CMOs public performance tariffs: Spanish court indirectly urges for the application of an “European average” criterion but then uses the UK one. Is there any room for discretion besides the CRM Directive?

In this guest post David Serras Pereira (SCM) discusses a recent decision which is interesting to anyone working in the collective rights management sector.

Here's what David writes:

CMOs public performance tariffs: Spanish court indirectly urges for the application of an “European average” criterion but then uses the UK one. Is there any room for discretion besides the CRM Directive?

Another interesting Spanish decision (here – search using reference 2000/2019 of Catalunya - Barcelona Court) concerning copyright collective management organizations (CMOs)’ tariffs was issued on November 7th last in the context of proceedings between a music promoter and Spanish CMO SGAE. 

The Audiencia Provincial de Barcelona considered that the criterion applied in relation to the public performance tariffs used by SGAE was too ‘heavy’ for a heavy metal show, and thus reversed the decision at first instance. 

Usually, CMOs have their own “Book of Tariffs”, which are applicable to different types of events and venues. At the time when the proceedings began, SGAE applied a 10% licence fee on the box office income (it is now 8,5%). The 10% fee was considered abusive by the court while, curiously, pointing to another CMO’s (UK PRS for Music) criteria as a fair and good percentage to apply, ie 3% on the box office income. 

The case began in 2013, when promoter of Def Leppard y Whitesnake, by the name of Rocknrock, refused to pay the 10% licence fee requested by SGAE, claiming that SGAE did not represent all rightsholders and that it had abused its dominant position. 

Regarding the latter aspect, the Spanish Competition Authority in separate proceedings sanctioned SGAE with a EUR 3 million fine following this and other matters (here). This eventually led SGAE to reduce the fee from 10% to 8,5%. 

In its ruling, the Barcelona court considered that SGAE had a monopoly and that 8,5% was still too high a percentage. The court pointed, among other things, to the fact that the percentage asked by SGAE was above the European average and, unexpectedly, indicated the UK case as the role model: 3% of box-office revenue, which is perhaps the lowest or one of the lowest in all EU. 

The decision can still be appealed to the Supreme Court and a final ruling will have to be made, but the decision raises a number of interesting points. 

The tariffs of a CMO (as a body representing several rightholders) normally reflect the criteria that the individual rightholders considered to be fair for licensing use of their works (either decided during a general assembly or by other means). 

It is possible for a court to make an intervention in the exclusive rights’ nature setting a maximum threshold not decided by the rightholders themselves? The basis for any such intervention should be framed in the context of the CRM Directive (here; Recitals 31 and 35 and Articles 16(2) and 35), which followed the Commission Recommendation 2005/737/EC (here). Even prior to the adoption of the directive, in OSA the Court of Justice of the European Union highlighted how tariff setting might also fall within the scrutiny of competition authorities. 

From the Directive it follows that, while tariff setting is in principle a matter of autonomy, there are some limits to it, ie:

• Tariffs should be determined on the basis of objective and non-discriminatory criteria 
• Tariffs should be reasonable in relation to, inter alia, the economic value of the use of the rights in a particular context and the nature and scope of the use of the work 
• Tariffs should offer appropriate remuneration to rightsholders for the use of their rights 
• Tariffs should be made public by the CMO 

This decision raises the following issues: 

a) Can rightholders right to set up how much they want to charge for the licensing of their creations be limited beyond the limitations set up by the CRM Directive and national legislation? 

b) If so, can such limitation be based on an European average of licencing practices of all the CMOs? 

c) Can it be considered abusive any tariff that is not close to the 3% one used by PRS? 

If SGAE decides to appeal, we will have to wait for the Supreme Court decision. 

New Spanish decision might offer support for 'direct licensing'

Mark Knopfler live in Bilbao by Aherrero

Most venues and festivals have a blanket annual licence with their local music collection society, and would pay a percentage of their box office revenues to compensate composers and lyricists, and their music publishers, for the use of music. In the UK that rate (Tariff LP) is currently 3% of box office paid to PRS for Music (this Tariff is under review). This rate is meant to cover ALL music used - the only exception in the past used to be the exclusion of the 'grand right' for dramatico-musical works which were intended to be accompanied in performance by dramatic action(for example opera and musicals) where the right was usually directly licensed by music publishers on behalf of authors.  

A Spanish court has ruled against collection society SGAE in favour of a venue which had negotiated to pay performance royalties directly to artists. The ruling, by Judge Pedro Macías in the commercial court of Badajoz in Extremadura, centres on two shows by veteran Spanish rock group Asfalto and comedian Pablo Carbonell at Badajoz’s 325 capacity Sala Mercantil venue in 2010.

When SGAE (Sociedad General de Autores y Editores) noted that the usual fees for the concerts had not been paid, it announced its intention to collect, only to be told that  “the artists had reached a private agreement between them” and the Mercantil, according the venues legal team, OpenLaw. Judge Macías’s affirmed the composers “exclusive rights to the exploitation of the work, without any limitations other than those established by law” 

“The owners of these rights are the authors, so they are the ones who should be able decide what to do with them,” comments OpenLaw’s Andrés Marín. “If a composer and performer negotiate directly with a third party and agree to give away or even collect their copyrights directly, the SGAE has no right to try to collect, or recover, the rights the artist has not claimed.

