will have little difficulty in demonstrating the number of mandates they hold; consequently, it is not anticipated that they will need to produce a copy of the membership agreement for each and every rights holder they claim to represent but could, for example, point to the number of distributions they have made in respect of that pre-existing collective licence or to a register of rights holders they license.

Where there is no pre-existing collective licence, the number of mandates a collecting society holds may be more difficult to prove depending on the scope and nature of the ECL scheme in question. Irrespective of a collecting society’s coverage of rights holders, where there is no pre-existing collective licence it is expected that there will be a clear demonstration that a collecting society holds the relevant rights of a significantly representative number of rights holders. It is likely that the ease with which this can be demonstrated will vary from sector to sector.

Conclusions about a collecting society’s representation are unlikely to be reached if the collecting society is unaware of the numbers of non-member rights holders in the extended portion. Collecting societies could reach an understanding of total numbers of rights holders by conducting surveys or advertising in trade magazines. In the case of an existing collective license upon which the ECL scheme is built, collecting societies could look at user data to see how many non-members are inadvertently being licensed.

The numbers of works that a collecting society’s members control relative to the number of works in the ECL scheme is not something that will be assessed in ECL applications. In the case of members, ECL schemes ought not to be impeded by very small numbers of member rights holders who control large volumes of works. Under Regulation 16 (3) (c), these members, if they oppose an ECL scheme, will be able to opt out of the scheme if their contractual arrangements with the collecting society permit it. Non-members who do not want to be part of the ECL scheme will always have the option of opting out.

Where members of a collecting society have already opted out works or rights from a pre-existing collective licence on which an ECL scheme is based, those works or rights cannot be brought into the ECL scheme. This is on the basis that they have not given the collecting society a mandate and cannot be treated as non-members for the purposes of the ECL scheme.

Where the rights and/or works are unacknowledged in a collecting society’s ECL application, the member rights holder has an opportunity to tell the Government of them during the period of representations, and the Secretary of State may raise the issue with the collecting society and may take the representations into account in making his decision whether to grant the authorisation. Even if the collecting society advertently or inadvertently licenses those works, the member rights holder could always opt them out on the basis that they are a non-member for the purposes of those works. The Secretary of State may only grant an authorisation if he is satisfied that the opt out arrangements are adequate to protect the interests of rights holders

It may be that there are member rights holders whose works are not in the scheme, but who are still affected by it. A collecting society has the discretion to seek the consent of these members but is under no obligation to do so. It is anticipated that collecting societies will be responsive to the needs of their right holder members, and to consult them fully before submitting an application.

When a non-member rights holder opts out their works the collecting society must inform licensees of (i) the names of those works, and (ii) when the works will be removed from the ECL scheme. Regulation 16 (2)(c) permits a member rights holder to opt out of an ECL scheme only where their membership agreement or some other contractual relationship permits them to opt out of collective licences or ECLs.

Regulation 16 (3)(b) allows a non-member rights holders to opt out of a “proposed” ECL scheme. This provision does not permit a non-member to opt out of all future ECL schemes, only a scheme that is already in the pipeline.

Regulation 18 (2) requires a collecting society to apply deductions towards the general costs of the collecting society and for the benefit of members and non-members alike. This means that deductions may not be used just for activities benefitting member rights holders. Under Regulation 18 (5), the collecting society must publish information on works and other subject matter for which rights holders have not been found or identified, but to whom monies are due.

Where sectors have international bodies, and where there are foreign non-members in ECL schemes, it is anticipated that the collecting society will notify those bodies and appropriate dissemination of the scheme to ensue. The Government does not expect collecting societies to make efforts to contact every non-member rights holder to whom monies are due, especially where the monies involved are very small. A collecting society’s efforts need only be proportionate.

Under Regulation 4 (4)(a) the Secretary of State cannot grant an authorisation unless he is satisfied that the applicant collecting society is already be licensing the types of works that are the subject of the ECL scheme.

It is not expected that the collecting society need provide information on undistributed monies in respect of each rights holder or title; a total amount of undistributed monies should suffice. Where rights holder or title specific information is known, it is expected that collecting societies will volunteer this information subject to any data protection requirements. On an application for renewal, a large sum of undistributed monies or a large amount of money being held for individual works may indicate that the distribution policies adopted by the collecting society have not been very successful.

Regulation 10 (2)(c) requires certain information on opt out arrangements that the collecting society has operated and the numbers of rights holders and works that have opted out of the ECL scheme up until date of renewal relative to those opted out at the time of the original application for authorisation. Regulation 10 (2)(b) requires the collecting society to confirm that some of the information provided at the time of the application for authorisation remains the same, failing which it should provide details of any changes.