CC BY
3УДК 34
Gazdeliani Giga
Lawyer - Intellectual property / Copyright / Human Rights / Immigration Law.
Manager and IP expert of collective management organizations (CMOs) and small/medium-sized enterprises (SMEs) CEO - MusMus Law Clerk - Ballon Stoll P.C.
Graduate of Washington University School of Law in St. Louis, LLM with a concentration in Negotiation and Dispute Resolution
(New York, USA)
ADDRESSING LEGISLATIVE ERRORS IN COPYRIGHT ROYALTY
FRAMEWORKS: A COMPARATIVE SCHOLARLY ANALYSIS OF GERMANY, GEORGIA, AND EU PRACTICES
Abstract: the article examines the gaps and shortcomings in the legislative frameworks governing copyright royalties in thrdistinct jurisdictions: Germany, Georgia, and the European Union. The author outlines the processes through which copyright royalties are determined and identifies key legislative errors, such as ambiguities in definitions, lack of clarity regarding the authority of governing bodies, and discrepancies in the application of fair use and fair dealing provisions. Through a comparative analysis, the work elucidates how these legislative gaps affect the rights of authors and copyright holders, as well as the ability of users to access copyrighted materials. The author provides recommendations for addressing the identified legislative errors, advocating for clearer definitions, enhanced regulatory frameworks, and improved collaboration between stakeholders. This article aims to contribute to the ongoing discourse on copyright law and its evolution in a rapidly changing digital landscape.
Keywords: copyright, intellectual property, collective management organization, legislative gaps, legal mechanisms.
I. The National Intellectual Property Office as the Determiner of Copyright Royalties.
In practice, it is common for users to claim that the authority to determine royalties in Georgia belongs to Sakpatenti (The National Intellectual Property Office) rather than the association (CMO). This claim is often unfounded and stems from the ambiguity of Article 18, Paragraph 7 of the law and its misinterpretation.
The third sentence of the mentioned paragraph, which defines Sakpatenti's role in determining royalties, relates exclusively to the determination of copyright royalties in the case of cable retransmission. This is determined by the following circumstances: the first sentence of Article 18, Paragraph 7 of the law states that "The amount of copyright royalties, as well as the method of calculation and payment for the use of a work in any form, is determined by an agreement concluded between, on the one hand, the author, another holder of copyright, or an organization managing property rights on a collective basis, and, on the other hand, the user."
In the next sentence of the provision, the legislator addresses the issue of royalty payment in the case of cable retransmission. According to the law, unlike other cases where the determination of the amount of copyright royalties can be made jointly by the organization managing property rights on a collective basis, as well as directly by the authors or other copyright holders, in the case of cable retransmission, the royalty is determined solely through an agreement between the organization and the user. According to the law, in this instance, authors and copyright holders do not participate in the determination of royalties.
In this case, the legislator considered the fact that authors and other copyright holders do not participate in determining the royalties. To prevent the organization managing collective rights from independently setting an unreasonable royalty amount, a protective mechanism was included in the provision in the form of Sakpatenti. This was done to protect both the interests of authors and copyright holders, ensuring they do not raise claims regarding the determination of an unreasonable royalty, and the interests of the user, preventing them from accusing the association of abusing its
authority by independently setting an unreasonable royalty amount without the involvement of the authors.
This is further confirmed by the formulation of the provision itself: "If the said organization and the user fail to reach an agreement, the amount of the royalty, as well as the method of its calculation and payment, shall be determined by Sakpatenti upon the request of one or both parties." The provision specifies that Sakpatenti will only determine the royalty if the collective management organization and the user fail to agron the amount. The legislator does not mention the author or other copyright holders; only the collective management organization is mentioned in its relationship with the user. Therefore, it is clear that the third sentence continues the relationship regulated in the second sentence, which exists solely between the organization and the user and pertains exclusively to cable retransmission.
This is further supported by Paragraph 6 of Article 21 of the law, which also regulates the exceptional situation where Sakpatenti is granted the authority to determine the amount of royalties.
In this case, the collective management organization independently determines the amount and method of royalty payment in its relationship with the user, without the involvement of the authors or copyright holders. This provision regulates the payment of royalties by manufacturers and importers of devices (such as audio and video recorders) and material carriers (such as phonograms, videotapes, cassettes, laser discs, CDs, and other physical carriers) used for reproduction for personal use. According to Paragraph 6 of Article 21: "The amount of royalties and the method of payment shall be determined by agreement between, on the one hand, the said manufacturers or importers, and, on the other hand, one of the organizations managing the property rights of authors, performers, and phonogram producers on a collective basis. If the parties fail to reach an agreement, the amount of royalties, as well as the method of calculation and payment, shall be determined by Sakpatenti upon the request of one or both parties."
