Extended Collective License

THE NORDIC SOLUTION TO COMPLEX COPYRIGHT QUESTIONS

Why extended license is needed

Traditionally, authors and other right owners have exercised their rights individually. In situations of mass use, however, the right owner has no practical possibilities to control the use of his works. On the other hand, the user can only with great difficulty, if at all, obtain the innumerable licenses he may need. Collective administration of rights is needed.

Collective administration is, however, not as such a sufficient solution. Organizations representing right owners do not have the powers to grant, with complete coverage, licenses for use. Non-represented right owners, i.e. outsiders, constitute a problem which has to be solved through some legal technique. The solution adopted in the Nordic countries is extended collective license, in this leaflet called extended license.

Elements of extended license

In general, an extended license system contains the following elements:

1. The organization and the user conclude an agreement on the basis of free negotiations.
2. The organization has to be nationally representative in its field.
3. The agreement is by law made binding on non-represented right owners.
4. The user may legally use all materials without needing to meet individual claims by outsiders and criminal sanctions.
5. Non-represented right owners have a right to individual remuneration.
6. Non-represented right owners have in most cases a right to prohibit the use of their works.

Areas of application

The extended license system is a possible solution for example in the following areas:

• terrestrial and satellite broadcasting
• retransmission by cable or rebroadcasting of radio and television programmes
• recording of radio and television programmes for educational use
• reprographic reproduction of printed material

Rationale

In the Nordic countries a copyright organization can represent only those right owners who have in person or through another organization given a mandate to act on their behalf.

Normally the effects of an agreement concluded between an organization and a user cover only the contracting parties; the agreement is not binding on third parties. In the extended license system an agreement obtains, directly on the basis of law, a binding effect on non-represented right owners.

An extended license is a limitation on copyright which interferes as little as possible with the freedom to contract and aims at maximizing the effective administering of rights. The extension effect provides the user a necessary protection against claims by outsiders and against criminal sanctions.

Copyright organizations have a two-fold service function. On the one hand, the user can obtain from one place the licenses for use. On the other hand, the organization represents right owners and grants licences on their behalf, collects the remunerations, and distributes them to the right owners. Collective licensing minimizes the costs of individual transactions.

A professional organization as a negotiating party is stronger than an individual right owner. Its sole task is to aim at results as advantageous as possible. The contractual terms and conditions thus achieved are in general acceptable also to outsiders. A non-represented right owner would hardly be able to achieve better results by acting alone.

The operation of an organization is supervised by those right owners who have authorized the organization to act on their behalf. The operation of the organizations has a considerably open character. Because of this transparency, the supervision is effective.

The overall purpose of the extended license is to create favourable conditions for the use of protected materials from the viewpoint of the right owners, the users, and the public at large.

An extended license can be supplemented by mediation, arbitration, tribunal procedures, or other similar legal arrangements in case the negotiating parties disagree regarding the terms and conditions of the agreement.

National or international representativeness?

One essential feature of the extended license system is that represented right owners and outsiders, as well as all users, are treated on equal terms and conditions. This places the organization which concludes agreements in a responsible position.

It is not any organization whatsoever that can conclude agreements having a binding effect on outsiders. The requirements set on the organization must be such as to ensure that the organization is capable, in the best possible manner, of looking after the interests of the authors in the field it represents. The organization must be professional, it must have know-how, and it must be efficient.

In practice this is achieved by requiring that the organization represents, with extensive coverage, the authors in its field in its country. The fulfillment of the requirements can, when necessary, be controlled by setting it as a condition for the extension effect of the agreements that a public authority has accepted the organization for this function.

It would, of course, be ideal if in the case of use of an international repertoire the organization would represent the right owners of all the countries concerned. In fact, certain organizations do have authorizations to administer the rights of foreign nationals on the basis of reciprocal representation agreements. In such cases the extension effect relates only to those foreign right owners who are not covered by these agreements.

It is, however, a fact that the degree of organization of right owners varies greatly from one field to another and from one country to another. The collective administration has advanced to the highest degree in the field of music, although even in this field the coverage is not complete. In most other fields the system is highly advanced in only a few countries. In many countries the administration is still developing or non existent.