The ruling certainly supports the developing practice of 'direct licensing' where performing artists who compose their own material are choosing to bypass their local performing right organisations (PROs) in favour of collecting performing right royalties directly. At last year's International Live Music Conference, Mark Knopfler's manager Paul Crockford highlighted the efficiency of self collection for Knopfler - and the practice of (large) discounts some collection societies were giving to promoters to assist in the collection of these revenues. 

However, a spokeswoman for SGAE said that that the PRO’s lawsuit was aimed at the Mercantil, not the performers, and that Judge Macías displayed a “clear misunderstanding” of copyright law by failing to distinguish between the rights of performers, composers and publishers: “The performers said to the court that they’d received their royalties, and the court understood that to mean the composers had, too,” she told IQ magazine. “It was a clear misunderstanding of Spanish copyright law, which distinguishes between the rights of composers and artists.” (In both cases, it should be noted, the composers and performers were one and the same). She said that Spanish creators can, if they wish, opt out of SGAE’s collective licensing (in the UK this is called a Clause 7G arrangement) but that in the case of the two disputed shows, neither performer had done so. “If any of our members want to withdraw certain rights, there’s a procedure for it,” she explains. “But what we can’t do is have both systems: If they have a blanket licence, they can’t then administer their rights directly as well, it would be chaos for us.”

OpenLaw, said the decision shows traditional collection societies are ultimately subordinate to the wishes of copyright holders – and demonstrates a “clear victory over the unjustified position of dominance that SGAE exerts over many of Spain’s music venues and artists”.

The  Court of Justice of the European Union recently decided in Soulier and Doke, C-301/15 that the InfoSoc Directive grants a 'high level of protection' to is authors. That case concerned a reference for a preliminary ruling from the French Conseil d’État (Council of State) to clarify if a legal framework intended to encourage the digital exploitation of literary works (books) published in France before the 1st January 2001 and which were no longer commercially distributed by a publisher and are not published in print or digital format was compatible with Article 2(a) and Article 3(1) of the Directive. The court held that the Directive must be interpreted as precluding national legislation that gave an approved collecting society the right to authorise the reproduction and communication to the public in digital form of ‘out-of-print’ books. Despite contrasting hints in the past in which the CJEU appeared to employ the terms 'authors' and 'rightholders' interchangeably, the Court reinforced the idea that who the InfoSoc Directive intends to grant a 'high level of protection' to is authors. It would appear that, post-Soulier and lacking specific 'EU-endorsed authorisation' to the contrary, national legislative initiatives (including licensing schemes) that fail to incorporate appropriate and streamlined procedures to (i) inform authors of possible future uses of their works, and (ii) obtain their relevant, individual, consent are likely to be regarded as incompatible with EU law.

This year's International Live Music Conference is hosting a panel titled "Direct Licensing: Rates, Rights and Wrongs on Thursday March 9th chaired by Jon Webster from the Music Managers Forum, and with representatives from direct licensing agency PACE, collection societies PRS for Music and Buma Stemra and from Yourope, the European festivals association and explains the panel as: "The widespread system of promoter rebates given by some PROs (performance royalty organisations) came under scrutiny at ILMC last year. As a result, several artists are now choosing to license their songwriting performance royalties directly, a situation that left promoters facing unexpected licensing fees during the 2016 festival season. The upshot is a three-way conversation between performance royalty organisations, promoters, and artists, as existing relatively simple administrative models are reviewed making the whole process more complicated for all. Add in various tariff updates, and performance royalties is an interesting area right now. Jon Webster invites specialists and guest speakers to help clarify the current situation and what the solutions might be."

http://www.iq-mag.net/2017/02/landmark-legal-victory-direct-licensing-mercantil-asfalto/#.WKYeuW-LSM9

http://the1709blog.blogspot.co.uk/2016/11/the-cjeu-decision-in-soulier-what-does.html

http://the1709blog.blogspot.co.uk/2016/03/live-music-sector-put-cmo-kickbacks.html

Rojadirecta: Spanish court orders interim relief against hyperlink aggregator

The following guest post has been received from our friend Fidel Porcuna de la Rosa, a Spanish Abogado, to whom we are most grateful. This is what he writes:

Following Bajatelotodo (on which see the 1709 Blog here) comes a recent Spanish decision of 16 June 2015 from the Juzgado de lo Mercantil no. 11, Madrid, sitting as one of the city's Commercial Courts, in an application for a preliminary injunction against an aggregator of hyperlinks to TV and internet subscription broadcasts of soccer games at www.rojadirecta.me. Virtually everyone with any interest in the Spanish and Portuguese soccer leagues has heard about this site, as is evidenced by the fact that this litigation, an IP related issue, was subject matter of an extended article in the well-read Spanish newspaper El Mundo.

The claimants were Mediaproduccion S.L.U. and Gol Television S.L.U., supported by the Spanish National Soccer Federation. The defendants were a company, Puerto 80 Projects S.L.U., and an individual, Igor Seoane, administrator and trade mark and domain name holder of the site www.rojadirecta.me. This site contained hyperlinks to TV and internet broadcasts of the Spanish and Portuguese soccer leagues, which could only legally be accessed by subscription payment. The owners of these hyperlinks made the broadcast freely available, and the defendants indexed, assorted and grouped (among other things) the hyperlinks in www.rojadirecta.me and other related sites.

