The Extended Collective License as Applied in the Nordic Countries

Henry Olsson

Henry Olsson
The Ministry for Justice
Stockholm

KOPINOR 25th ANNIVERSARY INTERNATIONAL SYMPOSIUM
Grand Hotel, Oslo, Friday, May 20, 2005.

1. Brief Background

A short introductory remark

I have not seen this presentation as in any way providing the details of the systems in the five Nordic countries, which systems differ in slightly in several respects. Such a detailed presentation would be rather pointless, especially for non-Nordic participants in this Symposium. In addition, legislative proposals for the implementation of the European Union Infosoc Directive are presently under consideration in the Parliaments in Finland, Norway and Sweden, and the law in Iceland is also undergoing changes.

Therefore, the presentation aims more at the basic features and the questions of principle that may be important to discuss in this context.

What is an extended collective license?

”Extended collective license” means just what it says, namely provisions in the law giving an extended effect to the clauses in a collective agreement in specific areas of the copyright/related rights field. The extended effect applies to right-owners who are not members of the contracting organisation.

The history of the system

The particular scheme does not have a very long existence. The first extended collective license provisions came as a result of the revision of the copyright laws in the Nordic countries in the early 1960s. Revision committees had been working in Denmark, Finland, Norway and Sweden with also Iceland participating. They proposed the first such extended collective license scheme, in the field of broadcasting of certain categories of works, primarily musical works. As the scheme worked well, it was then in the Nordic countries been extended to new areas over the years.

The application of the system in the Nordic countries

Basically, the scheme has the same basic structure in all the Nordic countries and covers the same main areas of exploitation of works or productions but there are some differences both as regards the coverage and as regards certain elements in the scheme itself. Those will be briefly touched upon in the following part of this presentation.

2. Basic features of the extended collective license.

a) The system presupposes that the right-owners in particular fields are grouped together in organisations that are representative in the field concerned and that are mandated to conclude contracts on their behalf.

b) Following free negotiations, a representative organisation of right-owners concludes a contract with a user or a group of users on a certain type of exploitation in a certain field.

c) The copyright law then prescribes that such a contract applies also to right-owners who are not members of contracting organisation, usually subject to certain safeguards for the outsiders.

d) On the basis of the contract and the provisions in the law, the user at issue may use the material covered by the contract knowing that he or she may not be subjected to infringement actions.

e) Right-owners who are not members of the contracting organisation shall be treated in exactly the same way as the members.

f) In addition, such outside right-owners usually have a right to individual remuneration and in many cases (depending on what is said in the national legislation, which differs in some respects) also a right to prohibit the use of their works under the terms prescribed.

g) Different solutions are used in the different Nordic countries when it comes to situations where no contract has been possible to conclude (mediation or arbitration or no remedies at all).

3. Basic Considerations

Basic rationale for the scheme

The first basic consideration concerns the reasons for the setting up of such a system.

The reason is simply to be found in the fact that there are areas of mass uses where it is simply impossible to find all the right-owners and conclude contracts with them. In the field of music, for instance, it is true that there exist collecting societies which represent right-owners all over the world and a contract with one of those organisations gives a fairly comprehensive coverage of rights. There may, however, be right-owners outside that organisation and a user who exploits their works runs the risk of committing a copyright infringement. A legal provision that – subject of course to some guarantees for the outside right-owner - extends the effect of the agreement with the collecting society would protect the user against such risks.

Thus, and this is a very important point, the scheme benefits both the right-owners and the users.

Benefits for the right-owners

The right-owners´ benefits lie in the fact that individuals are simply not able to control all the hundreds of thousands of uses that are made of their works. Some people think that DRM systems could replace collective administration. In my view this is an illusion, at least for the time being, and collective administration would therefore be needed in order to safeguard the rights which copyright law intends to give to the authors and other beneficiaries in this field, in particular in mass use situations.

Benefits for the users

The users benefits lie in that they can in this way obtain fully covering licenses and can trust that their exploitation would not be hindered or affected by unexpected claims from certain right-holders.

4. What would the alternative be to the extended collective license system be?

The need to ensure that exploitation is in fact possible in certain important areas

The extended collective license strikes a balance between the interests of the right-owners and those of the users. There is obviously a need to ensure that appropriate licenses can be obtained in cases of mass uses.

To ensure this there are of course alternatives other than the Nordic solution.

Obligatory collective administration

Thus, in for instance France, obligatory collective administration is used in certain fields. This means that right-owners can put forward their claims only through a collecting society and have to be satisfied with the remuneration they can get from that organisation without any possibility for individual claims or prohibitions.

