The Copyright Act 2002 represents a milestone in German copyright law. The act, which takes effect on July 1 2002, creates new and significant rights and obligations within the media industry. It not only governs and regulates all media agreements, but also imposes general terms and standards on such contracts. As a result, the author is afforded more complex legal protection.
Section 29(3) of the Copyright Act reiterates the principle that copyright is inalienable. However, the act allows authors to grant use of their works through licences. The act's most important provision is set out in Section 32, which provides that remuneration for such usage must be 'adequate'. Section 63(a) provides that the author's right to remuneration may only be transferred to a rights management society.
This provision allows the author to make a corrective claim against the licensee if the contractually agreed remuneration is not 'adequate'. The adequacy requirement is presupposed where (i) remuneration is based upon a collective agreement, or (ii) compensation is based on a scale adhered to by the licensee. In addition, compensation made to the author in good faith and in accordance with the general practice which prevailed at the time that the contract was concluded will also be considered adequate.
The so-called 'best-seller provision' allows the author to make a further, corrective claim against the licensee if the 'benefits and revenue' obtained from the licensee are 'markedly disproportionate', when considered over the entire duration of the contract and in relation to the revenues generated by the licensee during this period. In addition, Section 32 provides that a corrective claim must be made against a third party if that party generates the subsequent revenue which leads to the disparity.
The best-seller provision can also be contractually concluded, in order to meet the media industry's need for legal certainty. Provisions such as escalator clauses or percentage participation can prevent unnecessary litigation. However, contractual circumvention of the best-seller provision is prohibited.
Even where a contract provides that the applicable law is something other than German law, if the contract provides for substantial use of the work in Germany, the adequacy requirement and the best-seller provision will apply.
Section 75 extends the obligations and rights conferred in Sections 32 and 32(a) to performing artists (ie, actors and musicians). In cases where several performing artists wish to make a claim but their individual input cannot be separated from the work as a whole, the act provides that one artist can be nominated to pursue the claim on behalf of the others. This provision was included for reasons of procedural practicality, despite objections in relation to complex media (eg, films involving large numbers of actors).
The media industry must respond to this legislation in a number of ways in order to ensure compliance and guarantee the legal certainty necessary for its continued expansion. In relation to the adequate remuneration requirement, open communication and exchange of documents during negotiations would demonstrate a well-intended contract made in good faith. Explicit contractual explanation of the agreed compensation would also indicate mutual understanding and intention. Further, the litigious effects of the best-selling provision could be excluded by the inclusion of escalator clauses or other legal instruments in the contract.
For further information on this topic please contact Ulrich Michel at Nörr Stiefenhofer Lutz by telephone (+49 30 2094 2000) or by fax (+49 30 2094 2094) or by email ([email protected]).