In her ruling, the judge held that defendants could be liable for the unauthorized exploitation of Mediaproducción's producer rights and Gol Television's broadcasting rights, by virtue of Articles 120 to 127 of the Copyright Law. The judge also mentioned that the defendants’ behaviour could fall within Articles 15 and 4 of Unfair Competition Law No. 3/1991, in particular because the defendants did not observe the legal administrative requirements to which broadcasting and producers are subject, thus enjoying an anticompetitive advantage (a similar case involved Uber, here and here). The judge further considered that, in any event, their conduct likely did not fulfil the good faith standards in trade.

Under those findings, the judge ordered Puerto 80 Projects and Seoane to cease immediately and temporarily facilitating hyperlinks that give access to soccer games which were originally broadcast under payment subscription, presently or in the future. In addition, the judge preventively ordered to the registered internet access providers to block or prevent by the appropriate technical means, should the defendants not comply with the order in seven days from the enforcing date of the preliminary injunction, the access from Spanish territory to the site www.rojadirecta.me or to any other site used or to be used by the defendants for the same infringing purposes.

Since this decision was taken in the context of a preliminary injunction proceedings, it merely anticipates a potential decision on the action on the merits, but it is precisely for this reason that the decision is important; in preliminary injunction proceedings the claimant must clearly show a prima facie case, and the provision of hyperlinking has always proved to be a challenge in this regard.  The following points of the decision should be highlighted:

- The judge believed that Seoane and Puerto 80 Projects acted as a single person, so no distinction should be made when it comes to ascribe their illegal activities. For instance the judge noted that, while Puerto 80 Projects managed the site, Seoane (its sole administrator) was the registered owner of the figurative mark “rojadirecta” used by Puerto 80 Projects without any recorded or unrecorded licence. The judged further noted that Seoane owned the domain names redirecting to www.rojadirecta.me and had appeared as a party in proceedings before the WIPO on behalf of Puerto 80 Projects.

- The activity ascribed to the defendants consists of aggregating and embedding hyperlinks to TV and internet broadcasts for soccer games, the access to which could only legally be purchased by payment . Owners of the hyperlinks, named in rojadirecta.me as “official partners”, collected the signal from legal carriers and made them freely available online, sometimes deleting the “Gol Television” figurative mark affixed in the original broadcast.

- The judge gave importance to the defendants’ activity in indexing, assorting, grouping and updating the hyperlinks of the soccer games being broadcast or to be broadcast, as well as the fact that some of the hyperlinks did not take to the user to a different website, and so the contents of the hyperlinks could be watched framed in rojadirecta.me site. The judge described the defendants’ behaviour as an active and intentional cooperation because they were fully aware that the hyperlinks represented unauthorized communications to the public (to a new public, according to Svensson and other posts here and here) and contained unauthorized reproductions of the protected broadcasts. She therefore concluded that the defendants, by indexing, assorting, grouping and updating the hyperlinks to protected works, were also infringing the claimants’ rights.

- The defendants argued that there was no longer a reason to adopt a precautionary measure because the football seasons had ended or almost ended, and because it was not possible to know in advance whether the claimants would have the broadcasting rights over the next soccer game seasons: the claim, if successful, would then represent a form of censorship. They also argued that the claim was disproportionate as the purportedly infringing hyperlinks represented only 2% or 3% of the content of the site. The judge dismissed the arguments. Producers' and broadcasters' rights were enforceable for 50 years, which applied to past games to which hyperlinks could still be provided. She then indicated that the defendants were subject to fiduciary duties in accordance with Articles 16 and 17 of the Information Society and E-commerce Law No.34/2002 (transposing Directive 2000/31). The judge established a similarity with the fiduciary duty contained in the Press and Publishing Laws No. 14/1966 (Article 37) and noted that, in fact, given the small number of hyperlinks (not beyond 76 for each game) it was feasible to establish whether they were infringing. Finally, the judge considered that the claim to immediately cease was not disproportionate since it was evidenced that, contrary to what defendants stated, at least half of the hyperlinks infringed the claimants’ rights.

- The judge requested the claimants to provide a caution of 10,000 Euros to secure potential damages to defendants, ten times the initial amount suggested by the claimants. She noted that although it was not possible to establish the revenues of the defendants, the initial amount suggested by the claimants was insufficient in light of the visits to the site.

By way of a footnote, this blogger clicked through to the offending website and this is what he found:

Access to this website has been

Blocked

Blocking access to the rojadirecta.me website has been made pursuant to a Court Order dated 7 May 2015 obtained by the members of the Football Association Premier League. 

www.premierleague.com 

Any TalkTalk customer affected by the Court Order has a right under the Court Order to apply to vary or discharge it. Any such application must:
(i) clearly indicate the identity and status of the applicant;
(ii) be supported by evidence setting out and justifying the grounds of the application; and
(iii) be made on 10 days notice to all of the parties to the Court Order.

Active provider, criminal sanctions: the Bajatetodo case in Spain

The 1709 Blog is delighted to host this guest post from our friend Revital Cohen (Baker & McKenzie, Barcelona) on a recent Spanish ruling. This is what she writes:

Active provider, criminal sanctions: the Bajatetodo case

The Criminal Court of Appeal, Castellón, has recently upheld a first instance ruling [on which see the 1709 post here] which imposed a fine of 21,000 euro and a 18-month prison term on the webmaster of www.bajatetodo.com for providing clickable links to protected copyright works which included movies, music, software and games.

The defendant was held liable under Article 270 of the Spanish Criminal Code, by which it is a criminal offence to reproduce, plagiarise, distribute or publicly communicate an artistic work with lucrative intent and without the authorisation of the right holder.

