Creators' Rights Alliance - Between a rock and a hard place - F: Problems with regulation of copyright
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Before we explain our proposals, we will briefly consider (and refute) various arguments that will, no doubt, be raised by those opposed to legal intervention to protect creators.

The Common law tradition argument

The first argument against intervention in this field is that it is contrary to the Common law tradition in general, and the UK one in particular. The argument runs that the Common law has always understood copyright as a property right, and its transfer as a matter for the parties. Contract law merely enforces the expressed wishes of the parties, it does not (nor, the argument runs, should it) replace the agreed terms of contracts with terms it would regard as more just or more fair. The parties, rather than the courts, are in the best position to assess what is good for them, and if they fail to protect their own interests in particular situations, that is not the law’s concern. In a nutshell, even the courts of Equity “mend no men’s bargains.” [1]

 

The CRA’s response

Perhaps the biggest problem with this argument is the caricatured portrayal of UK law.[2] British law, from as early as “the first” copyright Act of 1710, had special provisions protecting authors from disposing of their works too readily.[3] In fact, until recently, UK law recognized ‘reversionary’ rights to ensure the copyright returned to its author’s heirs 25 years after the author’s death.[4]

Moreover, despite many claims that UK law had no moral rights until 1989, certain rights had in fact been introduced in relation to works of art as early as 1862.

In a number of respects, the position of creators has also received special protection in the United States. For example, in 1976 the reform of US copyright law replaced its complex renewal provisions, with “termination rights”. More recently, in New York Times Co Inc v Tasini (25 June 2001), the Supreme Court interpreted the US copyright provisions on “collective works” with the express purpose of protecting the freelance authors of newspaper articles.[5]

These examples demonstrate that, whatever others might allege, “copyright” tradition (if such a thing exists), is perfectly comfortable with the policy of protecting authors.

 

The public interest argument

One common argument against interference with freedom of contract is that the public interest lies in the optimal exploitation of copyright works. Property is a legal mechanism of ensuring that the subject matter ends up in the hands of the person who can exploit it best. In the case of exploitation by new technologies, recognizing the residual rights of authors has the potential to impede exploitation and, thus, is against the public interest.

 

 

The CRA’s response

Our response to this is firstly to question why exploiters are perpetrating the abuses we describe and grabbing creators’ rights in the way described above (in section A). We do not believe that they are grabbing these rights with particular exploitation in mind but rather out of paranoia, or in the hope of making a windfall, or simply to prevent other exploiters from using the works.

Secondly, in so far as the exploiters claim that they wish to take rights to avoid the expense and complexity of paying revenue streams to creators (e.g. through residuals),[6] we reply that collecting societies already exist to distribute to individual creators and that digitization should make the administration of rights easier than it ever has been.[7][8] Simultaneously, because consumers want greater agglomeration of rights through simplified blanket licensing regimes, collecting societies rather than exploiter businesses are the appropriate holders of these rights.

Finally, even if publishers, broadcasters and so on are in a better position to exploit works, the CRA thinks it is crucial never to forget that copyright is not just about exploitation, but is also about creation.  Creators’ rights are human rights.

 

One particular version of this argument is that exploiters need to take all the rights to satisfy their financiers. For example, the DCMS Task Force’s report Out of the Box observed that “The possibility to buy out rights upfront is becoming more important to production companies as programme deficits force producers to seek co-production and co-financing partners who often require rights in territories to be cleared for periods of a minimum of 10 years and up to 25 years”.[9] 

 

Once again, our initial response is to question the truth of this claim, given the existence in other European countries of copyright-contract laws similar to those we are proposing. To the extent that these claims are verifiable, however, creators call upon exploiters to consider imaginatively how creators’ interests can be accommodated in such financial environments. In the context of directors, payments to a collecting society (the DPRS) seems to have been an acceptable compromise.

 

The economics argument

One argument that might be made against compulsory contractual  terms, is that they are counter-productive. It has been said that in an environment where authors enjoy strong legal protection, exploiters are more reluctant to enter into exploitation arrangements, (for example by using instead creators from overseas).[10] It is also argued that where the laws on authors’ contracts permit unfair bargains to be re-opened, the overall effect is that exploiters enter arrangements with creators on less favourable contractual terms. In theory, this is because they discount from the amount they are willing to pay, funds necessary to cover later resort by creators to their statutory rights.

