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Some interesting things in Term Directive 2011/77/EU

This directive should make the life and welfare of certain creative persons better. The Member States had to bring their national legislation in accordance with provisions of this directive. Intellectual property office of United Kingdom has organised consultation on the implementation of Directive 2011/77/EU Amending Directive 2006/116/EC. In this consultation paper the very interesting things can be found.

The Directive provides that the right to terminate the agreement may be triggered where the recording is not offered for sale “in sufficient quantity”. There is no indication in the Directive as to the meaning of this term other than in Recital (8) which refers to “within the meaning of the International Convention on the Protection of Performers, Producers of Phonograms and Broadcasting Organisations” (“the Rome Convention”). Article 3(d) of the Rome Convention defines “publication” as the offering of copies to the public in “reasonable quantity”. Neither expression is particularly helpful in indicating the level of sales which might or might not be sufficient for these purposes.

The Directive states that the right to terminate may be exercised where the “producer” fails to exploit the sound recording. It was considered whether it would be appropriate to make reference to the “producer” in the Regulations (The Copyright and Duration of Rights in Performances Regulations 2013), or whether it would be more appropriate to refer to the owner for the time being of the copyright in the sound recording which would cover the original producer of the sound recording or his assignee. A copy out approach to implementation would point to the former but if the original producer has assigned his rights to a third party he would not be in a position to comply with any notice served on him under the “use it or lose it” provision and so a reference to the “producer” alone could severely limit the scope of the new rights.

Given that the so-called “use it or lose it” provision applies where there is a failure by the producer to make sufficient copies of the sound recording available for sale or available for download over the internet and is not concerned with a failure to make the recording available for rental or hire, it would seem illogical to require that the new rights could only be triggered where the performer has assigned all his property rights (including the rental/lending right).

A sound recording may have several performers, some of whom may each enter into individual contracts with the producer assigning various rights in the fixation of their performance and others who may enter into a joint contract to do so. Once any individual performer has exercised his right to cancel his contract it would still be necessary for him to reach agreement with the other performers on the sound recording before he can exploit the sound recording.

In order to exploit the recording a performer (“P”) would require to “clear” the rights of any other performers (“OPs”) who appear on the sound recording whose rights will also have been assigned to the producer of the sound recording. Such rights would need to revert to their respective owners before they could be re-assigned to P in order to be exploited by P.

The Directive does not prescribe a mechanism for how the rights of other performers might be “unpicked” in order to arrive at a situation where a performer might exploit the recording. Paragraph 2a of the Directive provides that where a sound recording contains the fixation of the performances of a plurality of performers, they may terminate their contracts on transfer or assignment “in accordance with applicable national law”. This suggests that such matters would be determined by the law of contract in each member state.

The Directive is silent on whether the performer’s right to terminate should be transmissible to heirs in the event of death.

The Directive provides that the “overall amount” which the producer must set aside for payment of the supplementary remuneration is 20% of the annual revenue from the reproduction, distribution and making available of a particular sound recording. The Directive is quite specific in terms of the type of exploitation of the sound recording by reference to which the supplementary remuneration is calculated. This amount is intended to be divided between all the “non-featured” performers on the recording (who generally do not receive recurring royalties under their contracts of assignment – see Recital (9) of the Directive).

The Directive does not specify what proportion of the annual payment will be received by each performer – it provides that the annual sums will be paid over to relevant collecting societies who will then distribute the sum amongst their members according to their rules (see Recital 12 and paragraph 2d).

The Directive specifies that the sums to be taken shall be calculated from the revenue received from the reproduction, distribution and making available of the sound recording therefore no account shall be taken of revenue which the producer has derived from the rental of phonograms or from the single equitable remuneration received for broadcasting and communication to the public.