The lucrative intent of the webmaster-appellant was held unquestionable by the Court of Appeal, who received a substantial financial benefit directly attributable to the infringing activity (eg, from advertising and assignment of users' accounts to third parties).

As for the issue of liability, the webmaster claimed he was eligible to benefit of the [very Spanish] linking safe harbour provision of Article 17 of the Spanish Act No 34/2002, which implemented the e-Commerce Directive 2000/31. Going beyond the three safe harbours explicitly listed in Articles 12, 13, and 14 of the e-Commerce Directive, the Spanish provision implements a shield from liability dedicated to linking providers who are not actually aware of the unlawful nature of the linked contents or who, after becoming aware of it, promptly act to remove the link.

The Court of Appeal rejected the webmaster's defence, observing that the bajatetodo.com website did not simply provide links to unlawful contents, but also engaged in the selection, ordering and indexation of the instruments to access and locate them. Thus the webmaster's activity went far beyond what is conceived as a mere [neutral and passive] intermediary role.

Citing the Court of Justice of the European Union decision in Svensson [commented on by the IPKat here], the Court added that the provision of clickable links to protected works constitutes an unauthorized act of communication to the public as they address an indeterminate and large number of new recipients, thus amounting to copyright infringement and to the webmaster's criminal liability.

The Castellón Criminal Court of Appeal decision confirms a significant change of direction in Spanish case law. Indeed, Spanish courts had for long time ruled that the act of arranging and providing information about unlawful files available in P2P networks merely facilitates the downloading of infringing contents [see, for instance, the Sharemula and the Pablo Soto cases, the latter discussed on the IPKat here]. Such activity had thus always been considered to be a mere intermediary role sheltered by the linking safe harbour provided by Article 17 of the Spanish Act No. 34/2002.

Although Spanish case law was based on the assumption that the owners of P2P websites could not be held criminally liable since they do not directly engage in acts of communication to the public, the Castellón Criminal Court of Appeal stressed that this is no longer the case, which appears to be in line with the recent reform of the Spanish Intellectual Property Act [on which see the earlier IPKat post here], which expressly provides that administrative proceedings can be initiated against those who facilitate links to copyrighted work provided that they are not limited to a mere neutral intermediary activity. 

The Spanish hunt for websites providing hyperlinks

From our friend and Entresijos y Tesituras blogger Irene Palomino (@IriniPalomino) comes the following guest post on the current situation in Spain regarding internet-facilitated copyright infringement and linking sites:

The New Year brought the new Spanish IP regulation into force.

A significant and novel feature of the New Spanish legislation is its explicitly increased focus on copyright infringers in the online environment. The main target of the new legislation is the inclusion of websites that provide classified and ordered hyperlinks which give access to protected materials. This approach is entirely at odds with current Spanish jurisprudence – in particular the decision in Audiencia Nacional of Quedelibros v SGAE (decision here; discussed here, both in Spanish) which stated that it is against the law to treat these intermediaries as autonomous infringers without taking into account the status of the owner of the website who hosts the material.

Nevertheless, this new law suggests another version of things, regarding the operators of these websites as independent infringers. The legislature, far from restraining itself, considers not only websites hosting classified links to be infringers but also those which allow linking publications on their website. This means that all website owners must be extremely careful about what is going on in their forums and comments spots.

In order to enforce these new rules, the procedure for fining those potential infringers has been revised through a special governmental institution called La Comisión de la Propiedad Intelectual Sección Segunda (‘the Commission’, explained in Spanish here).

Reassuringly, in order to define what is considered an infringer, account is taken of the Spanish audience making use of those websites that provide suspicious hyperlinks and quantities of unauthorised protected work available via hyperlinks from those websites.

There is always a dark side and, in this case it deals with how the new procedure works.

In order to report an infraction, copyright holders must address a notification in the form of an email to the website in question, alleging a violation of his/her rights. Since an answer is not required in order to initiate proceeding, after three days we are entitled to begin the process. If an email address is not provided on the website, a simple petition addressed to the Commission will suffice and it will be announced in the Official State Gazette (Boletín Oficial del Estado).

As a first step, the Commission will notify the website about the alleged infraction. Within the timeframe of a maximum of 48 hours, two options arise: on is to delete allegedly infringing materials and the other is to prove one’s innocence.

Paradoxically, if materials are deleted, websites might be subject to a civil action, given that this response can be equated with an implicit acceptance that one has infringed copyright.

Where website owners do not delete hyperlinks, the Commission can make use of heavier weapons: after obtaining a judicial authorization, the Commission holds two options. The first is to ask the electronic payment services and advertisement services to cease any relationship with the websites, which results in economic pressure. The second is to ask the ISPs to trace users as well as website owners in order to bring blocking injunctions against them. It is imperative that these petitions be justified by an effectiveness report, balancing the proportionality of the measures inquired. This reasoning is in line with UPC Telekabel jurisprudence. Nevertheless, it is still unclear how users of this procedure can assert their rights and how the courts can control these injunctions, since the prior judicial authorisation required is exclusively for formal purposes. Finally, fines range from €150,001 to €600,000 and, where the domain is not from the EU, access to it from within Spain may be blocked for a maximum of one year.

As if this was not enough, the infringer may be subject to further civil, administrative and penal action.