 The CRA’s response

As regards the assertion that British creators will in fact lose out from such reforms, we have two responses. Firstly, while this argument might make some sense to an economic theorist, there is no evidence of creators from continental Europe suffering as a result of their authors’ contract and moral rights law. Secondly, and more importantly, we are proposing these reforms not merely out of economic interest but with the aim of protecting rights, promoting justice and a vibrant democracy. We are not interested in sacrificing these aims in order to become the creative sweatshop of Europe.

 

 

The “variety” of copyright subject matter argument

One likely argument is that copyright subject matter is varied and, potentially, covers a huge field. For example, literary works encompass not merely lengthy review articles in journals, but trivial works such as lists of ingredients for products, or instructions on how they should be used. Given this scope, it is argued, the only way to deal appropriately with rights is on an individual basis to be determined by the parties.[11]

The CRA’s response

While we accept that copyright covers a wide array of works and that our proposals therefore implicate a variety of interests and circumstances encompassed by our proposals, we do not agree that it follows from this that we should do nothing at all. As with the laws of many other European countries, our proposals aim to establish some core standards that can operate in the majority of cases.

In addition, we propose to introduce flexibility to accommodate non-standard cases.[12] In particular, where standard collective agreements are negotiated, we suggest that (in certain circumstances), they override the general provisions.[13]

 

The partial authors/group works argument   

Related to the “variety of subject matter” objection, and the “public interest objection” to the regulation of authors’ contracts, is the objection based on group works. Many copyright works, from films to encyclopaedias, are typically the products of a large number of contributors. In such situations, it is asserted that it is wrong if any particular author can hold out over the others, and prevent their remuneration. In effect, the objection is that the type of regulations we are proposing can be used by creators AGAINST other creators.

The CRA’s response

Our response to this is that the regime we propose is not intended to force all relationships into the same straitjacket, but is intended to be flexible enough to accommodate special situations. In some countries, the problem of multiple authorship of audiovisual works is accommodated by presumptions of transfer, coupled with rights to equitable remuneration, and in the UK, following the EC Rental Directive, section 93A of the CDPA creates a presumed transfer of the rental right to the producer of a film.[14]

However, the CRA does not believe that this necessarily creates a fair and balanced situation. We propose that provision be developed by negotiation between collective organizations/appropriate trade unions representing the parties and interests involved (such as those in the Directors’ representatives and the Broadcasters and Producers representatives described earlier, or the NUJ and newspaper publishers). We hope, by so doing, to provide flexible solutions to the specific considerations affecting exploitation of certain works.

 

The “choice of law” argument

One final argument against any intervention in the field of copyright contracts relates to its potential futility. Such regulation, it is suggested, is potentially futile because, even if the rules are mandatory under domestic law, the parties to the copyright contract are free to choose a different law. Consequently, national mandatory provisions intended to overcome problems of contracts that arise from the authors’ poor bargaining provision are likely to be avoided by choosing as the law of the contract a much less interventionist regime.[15] This will place European laws under a double disadvantage: not only will they no longer have the benefit of protective rules, but they will also have to seek advice from those familiar with US law to understand their rights.

The CRA’s response

The “argument from choice of law” is a powerful one, but is clearly one which is unacceptable to the CRA, as it implies that there is nothing we can do to strengthen the position of authors. Given that our analysis has shown that the current terms of creators’ contracts rarely are reflections of negotiation between creator and exploiter, the idea that the creator’s apparent “choice” of law determines the issue, poses real problems. In fact, the objections could be met in a number of ways.

  • Firstly, we could exclude authors’ contracts from the general rules relating to choice of law for contracts.
  • Secondly, we could exclude certain rules (such as moral rights) from the operation of the contract-conflicts rules by requiring that they be treated as copyright rules, and subject therefore to the laws of the protecting country.[16]
  • Thirdly, we could treat certain provisions as based in “public policy” and non-excludable. Under French case law, in fact, attempts to utilize contractual choice of law have failed to override the copyright rule that moral rights are inalienable: such rules can be enforced in France, despite an agreement to waive the rights contained in a contract stated to be subject to US law. In contrast, rules on proportional remuneration can be excluded in this way.[17]
  • Fourth, by campaigning at an international level so that similar contractual rules exist globally, we can  render the question of choosing law less significant.