Consequently, the law recognizes only two instances in which Sakpatenti is granted the authority to determine the payable copyright royalty. This makes the
legislator's intention even clearer—to include a protective mechanism in situations where the collective management organization engages with the user independently of the authors and copyright holders, to prevent the determination of unfair copyright royalties.
Accordingly, it is undeniable that Sakpatenti's authority in determining royalties is limited solely to the two mentioned interactions with users and should not extend to other types of user interactions. Paragraph 6 of Article 21 also confirms that the third sentence of Paragraph 7 of Article 18 pertains only to cable retransmission. If this provision were intended to apply to all user interactions, the legislator would not have needed to address the issue of royalty determination by Sakpatenti again in Paragraph 6 of Article 21, nor would they have restricted the possibility of involving Sakpatenti to only two interactions of the same specific nature.
II. The Authority of the Collective Management Organization to Determine the Amount of Copyright Royalties.
Copyright users also misinterpret Article 18, Paragraph 7 of the law regarding the determination of royalties. They often claim that the royalty has not been established and that the association merely presents an offer. This position is also unfounded and contrary to the law. According to Paragraph 5 of Article 63 of the law: "The management of the organization's activities is carried out by the holders of copyright and related rights whose property rights are managed by the organization. Decisions regarding the amount of royalties, the conditions for issuing licenses to users, the distribution and payment of collected royalties, and other significant matters are made collectively by the holders of copyright and related rights at a general meeting." Therefore, it is legally established that copyright royalties are determined collectively by the holders of copyright and related rights at a general meeting.
The user's reliance solely on Article 18, Paragraph 7 of the law, arguing that the royalty must be determined through an agreement with the user, is incorrect. The interpretation of the provision should not be made in isolation from the rest of the law; it must be understood in the context of the overall objectives of the law.
According to subparagraph "a" of Paragraph 1 of Article 65 of the law, "An organization managing property rights on a collective basis has the right to agrwith the user on the amount of the royalty and other licensing terms." The agreement on the royalty amount with the user is a right of the organization, not an obligation. This is natural and aligns with the specific nature of copyright relations. If the determination of copyright royalties were dependent on agreement with the user, the user would often attempt to obstruct the determination of royalties by claiming that the proposed rate is unacceptable. Consequently, the royalty would frequently remain undetermined, which would naturally hinder the protection of copyright and the receipt of fair royalties by the author. This situation would facilitate the use of works without paying royalties, thus infringing on copyright.
Furthermore, according to Paragraph 3 of Article 64 of the law: "In accordance with the rights granted by this law, an organization managing property rights on a collective basis issues licenses to users for the use of a work or an object of related rights in an appropriate form. The terms of the licenses must be identical for all users within the same category." This provision also confirms that copyright royalties must be determined by the holders of copyright and related rights, as negotiating with each user individually would naturally violate the principle of uniformity in licensing terms.
Consequently, the interpretation of Article 18, Paragraph 7 cannot be separated from the law and its objectives; it must be interpreted in conjunction with Paragraph 5 of Article 63, Paragraph 1 of Article 65, and Paragraph 3 of Article 64. Based on these provisions, it follows that copyright royalties are determined collectively by the holders of copyright at a general meeting. The collective management organization, which must adhere to the principle of uniformity when setting the royalty rates, has the right— but not the obligation—to negotiate the royalty with the user.
It is noteworthy that, based on the aforementioned principle of tariff uniformity, a non-discriminatory approach is applied in most European countries. In these countries, collective management organizations typically enjoy de jure or de facto monopolies and do not have the right to refuse to grant licenses to users. The prohibition of discrimination not only ensures uniform tariffs but also benefits users of
copyright-protected works, as they are protected from unjustified discriminatory practices.
Although the directives adopted by the European Union in the field of intellectual property protection are not yet mandatory normative material for Georgia, it should be noted that some of these directives are reflected in Georgian legislation, which is largely aligned with EU law. For example, in 2005, a fundamental amendment was made to Georgia's Law on Copyright and Related Rights, incorporating several provisions outlined in various EU directives.