Curiously, it is the first time in the EU that we encounter this sort of specification concerning hyperlinks where the prosecution of this questionable practice is established by a special authority. This is a good moment to look back to the Svensson and BestWater CJEU decisions and observe how the Spanish have done their homework in order to clarify unknown factors arising from these EU decisions.

Finally, the new ruling also introduces a new Article into the Civil Procedure Code where, in preliminary trial research, a private party may require the ISPs to provide users’ identification in order to bring an action to protect intellectual property rights. This is a bit scary if one considers that this possibility leaves the window open to jeopardize users’ right to privacy. As we can well remember in the recent decision of the CJEU in Digital Rights Ireland, the Court ruled that rights of users must not be violated unless there existed a major reason to do so, such as a serious crime. One might say that this new civil procedure amendment could be used as a subterfuge to avoid the criminal procedure’s more rigorous conditions.

We will soon see how those websites behave and if they are efficiently blocked. I am eager to see the influence of this new law in other regulations.

Further reading:
El Pais, "Spain’s new intellectual property legislation: the key points", here

The CopyKat - last Christmas you ......

As Eleonora reports over on theIPKat, Google has announced that it will be permanently shutting down the Spanish version of Google News, effective from December 16, 2014. The shutdown comes in direct response toamendments to the Spanish intellectual property law (Ley De Propiedad Intellectual) imposing a compulsory fee for the use of snippets of text to link to news articles, by online news aggregators that provide a search service. Google says its news service makes no profit and so hasd decided to pull the service out of Spain.  Richard Gingras, Head of Google News, said "[t]his new legislation requires every Spanish publication to charge services like Google News for showing even the smallest snippet from their publications, whether they want to or not. As Google News itself makes no money (we do not show any advertising on the site) this new approach is simply not sustainable."

Finland has decided to ditch copyright levies on digital devices. Instead a special government fund will be set up to compensate artists for private copying of music and movies. Following a Parliamentary  vote, Finnish MEP Henna Virkkunen said the new system would be “fairer to consumers and better better for artists because they will get more compensation this way”. Even Veronique Desbrosses, general manager of GESAC, which represents authors’ rights, agreed that increased compensation for artists was a positive element, saying “private copying compensation is part of the ecosystem and is essential”.

Chief Judge
Alex Kozinski 

With the eleven person en banc Ninth Circuit panel set to begin to re-hear arguments in Garcia v. Google case today in Pasadena, a number of Silicon Valley technology companies are amongst those resisting Cindy Lee Garcia's quest to "scrub the internet of her 5-second appearance in the controversial trailer for Innocence of the Muslims". Those against actors gaining a recognised copyright in their performances include Netflix, and the remaining amici range from law professors to news organizations, public interest groups to the Screen Actors Guild-American Federation of Television and Radio Artists—the last being the lone brief endorsing Garcia's copyright position. But interestingly no other major content owners from the film, TV or recorded music sectors have joined the battle: yes they want Google to take down infringing items - but no - they don't want performers and recording artists having any rights that might restrict their own commercial objectives. Google, the California Broadcasters Association and the American Civil Liberties Union all "foresee dire consequences if a U.S. appeals court doesn’t overturn a first-of-its-kind ruling" given by Chief Judge Alex Kozinski that gave actress Cindy Lee Garcia a copyright interest in her performance. Small filmmakers have also weighed in, backing Google; Jack Lerner, an assistant clinical professor at UC-Irvine School of Law, helped write an amicus brief on behalf of the International Documentary Film Association, other independent film groups and filmmakers including Morgan Spurlock, whose "Supersize Me" was nominated for an Academy Award. The California Broadcasters Association said that if the February ruling stands, it will open the floodgates to demands by minor players in movies for the removal of their performances from the Internet. More here.


Torrentfreak now reports that the Motion Picture Association Of America is now looking to secure web-blocks in the U.S without requiring new U.S. legislation. It seems having originally investigated how it might resurrect the web-block elements of SOPA/PIPA in Congress without causing so much controversy (which seems to have been a fanciful hope!)  - the MPAA has now opted for seeing if it can find a way to secure web-blocks in the American courts under existing laws, without requiring new legislation to be passed.

For the past three Decembers, a new musical tradition has been quietly taking root in the recorded music sector, stemming from the 2012 revision to European Union copyright law providing that sound recordings would be protected for an extended 70 years (rather than 50). But attached to that extension was a crucial proviso: in order to qualify for the extra 20 years of protection, the recordings had to be released within the first 50 years after they were made. Now Bob Dylan is said to be releasing a nine-LP box set of unreleased material from 1964, to keep the recordings from entering the public domain. The Beach Boys, The Byrds and The Kinks  are also due to release material although a number of websites noted that Universal Music is running out of time if it wants to reboot the copyright in any unreleased Beatles recordings from 1964. This time last year the major and the band's Apple Corps released 'The Beatles Bootleg Recordings 1963' onto iTunes. 

The one-time pirate website FilesTube has been officially "un-blocked" in the UK after relaunching itself as a licensed video aggregator. UK internet service providers were ordered to block their users from accessing  the site by the High Court in an action brought by record industry trade body the BPI in October last year. A relaunched Filestube is now as an aggregator of only legitimate content. and according to Torrentfreak, FilesTube's Poland-based operators had anticipated having to go the English High Court to get their domains unblocked, but the BPI had been monitoring the situation and voluntarily requested the block be removed. Indeed the BPI's General Counsel Kiaron Whitehead told TorrentFreak: "We are pleased that the block has encouraged FilesTube to change its business model so that it no longer appears to infringe music rights. Accordingly, we have agreed to un-block the site, which the ISPs will implement over the next few weeks. We hope that other sites which are subject to blocking orders will follow suit and help to support the development of legal digital entertainment".

