The amendment to the Austrian Copyright Act introduces a whole range of new provisions on copyright contract law, strengthening the position of authors and performers1. In our first Legal Insight ("Austria: The (new) Copyright Contract Law ") we provided some background information and an overview. In our second Legal Insight ("Austria: The (new) copyright remuneration rules for authors and performers"), we introduced the new remuneration provisions. However, in order to assess whether the remuneration remains appropriate and proportionate, some more information is needed.
This brings us to the transparency obligation (Art 19 DSM Directive; Sec 37d Austrian Copyright Act):
Why is there a transparency obligation?
The obligation is based on the European legislator's presumption that authors tend to be in the weaker contractual position when they grant licences or transfer their rights. Thus, they need information to assess the continued economic value of their rights, compared to the remuneration received for their licence or transfer, but they often face a lack of transparency. Therefore, the European legislator has introduced the transparency obligation, ensuring that authors gain this necessary information to assess whether they are still remunerated appropriately and fairly in relation to the actual revenues gained by the exploitation of their work.
Accordingly, the transparency obligation provides that licence or rights holders are obliged to inform the authors at least once a year about the exploitation of their works. The Austrian legislator clarified that the information only has to be provided for the past year.
This right to information cannot be waived in advance.
Who is subject to this obligation?
The obligation is imposed on the author's direct contractual partner. According to the Austrian transposition it is in fact not a right of the authors to request information but an obligation of the contractual partners to automatically provide information (without being requested to do so).
If the contractual partner has sublicensed or transferred the rights, the author has a claim to information against this third party if the author's contractual partner does not have all the necessary information. For this purpose, the contractual partner must disclose the identity of the third party to the author. Unlike the original contractual partner of the author, the third party has only a duty to provide information upon request.
What must the information contain?
As long as exploitation is ongoing, contractual counterparts of authors have to provide information available to them on all modes of exploitation and on all relevant revenues worldwide.2 This information has to be:
- up-to-date to allow access to recent data;
- relevant to the exploitation of the work;
- comprehensive in a way that it covers all sources of revenues relevant to the case, including, where applicable, merchandising revenues (also revenues from advertising and sponsorship directly related to the exploitation of the work is probably covered).
The information must be provided in a way that is comprehensible to the author and that enables them to assess the economic value of the rights concerned.
Are there exceptions from the obligation? And do employers have to provide information to employees?
There will be hardly a company that does not use copyrighted works (texts, pictures, logos, videos, music and the like) on the basis of – perhaps only implicit – licence agreements with authors. A large proportion of these works will probably have been created by the company's own employees. Is information on revenues arising from the exploitation of such works to be provided in every case? To be honest, we do not know yet. However, such an interpretation would appear to be excessive. Again, the provision seems to be primarily aimed at typical exploitation situations (e.g. publishing contracts), while the law itself only provides limited exceptions:
- If it turns out that the administrative burden of the transparency obligation would be disproportionately high in relation to the revenue generated by the exploitation of the work, the scope of information to be provided is reduced to what "can reasonably be expected". Still, there would be an obligation to provide certain information.
- If the author's contribution is not significant with regard to the overall work/performance, there is no obligation to provide information.
- According to the Austrian transposition the same will be true if the obligation would be disproportionate for other reasons.
These unspecific legal terms and requirements may leave sufficient leeway to apply the provision only in typical exploitation situations. For example, there is no independent commercial exploitation of logos, advertising materials, product packaging, etc. At the same time, such unspecific exceptions are problematic for rightsholders as they must judge for themselves whether and what information must be provided.
Finally, the information obligation does not apply from the outset if:
- the author has licensed or transferred the rights free of charge (it is not clear whether this – reasonable – clarification of the Austrian legislator is in line with the DSM Directive);
- the work is a computer program.
Since business-relevant information on income, methods of exploitation and distribution channels are often sensitive trade secrets, it is advisable to ensure that the information provided is treated confidentially, for example by means of non-disclosure agreements. In doing so, however, the author may not be limited in exercising their rights derived from the information (e.g. claiming contract adjustment).