Legal license

Another alternative is of course an outright legal license either as a compulsory license or as a statutory license. In both cases, there is no possibility to refuse the use or to negotiate the terms for that use. In addition to being possibly in some cases in conflict with international copyright conventions, the system is obviously not particularly beneficial for the right-owners.

Comparative advantages of the extended collective license

The extended collective license offers another solution in that it gives the right-owner a better position. Outside right-owners can certainly be sure that a representative organisation in the country where the use takes place will negotiate terms and conditions that are as positive as it would ever be possible.

The nature of the extended collective license

One could of course question whether the extended collective license is not in fact a compulsory license in relation to outside right-holders or at least that the system contains some compulsory elements.

The reply is a clear “no”. In particular in situations where the outside right-owner has a right to file an individual prohibition against the use of this work or contribution, he still has the full rights to control his work. Also in cases where the law does not expressly guarantee the outside right-holder a right of prohibition, such a right may well be included in the collective agreement that is the basis for the operation of the system.

When the Infosoc Directive was negotiated, the Nordic delegations were of course somewhat nervous about the status of the extended license system in the context of a closed list of possible exceptions that the Directive prescribes in its Article 5.2 and 5.3. The end result of these deliberations is documented in Preamble 18 which states that: “This Directive is without prejudice to the arrangements in the Member States concerning the management of rights such as extended collective licenses.” This makes it very clear that the Nordic system by nature is not to be seen as a limitation but as a management arrangement.

The statement in the Preamble should be seen as a general statement that applies not only to already existing extended collective license schemes but also leaves a freedom to establish new such schemes. This is the position of at least the Swedish Government. In order to make it absolutely clear that such schemes are not limitations, the Swedish legislator intends to, for instance, put all provisions on extended collective licenses into a separate Chapter in the Copyright Act (and not, as before, as Articles in Chapter 2 on limitations.

5. Fields where the extended collective license applies.

As originally designed in the copyright laws at that point in time the license applied to musical and literary works for use in sound radio and television broadcasts.

The application of the system has later been extended – with different pace in the different Nordic countries – also to (and here Sweden is taken as an example)

• retransmission by cable and/or re-broadcasting of broadcast programs
• reprographic reproduction of printed material either only for educational purposes or also for e.g. internal information in enterprises, organisations and alike
• recordings of radio or TV programs for educational use,
• lately (according to the Government´s Bill No 1994/95:110) also for library distribution of digitised material.

During the legislative process for the implementation of the Infosoc Directive, there ware demands, in Sweden, for collective license provisions also other new fields. For instance, the broadcasters requested such a system for the exploitation of material in their archives and for the making available in on-demand services of literary and artistic works and commercial sound recordings used in sound radio or televisions programs. The Government, however, did not want to consider those proposals in that context but will take them up after the implementation of the Infosoc directive is happily concluded.

6. The main elements of the system of extended collective license

6.1 The basic agreement

A condition for the extended license is of course that there is an agreement. That agreement must concern the use of works or other subject matter in a certain manner. The agreement must, in other words, be specific and relate to, for instance, reproduction, public performance etc. and should not be general and concern all types of exploitation of the works. That would go too far, in particular in relation to foreign or other outside right-owners who might be subjected to the terms of the agreement.

Agreement on exploitation in specified types of activities

The agreement must relate to the exploitation of a work in a specified type of activities, such as education, broadcasting, information or other areas where the works or productions might be exploited. An agreement on which an extended collective license should be based can hardly be all-embracing and cover all kinds of uses in the society.

Types of works to which extended collective license schemes apply.

Some extended collective licenses apply to all kinds of works. Thus, in for instance Sweden, the proposed license relating to copying for information purposes within enterprises, organisations etc. applies only to published literary works and to works of fine art that appear in connection with the text.

In the same country, the extended collective license for library distribution does not cover computer programs.

The extended collective license relating to sound radio or TV transmissions applies only to published literary or musical works or works of fine art that have been made available to the public; exception is, however, made for theatrical works.

Furthermore, the collective license as regards reproduction for educational activities would, according to the Government´s proposal in the bill to the Parliament, apply to all kinds of works provided that they have been made available to the public (also in digital form).

Another all-covering extended collective license is the one that relates to cable retransmission and re-broadcasting; that applies to all works that form part of the transmission that is re-used.

6.2 The contracting parties

In order for an agreement to form the basis for a collective license, there are certain requirements as to the contracting parties.