Following on from our last blog and from TorrentFreak comes the opinion: "The Pirate Bay was taken offline in a police raid in Sweden. It may only have been the front-end load balancer that got captured, but it was still a critical box for the overall setup, even if all the other servers are running in random, hidden locations. Sure, The Pirate Bay was old and venerable, and quite far from up to date with today’s expectations on a website. That tells you so much more, when you consider it was consistently in the top 50 websites globally: if such a… badly maintained site can get to such a ranking, how abysmal mustn’t the copyright industry be?

That new Spanish law: a tale of fragments, aggregators -- and money

Last week the IPKat hosted this piece by Elena Molina and Sergio Miralles on the controversial new Spanish IP law.  Not to be outdone, the 1709 Blog has commissioned an analysis of its own. The author is our friend Valentina Torelli who, like Elena and Sergio, is currently practising in Spain. Here's Valentina's assessment:

As announced online last week, the Spanish Law no. 21/2014, the highly-publicised intellectual property law reform, was published on 5 November, provoking shock reactions within the world of ISPs. The law comes into force on 1 January 2015, except for some provisions which will be effective one year from publication. 

Among the changes to the previous intellectual property law, a green light has been given to the contested new Article 32(2), which makes the author’s right’s limitation for review subject to a compulsory economic compensation, when content aggregators communicate to the public literally “negligible fragments of contents”, taken from news publications or from latest news websites, which are directed at forming public opinion or have informational or entertainment purposes. 

The modification of Article 32(2) was intended to better comply with Article 5(3)(d) of Directive 2001/29 (the InfoSoc Directive):

“quotations for purposes such as criticism or review, provided that they relate to a work or other subject-matter which has already been lawfully made available to the public, that, unless this turns out to be impossible, the source, including the author's name, is indicated, and that their use is in accordance with fair practice, and to the extent required by the specific purpose.”

The most interesting part of the new Spanish provision is the inalienable nature of the economic compensation – which results to be compulsory collective management right for publishers and authors – in relation to making available negligible parts of publications. This compensation has been nicknamed the “AEDE tax” [tasa de la Asocición Espanola de Editores] as it will go to the benefit of publishers or other “right holders” and will be collected once a year by CEDRO, the Spanish collective society for authors and publishers, according to the Annual Budget Law. 

That said, although news-aggregators are exempted from asking for authorization to recompile periodicals’ and reviews’ irrelevant portions of contents, they will have to pay a predetermined amount of money to make them available to the public, irrespective of whether the legitimate right holder is a member of the Collective Society. This means that the collected compensation could be divided among the Collective Society’s members, without necessarily being paid to the legitimate right holder. Likewise, the publications released under Creative Commons will also be compensated by means of the new provision although their nature is quite the opposite to a ‘compulsory economic right’ philosophy. 

In any event, such limitation for review to author’s rights does not cover the communication to the public involving thumbnail images of images and photographs taken from the previously identified publications. 

From a legislative technique perspective, some perplexities may arise in regard to the criteria whereby the part of publications provided by content aggregators could be considered negligible (fragmentos no significativos) but protectable under copyright law and, therefore, exempted under condition of an economic compensation for the sake of the public interest in access to culture and information (Articles 44 and 20 Spanish Constitution). 

 It seems that the solution would be to carry out an assessment on a case by case basis, assuming that no authorization or compensation is due when the publications’ fragments are originally summarized by the aggregator and then communicated to the public together with the link to its original source. 

Another important point is the identification of the content aggregators, as there is always a tendency to take into consideration the big players in the market, disregarding other smaller operators, providing the same type of services addressed by these legislative measures. In this regard, sooner or later at international level the category of content aggregators should be regulated on its own for the purposes of copyright protection. 

Provided that social networks should not fall under the definition of content aggregators for the purposes of the reform, it would be interesting to analyse whether the limitation provided in Article 32(2) of the new Spanish Intellectual Property Law would apply to blogs, databases or applications, undertaking reviews of news publications. Indeed, Spanish law no. 34/2002 implementing Directive 2000/31 (the E-Commerce Directive) provides no definition of “service providers”, it being necessary to refer to the European legal framework and, in particular, to Article 1(2) of Directive 98/34 as amended by Directive 98/48, which provides the following definition:

“ ‘service’, any Information Society service, that is to say, any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services.”

Consequently, emphasis should be on services “normally provided for remuneration”, given that the provision of a service “at distance” “by electronic means” regards the inherent functioning of the Internet and that “at the individual request” involves the active participation of the users querying the internet itself. It follows that the category of providers engaged in content aggregation could be wider than is normally conceived when thinking of internet service providers, just because the concept of remuneration could be differently interpreted. 

In relation to the beneficiaries of the reform, again it is unclear whether the new provision encompasses only the traditional media of communication or also covers other players such as blogs and online reviews to the extent that they engage in news updates. Likewise, it seems that if the publication whose negligible fragments are aggregated was considered a collective work, the fragments’ authors would step back in respect to publishers’ right to the economic compensation. 