On February 30, 2005, Law #N1585 introduced various amendments, including changes to Article 64 of Georgia's Law on Copyright and Related Rights. Paragraph 3 of this article incorporated the principle of uniformity in licensing terms for users within the same category of copyright. According to this provision, it is unacceptable for one user category, such as a recording studio that reproduces musical works, to be in a privileged position compared to another recording studio.
For example, the role of the collective management organization GEMA in Germany in determining the copyright royalty rates aligns with the practice of collective management organizations in Georgia. German copyright law also obligates GEMA to ensure uniform conditions for users within the same category.
However, in addition to the above, according to the legally established approach for determining tariffs in Germany, the tariff is set independently of the copyright holders. Copyright holders who join GEMA and transfer their rights for management to the collective management organization are not legally allowed to set a lower or higher royalty rate than that determined by GEMA. This provision does not follow from Georgia's Law on Copyright and Related Rights.
According to Georgian copyright legislation, decisions regarding the determination of royalty amounts are made collectively by the holders of copyright and related rights at a general meeting. In practice, however, a different situation often arises. Based on the decision made by the copyright and related rights holders at the general meeting, the competence of developing licensing terms and determining the specific amount of payable royalties (tariffs) for the use of copyright by the user has
been delegated to the association's board to ensure the association's swift and efficient management. Nevertheless, since the authority to set tariffs is granted by the general meeting of authors and other copyright holders, if the authors do not approve of the association board's tariff policy, they retain the right to revoke the authority granted to the board regarding the determination of royalties. Additionally, the association's statute specifies that the general meeting is the highest governing body of the association.
Accordingly, although, similar to German legislation, Georgian copyright law obligates Georgia's collective management organization to uphold the principle of uniformity when issuing licenses to all users within the same category, this does not restrict authors from having the opportunity to determine the copyright royalties themselves.
Additionally, according to Paragraph 2 of Article 15 of Georgia's Law on Copyright and Related Rights: "The conclusion of a contract for the creation of an audiovisual work entails the transfer of the exclusive right to use the work to the producer of the audiovisual work, unless otherwise stipulated by the contract. The authors (co-authors) of this work retain the right to receive royalties from the user (broadcasting organization, cinema, etc.) for any form of use of the work, and any contractual agreement to the contrary between the audiovisual work's producer and the authors is void. This right is exercised solely through the collective management organization of property rights, except in cases where the user has paid the royalties directly to the author (co-author), in which case the user is obligated to provide documentary proof of payment to the collective management organization."
This provision of the law specifies the implementation of the right exclusively through the collective management organization. However, it also acknowledges the author's role in receiving royalties. In practice, the user has the option either to pay the royalty directly to the author and subsequently provide the collective management organization with documentation confirming the payment or to pay the royalty directly to the collective management organization.
Accordingly, Georgian legislation, similar to that of most European countries, ensures a non-discriminatory approach by the collective management organization and establishes uniform conditions for users within the same category. However, unlike the practice in Germany, the author in Georgia participates in determining the payable copyright royalty.
REFERENCES:
1. Giuseppe Maiotti, "New Licensing Models for Online Music Services in the European Union: From Collective to Customized Management, Symposium: Collective Management of Copyright: Solution or Sacrifice?" COLUMBIA JOURNAL OF LAW & THE ARTS, 2010-2011, Pg.785, son Heinonline - Citation: 34 Colum. J.L. & Arts 757 2010-2011;
2. Violaine Dehin, The Future of Legal Online Music Services in the European Union: AReview of the EU Commission 's Recent Initiatives in Cross-Border Copyright Management, 32 EUR.INTELL. PROP. REV. pg.223-224, Cited by Giuseppe Maiotti at "New Licensing Models for Online Music Services in the European Union:From Collective to Customized Management, Symposium: Collective Management of Copyright: Solution or Sacrifice?" COLUMBIA JOURNAL OF LAW & THE ARTS, 2010-2011; Pg.785;
3. Sopo Kvintadze, "The Association Agreement Will Further Protect Intellectual Property," Journal "IP Georgia," Spring 2014, p. 65;
4. Peter Gyertyanfy, "Why Is a European Directive on Collective Management Necessary? A Perspective From a New Member State of The EU", Journal Copyright Society of the U.S.A., 2005-2006, pg.89;
5. Georgian Copyright Association Statute, Tbilisi, 2012, p. 7; available at -http://gca.ge/index.php?cid=47&lang=geo