Representativity

First, the organization that grants the rights through the agreement must be a representative one. It must be truly representative of the right-owners whose rights are licensed through the agreement. The requirement of representativity is expressed in different ways in the different Nordic countries, and the notions used are somehow difficult to translate into English. For instance, the notion in the Swedish law (“ett flertal”) could mean either “the majority” of the right-owners concerned or it could mean “a substantial number” of those right-owners. If the former notion is chosen there could be only one organisation in each field which would be entitled to led conclude agreements having this legal effect, something that could run counter to competition law principles and the freedom of association etc. In Sweden, the question of the interpretation of the representativity requirement was considered by the Supreme Court (although in a different context, namely the entitlement to receive droit the suite). The Supreme Court found that more than one organization would be entitled to collect such remuneration (Supreme Court Cases, NJA, 2000, s 445). The same would probably apply to the extended effect of collective licenses. The organisation must in other words be representative in the sense that it represents a substantial number of right-owners in the field concerned.

Representativity at the national level

The requirement of substantial number can, however, only apply the organisation´s home country. It can not be required that the organisation shall represent – through reciprocal agreements – the repertoire of a number of foreign countries. In most areas such international representativity does not exist. Consequently it is enough that the organisation is representative at the national level.

The “nationality” criterion

Here is another area where the solutions in the various Nordic countries differ or may differ. As regards Sweden, the only nationality criterion is that the contracting organization must represent a substantial number of Swedish right-owners.

Other countries apply, or propose to apply, other criteria in this respect, for instance in Denmark and in the proposed Norwegian bill to the Parliament on the implementation of the Infosoc. Directive. In the Norwegian bill, the criterion is proposed to be that the organisation shall represent a substantial number of authors of works that are exploited in Norway.

The relations between the criteria applied in the Nordic countries and European law, in particular the non-discrimination principle, is under discussion. As this is an eminently sensitive political issue it will not be further discussed here.

Authorisation by public authorities

Normally, there would be no need for any authorization by the public authorities (e.g. the Ministry of Culture) in order for an organisation to conclude an agreement that could form the basis for an extended collective license. This is, however, a matter for national considerations and is differently solved in different Nordic countries. In Sweden, for example, there is no need for such authorisation.

Contracting party on the users´ side

The contracting party at the users´ side normally is an organisation that represents the users in a certain area. That organisation concludes an agreement on behalf of the individual users or at least can recommend the agreement as a model contract to its members. It is, however, also possible that the agreement is concluded with an individual user who would then, by means of the provision in the law, be entitled to use also foreigners´ works in the area concerned and for that user´s activities.

6.3 Effects of the collective agreement.

Extended effect of the collective agreement

The provisions on extended effect of a collective agreement imply that the user is granted a right to exploit works of the kind covered by the agreement despite the fact that the right-owners are not represented by the organisation.

For that exploitation, normally the conditions set out in the agreement apply also to foreign right-owners. Consequently they are entitled the same conditions as the national right-owners and to the same remuneration. It is a key principle that foreigners must have the same rights – and obligations – as those who are directly bound by the agreement. Normally this is explicitly stated in the provisions. For instance in the Article 42 a § of the Swedish law it is prescribed: “The author shall, as regards remuneration according to the agreement and benefits from the organization that essentially are funded from the remuneration, be treated in the same way as the authors who are represented by the organisation.”

It is to be assumed that foreign authors could hardly have obtained better conditions for the use of their works than what a representative organisation in their field in a Nordic country would have obtained. Thus, generally speaking, the system of extended collective agreement would be beneficial for all authors.

6.4 Guarantees for outside right-owners

The need for guarantees for outsiders

Obviously, there may be situations where outside right-owners are not be entirely happy with a situation where their works are used in a foreign country on conditions that they are not familiar with or to which they have not agreed. It is thus important that there are certain guarantees for foreigners. If there were no such guarantees the system would be less of a tool for the management of rights and more of a compulsory license. Legislators in the Nordic countries have considered this to be a particularly important aspect and have tried to find solutions in order to satisfy such outside right-owners.

The character of such guarantees

Such guarantees could be of two kinds.

a) A right to prohibit the use of their works on the basis of the license

b) A right to claim individual remuneration

Right to prohibit

This “veto right” is designed and applied somewhat differently in the different Nordic countries. To take Sweden as one example (and my Nordic colleagues will certainly mention the system in their countries) such a right to file a prohibition would (according to the Bill 1994/95:110) apply in the case of extended collective licenses in the fields of

a) copying for information purposes within enterprises, organizations etc (Art 42 b)

b) copying for educational purposes (Art 42 c),

c) transmission of works between libraries/archives (Art. 42 d), and

d) primary sound radio and television transmissions (Art 42 e).

In this latter case transmission on the basis of the extended collective license must also not take place even if the is no formal prohibition but also if the broadcasting organisation has, due to the circumstances in the case, a special reason to assume that the author would object to the transmission (for instance that the author has changed his position in certain important matters and therefore does not want his previous opinions to be spread).

In the cases mentioned under a) – c) the prohibition may be filed with any of the contracting parties.