Moreover, according to the second part of Article 32(2), the new mandatory compensation may also entail browsing ISPs’ activities, when they offer users the search tools for spare words, included in the negligible portions of publications, and they do not comply with the three cumulative requirements provided by the law. Indeed, the review limitation to the author’s rights applies only if the availability of such search tools to the public (i) does not pursue the browsing ISP’s own commercial purpose, (ii) is strictly limited to the offer of search results in accordance to the users’ previous entries in the search engine and (iii) provides the link to the original webpages to which the protected contents belong. 

In this case, the provision has two main points.

·         the fact that the search tool regards spare words included in the publications, without specifying how many words or combination of them can be exempted.
·         such search services cannot be associated with the provider’s own commercial purposes, although it is not clear whether the provision is conceived only for pay-services or if it also embraces indirect revenue sources.

This being said, the reason underlying the introduction of the economic compensation concerns the publishers’ prerogatives to protect the undue exploitation of their intellectual property rights on the internet. In particular, it is aimed at contrasting the direct competition between them and content aggregator ISPs, in relation to access to information without the latter sharing the costs the publishers bear in producing their original content. 

Notwithstanding the argument relating to the anticompetitive effect of content aggregators’ services against both offline and online publishers, the Spanish National Commission for Markets and Competition (CNMC) in its report of 16 May this year took a totally different stand. In the light of the several versions of the Intellectual Property Law’s draft reform, the Commission proposed modification of Article 32(2), recommending that the limitation for review be reconsidered as regards the mandatory nature of the economic compensation and the exclusive assignment of its collection to collective societies. The main points of the report can be summarized as follows: 

1.       The content aggregator ISPs’ and press-clippers’ competitive role affecting publishers could not be confirmed. 

 The Commission observed that website holders could apply technological protection measures, such as the standard program robots.txt, to prohibit or to limit crawling and the aggregation of website content according a tailored degree of availability. However the snippets’ aggregation provides publishers with visits to their websites, as complete access to information is only possible on their pages. This takes into account the huge economic investments that many, if not all, publishers make in order to increase their indexing in search engines. Effectively, the Commission achieved a more favorable result in the contractual balance of interests between all the interested players as regulated by the market. In this regard, as content aggregators have raised concerns all over the European Union, it is worth mentioning that the German Federal intellectual property law had introduced an obligation for them to obtain publishers’ licences to communicate to the public full protected contents, with only the making available of snippets being exempted from such licensing. Moreover, the Commission emphasised that, while the predetermination of economic compensation would be ineffective, since it would not serve the publishers’ different and variable interests, the advertising revenues derived from the linking to their websites from those of content aggregators would be significant. 

 Indeed, that content aggregators could contribute economically to publishers’ adaptation to the online market is not a brand new idea: for instance, in 2013, Google signed an agreement with the French Press Association under the eye of the French Government, whereby a dedicated fund, amounting to 60 million euros, was established to facilitate the press’s transition to the online environment.  

2.       Horizontal competition among content aggregators ISPs would be undermined 

As regards the competition between content aggregators, the CNMC warned about the discriminatory character of the compulsory economic compensation, in that it would be a measure preventing the access to the content aggregators market, which the actual ISPs did not have to get over. 

While waiting for the entry into force of the new Article 32(2) next year, it will not be long before we see how affected content aggregators will deal with the new provision and adapt their business models to the rules of the Spanish web, and whether the Spanish internet will change its mode of operation.

Spain and the aggregators' levy: war on the commons or just a light skirmish?

It is with great pleasure that this weblog hosts the following piece by Fidel Porcuna (Bird & Bird, Madrid), inspired by a recent bit of thinking on Communia by Paul Keller.  Writes Fidel:

"If we should pick a single measure, among several which the Spanish government seeks to implement via the new reform of the current Spanish Intellectual Property Law (passed by the lower chamber of the parliament on 26 July 2014), which has received and continues to receive major criticism globally, that would be the measure dealing with the news aggregators' compulsory levy (also called "Article 32.2", "Google levy" or, more properly, the "AEDE levy"). By this levy, electronic content aggregation providers using "non-significant fragments of aggregated content which are disclosed in periodic publications or on websites which are regularly updated" will trigger a right to an equitable remuneration. This remuneration is to be compulsory managed by a collecting society in favour of publishers and other relevant right-holders (the association of journalists is also claiming an entitlement). Contrary to the current legislation where this remuneration exists, this new law makes the remuneration unwaivable, literally "unrenounceable". This inclusion has opened a Pandora's box in which the tensions between aggregators and publishers have so far been locked. While publishers are interested in obtaining economic gains from the reuse of copyrightable fragments, aggregators maintain that this reuse brings large benefits to publishers in terms of redirecting links, and a fair use exception is applicable based on general interests of free creation.

Is this now unwaivable character risking the commons? In his thoughtful and well-documented article, "Did Spain just declare war on the commons?", Paul Keller explains the damage linked to the inability of providers to choose how to exercise this right, let alone the ambiguity of the wording of the new law (e.g. is it really meant to be so broad to include every website which is regularly updated and contains information or opinions, such as a blog; what length is required to be included in the definition of non-significant fragments?) First, Keller argues that the reform will limit creators and publications who want to encourage others to reuse their content because they will not be able to waive the requirement that users must pay for aggregating their content. Secondly, non-traditional publishers may do not want to be remunerated for re-use of non-significant fragments taken from their websites since their business models are based on traffic or because they are interested in sharing their writings as widely as possible. Thirdly, Keller argues that it will render ineffective the Creative Commons licences or other works benefiting from the free culture. He concludes that the reform is another ill-conceived attempt to support the failing business models of traditional publishers by misusing intellectual property law. The view coincides with recent Ricardo Galli's interesting article published in El Mundo, where the conclusions from the Competition Commission's report on the subject are cited. Ricardo Galli is founder of Menéame, the first aggregator provider in Spain and fourth after Google, Twitter and Facebook.

