In July 2007, the Lower House of German Federal Parliament (Bundestag) passed a long-awaited bill to amend the German Copyright Act. Following the approval by the Upper House in late September 2007, the new law became effective January 1, 2008. The bill, known as the “Second Basket” of copyright reform, is a follow-up to an earlier Copyright Act amendment that went into effect in September 2003. This “First Basket” transferred mandatory provisions of the European Copyright Directive (2001/29/EC) and the World Intellectual Property Organization (WIPO) Performances and Phonograms Treaty (WPPT) into German law. The “Second Basket” addresses several controversial issues that initially were put on hold in order to meet the deadlines set by the Copyright Directive and the WPPT. Among other actions, the bill readjusts the Copyright Act’s fair use provisions, provides for a new scheme of statutory remuneration of copyright owners and lifts the ban of the transfer of rights in unknown exploitation methods.

Readjustment of Fair Use Provisions

The new law aligns the Copyright Act’s fair use provisions with the requirements of the digital age. Most importantly, it closes a loophole regarding the reproduction of copyright-protected works for private use. Previously, Section 53 of the Copyright Act permitted reproductions of a work to be made for private use, provided that the original was not obviously produced unlawfully. As a consequence, the downloading of music or films from peer-to-peer file-sharing platforms—which under German law constitutes a reproduction of the work—generally was permissible, because in the majority of cases the original was not produced unlawfully (even though it was made available to the public unlawfully). The reproduction of a work from an original unlawfully made available to the public now also excludes the application of the fair use provision.

New Scheme of Statutory Remuneration

The new law also provides for a new scheme to compensate copyright owners for copies made under the fair use provisions of the Copyright Act. In principle, copyright owners (acting through their industry’s collecting societies) may claim an adequate compensation for fair use copies from the manufacturers of copying devices and storage media (such as hard drives, memory sticks or blank DVDs). Previously, the amount of compensation was determined in a detailed attachment to the Copyright Act, which proved to be rather inflexible in the face of rapid technological change. After the reform, the amount of compensation will be negotiated between the collecting societies and the manufacturers directly, allowing a more effective remuneration scheme.

Transfer of Rights in Unknown Exploitation Methods

When the German Copyright Act first was enacted in 1965, it included a provision prohibiting the transfer of rights in unknown exploitation methods. Originally intended to protect authors from “selling” all rights in their works across the board, this provision now in many cases impedes the digital exploitation of films and musical works. Since the rights in many works originally were granted only for the analogue exploitation methods known at that time, the rights for digital exploitation (e.g., via DVD, IPTV or mobile TV) now must be renegotiated with the authors or, more frequently, with their heirs. In many cases this has proved to be extremely difficult, particularly with respect to co-authored works, such as films. The new law principally allows the transfer of rights in unknown exploitation methods. With respect to existing contracts, it provides for a transitional arrangement. According to this arrangement, the rights in unknown exploitation methods are deemed also to have been transferred if all relevant exploitation rights known at the time were assigned to another party without any territorial or time limitation. The author of the work may, however, object to such transfer of rights within certain time limits. The author is entitled to a fair and equitable consideration for the exploitation of his or her work. It is expected that this provision will free many digitally unexploited cinematic treasures from film studios’ archives. This bill is a major improvement to the German Copyright Act, allowing it to meet the challenges of the digital age.