As regards the fifth extended collective license, namely the one on cable retransmission or re-broadcasting of broadcasts, the author has no right to file an individual prohibition.

Guaranteed right to remuneration

a) Remuneration according to the agreement

One of the essential elements of any agreement on exploitation of works and other productions is that the right-owner should be entitled to remuneration for the use that takes place of his or her work. Normally, the agreement on which the extended collective license is based contains provisions in this respect. According to the provisions in the law in this respect those remuneration conditions apply also to right-owners who are not members of the contracting organisation. The organisation has to see to it that those non-members actually receive the remuneration.

b) Remuneration in the form of collective arrangements (grants etc.)

There are, however, situations where such outsiders are not satisfied with the conditions concerning remuneration that are prescribed in the agreement. One such situation occurs, for instance, when the contracting organisation has decided to use the remuneration for collective purposes, such as fellowships, etc. As mentioned above, in such cases the outside right-owners are entitled to exactly the same treatment as the members as regards such arrangements that are essentially funded from the remuneration.

c) Right to claim individual remuneration

It may, however, well happen that outside right-owners are not happy with the possibility to take part in such collective arrangements. For such cases, most extended collective license provisions contain a clause that, regardless of the possibility to take part in such collective arrangements, the author always has the right to claim individual remuneration.

In most situations and in most of the countries where the system applies there are certain conditions attached to the right to claim individual remuneration, such as the following.

d) Against whom are individual claims to be directed?

One such condition is that the claim has to be directed only towards the contracting organisation and not towards, for instance, the user. This is quite natural because one of the rationale for the system of extended collective licenses is to facilitate life for the users, something that would not be the case of individual claims suddenly came up against the users.

e) Period of limitation for individual claims

Another condition is that the claims have to be made within a certain period of time, in most cases within three years from the year in which the exploitation took place. This is a provision that is necessary in order not to force the organisations to keep such money in reserve for a long time.

f) Specific provisions on claims relating to re-transmission

The extended collective license for cable retransmission or re-broadcasting there is an additional condition. That condition is that all claims against those who carry out such “secondary uses” have to be forwarded only by the contracting organisations and the claims have to be put forward at the same time. This is a provision that obliges the authors, performing artists and the broadcasters whose transmissions are used to act together, all of course in order to facilitate as much as possible the activities of the cable transmitters/re-broadcasters.

7. Measures to ensure that collective agreements are in fact concluded

Any system of extended collective license presupposes that an agreement is in fact concluded between a representative organisation and the user. The question is then what will happen in case no such agreement can be concluded. In this regard different solutions have been adopted in the different Nordic countries.

To take my own country first – only because that is where I know the situation best – there has always been a considerable political resistance against any form of compulsory measures when difficulties arise in the negotiations concerning such an agreement. Thus, the Swedish law contains no provisions on arbitration or similar measures, but the Government and the Parliament have preferred to have confidence in the good will of the parties to arrive at a conclusion. When the Satellite and Cable Directive had to be implemented, this approach was, however, put to a test, because Art. 11 of that Directive obliges the EU Member States to have a system of mediation in case negotiations fail. In Sweden this resulted in some modifications in an earlier existing Act on Mediation in Certain Copyright Disputes.

In the other Nordic countries, the situation is different. Some of those have recourse to an arbitration procedure in case of failed negotiations, a measure that is obviously stronger than a mere negotiation.

8. Concluding remarks on the extended collective license system.

The system of giving extended effect to collective agreements in certain areas is a typical Nordic way of finding copyright solutions to otherwise difficult situations of mass use of protected works and other contributions.

That system presupposes of course that the is a well developed system of organisations in the field concerned and that such organisations represent a substantial number of right-owners in the field concerned. It presupposes in other words that the “copyright market” is well organised and disciplined. If such is the case, the system is likely to function very well. Experience in the Nordic countries has shown that.

That the system functions well is also shown by the fact that very few individual prohibitions against the use of works under an extended collective license scheme have been filed.

I can of course speak only for my own country - but I believe that the situation is essentially the same in the other Nordic countries – when I say that the Government is deeply attached to the system as such and finds it very useful to solve the need for copyright clearance in mass use situations where the is a need for appropriate and efficient solutions.

That the Nordic members of the European Union are very attached to the system was shown, inter alia, by the insistence with which those countries fought for the system in the course of the negotiations on the Infosoc Directive. That fight was certainly not easy but the result was satisfactory in the sense that the Preamble of the Directive clearly admits the system and does not consider it as a limitation on the rights.

In summary, the extended collective license is an appropriate way of solving the difficulties in obtaining copyright clearance in certain situations of mass uses where there is every need to find appropriate solutions to satisfy both right-owners, users and the society at large.