This blogger shares the concerns of Keller, but somehow has hopes that the new Article 32.2 will not bring such an apocalyptic scenario. Creators and right-holders of music works whose "unwaivable" rights were managed via collecting entities seem to have found their way to obtain from Spanish Courts respect for works shared under the free culture movement. Since this measure is ultimately linked to the publishers' rights --despite being designed as the new ancillary right to news aggregators-- and not all publishers do agree with the AEDE levy, the collateral damage as described by Keller perhaps will not come to pass".

The CopyKat - the pain in Spain means no blocking - again

A  court in Spain has overturned a previous ruling that had led to the blocking for a number of file-sharing sites. Back in May this year the anti-piracy group FAP secured injunctions in court forcing internet service providers in the country to block various file-sharing set-ups, including SpanishTracker, PCTorrent.com, NewPCT.com, PCTestrenos.com, Descargaya.es and TumejorTV.com - but in a blow to the content industries - who had celebrated the earlier ruling - an appeals judge in the wonderfully named Court of Instruction No.10 (well that's according to TorrentFreak)  has said there are "insufficient grounds" for blocking the offending sites in order to protect intellectual property rights - although thus will no doubt prompt fresh calls to extend or revise the so called Law Sinde in Spain which was meant to have allowed web blocking as a remedy against internet piracy from March 2012. 

It seems Amazon is trialling a 'Spotify' type service which will allow Kindle users to subscribe for ebooks - paying $9.99 a month to have access to 640,000 books and nearly 7,000 audio books. Richard Mollet, the Chief Executive of the Publishers Association in the UK has said that it is essential that any subscription service properly rewards writers and publishers. Kindle Unlimited joins Scribd, EnTitle and Oyster - but with the potential a far far bigger library of books available to subscribers - although no books from any of the 'big five' publishing houses (Penguin Random House, Simon & Schusterm, Harper Collins, Hachette and Macmillan are featured in the prootional video which had been seen by Gigam - although Lord of The Rings, books from the Harry Potter series and Life of Pi were apparently seen in the video.

And Google is possibly experimenting with a new system that would see adverts for legitimate content platforms positioned at the top of searches for unlicensed movies or music. Google has been widely criticised by the music and movie industries for not doing enough to steer web-users to legitimate rather than illegal sources of content.

Bornstein & Bornstein, a firm of attorneys in San Francisco are being accused of censorship after reportedly using a DMCA copyright takedown notice to remove a controversial and secretly filmed video from YouTube. A certain Jackson West had attended one of the firm's sessions  on how to progress local evictions of longterm tenants, and video taped people protesting at a seminar given by the lawfirm . However you can still see the video via Vimeo - for now - from a link on TechDirt.

US fashion and make up blogger and YouTube star is facing a copyright infringement action from Ultra Records and Ultra International Music Publishing, home of Calvin Harris and Deasmau5. The case, filed in the United States District Court in Los Angeles, makes it clear the label has only begun its search of Phan’s many online productions, but has so far uncovered dozens of infringements, according to the complaint. Those videos have been viewed more than 150 million times, the plaintiffs said. However at lest one Ultra artist, Kaskade, the globally renowned US DJ who was nominated for a Grammy last year, is not happy with his label's stance tweeting "Copyright law is a dinosaur, ill-suited for the landscape of today’s media.”   “I’m not suing @MichellePhan + Ultra Records isn’t my lap dog. I can’t do much about the lawsuit except voice my support for her.".

And finally, Malibu Media, perhaps wrongly accused of being a copyright troll, has succeeded in an infringement action against Don Bui, an immigrant from Vietnam who is now a naturalized US citizen, after the judge in the case gave short shrift to his explanation that the reason he downloaded and kept 57 Malibu Media porn movies from Kickass Torrents was because he had no idea how torrents work - and saw nothing wrong in "ordering movies" from Kickass Torrents. The erotic film studio has filed thousands of lawsuits against "John Doe" defendants in the U.S., in many cases "collecting a couple of thousands of dollars from "scared file sharers who do not want to go to court." US District Judge Robert Jonker reportedly said this "Defendant has some quarrels with the details of how BitTorrent works, but nothing that the Court sees as a fundamental or material issue of fact. Even as Defendant describes the facts, using BitTorrent technology, he ultimately winds up with 57 unauthorized copies of Plaintiff's works--copies that did not exist until Defendant himself engaged the technology to create new and unauthorized copies with a swarm of other users. True enough, the process is not identical to the peer-to-peer file sharing program in Grokster. It is, however, functionally indistinguishable from the perspective of both the copyright holder and the ultimate consumer of the infringed work. In both situations, the end user participates in creating a new and unauthorized digital copy of a protected work. It makes no difference from a copyright perspective whether the infringing copy is created in a single wholesale file transfer using a peer-to-peer protocol or in a swarm of fragmented transfers that are eventually reassembled into the new infringing copy." Bui's attorney also suggested his client was a "poor immigrant" who didn't understand English very well" - that argument was shot down as well. More on TechDirt.