 

 



[1] Maynard v Mosely (1676) 3 Swanst 651, 655; 36 Eng Rep 1009, 1011-2.

[2] For similar criticisms of caricatured representations of the common and civil law copyright traditions, see G. Davies, Copyright and the Public Interest (IIC Studies, Vol 14) (1994); J. Ginsburg, ‘A Tale of Two Copyrights: Literary Property in Revolutionary France and America’ in B. Sherman & A. Strowel, Of Authors and OriginsThe Making of Modern Intelectual Property Law (Cambridge: CUP, 1999) ch 11. (Clarendon: Oxford, 1994) 131; A Strowel; ‘Droit d’Auteur and Copyright: Between History and Nature’ in Sherman & Strowel 235; B. Sherman & L. Bently,

[3] The Statute of Anne conferred the exclusive right in two blocks, and the second was acquired only if the author was alive when the first period elapsed. This splitting of the copyright term has been understood as protecting an author from market pressures to assign his copyright.

[4] CA 1911 s 5(2) recognized a ‘reversionary right’ in respect of works which were assigned by the author rendering the assignment void as against the author's personal representatives insofar as it extends to the period of copyright that commences 25 years from the  author's death. See Chappell v Redwood Music [1981] RPC 337.

[5] For a similar situation involving the use of photographs in electronic databases see National Geographic Society et al v Greenberg 122 SCT 347, 151 L Ed 2d 262.

[6] This has frequently been the reasoning of film producers, when refusing to offer residuals. See e.g. P. Haggard, ‘The Directors’ Cut’ Broadcast 10 April 1998, p. 19.

[7] Moreover, in principle, the identity of creators and their rights (royalties, or contractual entitlements) can be encoded into the electronic fabric of works distributed in digital form. This sort of “rights management information” can form the basis of automated payment systems that involve minimal levels of bureaucracy. Digital distribution techniques require LESS agglomeration of rights, not more; and LESS standardization, not more.

[8] See CLA v UK Universities (Copyright Tribunal).

[9] Out of the Box, para 3.5.5.

[10] Ibid, para 3.5.11 (asserting that programme makers are recording music overseas where the rates for musicians are significantly lower).

[11] See H.-P. Hillig, ‘Contactual Freedom in German Copyright Law’ in H. Cohen Jehoram (ed.), Copyright Contracts 121, 132 (Sijthoff, Alphen aan den Rijn, 1977) (arguing against a general rule on proportionate remuneration).

[12] In some circumstances, as with the right to remuneration, this flexibility might be introduced by recognizing some minor exceptions.

[13] The German law on equitable remuneration is qualified by a provision stating that “if a remuneration is stipulated in a collective agreement or common remuneration rule … the equitability thereof shall be presumed.” So called “common remuneration rules” are rules drawn up by authors’ associations and users’ associations and are intended to take into account the circumstances of the relevant regulatory area, as well as the structure and size of the exploiting parties.

[14] The provision applies to the authors of literary, dramatic, musical or artistic works, but the presumption does not apply to the authors of the screenplay or dialogue or the composer(s) of music specifically created for and used in the film. If there has been a presumed transfer, or a voluntary transfer of the rental right to the producer of a film, the author should be entitled to equitable remuneration under section 93B(1) of the CDPA.

[15] The Rome Convention of 19 June 1980, on the Law Applicable to Contractual Obligations, ratified by all Member States of the EC, allows parties to contracts to agree on which national law to apply. As a consequence of this, the danger exists that whatever mandatory rules are developed for the protection of authors, whether at a national or European level, publishers and entrepreneurs will inevitably utilize their bargaining position and knowledge of private international law to excise the operation of the mandatory rules by requiring that the contract specify as the applicable law a regime which has no such rules. In fact, it is foreseeable that if intervention by way of mandatory terms increases, more and more publishing (etc.,) contracts will specify the law of the US as the applicable law.

[16] As a result of the recent amendments, German law provides that where exploitation occurs predominantly in Germany, the rights to adequate remuneration and proportionate remuneration under Arts 32 and 32a apply (even if the choice of law in the contract  is other than German): Art 32b(2).

[17] Bragance v. Michel de Grace, Cour d’appel Paris, 1e ch, 1 February 1989, (1989) 142 Revue Internationale De Droit D’auteur 301.

 

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