In organizing the administration of rights at the level of legislation, international representativeness cannot, however, be set as a prerequisite, since in most fields a comprehensive international organizational structure is lacking. The only requirement that the legislator can set in this respect is a good national representativeness.

Different solutions for the problem of outsiders

The problem of outsiders has been approached in different ways in different countries.

One alternative is to incorporate into an agreement an indemnity clause by which the organization assumes the liability for the payment of remuneration to non-represented right owners. This alternative, however, does not make the use of non-represented works permissible but only eliminates financial liability under civil law. Agreements cannot transfer liability under criminal law; the user is always responsible for any infringements he has committed. This alternative does not therefore safeguard the position of the user.

Another alternative is to incorporate into the law provisions by which a copyright organization is given a general authorization to represent right owners or by which it is presumed that the organization has such right. The practical effects of this alternative hardly differ from those of extended license, which, however, does not give the organization a general right of representation but only extends an agreement concluded by the organization also to cover non-represented right owners.

A third alternative is to incorporate into the law provisions of non-voluntary licence (e.g. statutory or legal licence) whenever permitted by international conventions. In this case the consent of right owners for the use of protected materials is not needed at all. They have only a right to remuneration. Non-voluntary licence is a considerably farther-reaching limitation on rights than is extended license, and it significantly weakens the negotiating position of right owners.

How extended license functions

The agreement and its extension

An extended license is based on a freely negotiated agreement between a user of protected materials and an organization. In the negotiations it is possible to take into account all viewpoints affecting the matter; where, when, and on what terms and conditions the user may use the materials. The extension effect with respect to outsiders will come into force only after the agreement has been concluded.

The organization

The legislator can require that an organization concluding extended license agreements is subject to the approval of the appropriate ministry concerned.

Right of veto

For example, in the extended license provisions relating to broadcasting it is stated specifically that the provisions shall not be applied to works the use of which has been prohibited by the author.

A right owner may issue a prohibition to a specific user either directly or through the mediation of the organization which has concluded the agreement. In the Nordic countries there are no requirements set on the form of a prohibition.

Distribution of remunerations

A copyright organization distributes to the to the right owners the remunerations it has collected. In certain cases, however, individual distributions are not in practice possible. In these cases the remuneration may be distributed collectively, for joint purposes of the right owners.

In some extended licencs provisions the possibility for distribution for joint purposes has explicitly been accepted for practical reasons. The number of transactions in a certain area of use may be so high, and the total amount of remuneration paid so small, that individual distribution of remunerations is not feasible.

The legislator has placed non-represented right owners in the same position as the represented ones; discrimination is prohibited. If an organization decides to use the collected funds for the joint purposes of right owners, the decision concerns also non-represented right owners. However, regardless of any decisions made by the organization, outsiders always have the right to demand individual remuneration. In this respect authors who are outsiders are in an even better position than the authors represented by the organization.

The remuneration is paid to an outsider by either the user or the organization, depending on which alternative has been adopted in the law concerned or on what has been agreed upon.

The right of non-represented right owners to individual remuneration will expire if a claim is not presented to the organization within a prescribed period of time. In general this period is two or three years, but it may be as long as ten years.

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Nordic examples

Broadcasting rights in Sweden

The extended license concerning broadcasting is applied in Sweden to published literary and musical works (i.e. not films). This does not apply to dramatic works and films, nor to works for which the author has prohibited broadcasting or where there is particular reason to assume that the author will oppose the broadcast. In practice, prohibitions are issued extremely seldom.

From the extended licence provisions it follows that, for example, when the Swedish Performing Right Society STIM signs with the broadcasting company an agreement regarding the broadcasting of music, the agreement will cover not only the composers, arrangers and lyrics-writers represented by STIM but also all other Swedish and foreign authors in the field of music. The provision is applied correspondingly to the broadcasting of literary works.

The copyright legislations of the other Nordic countries include similar extended license provisions. In Denmark and Norway, the provisions cover not only literary works and musical compositions but all works.

Reprographic reproduction in Finland

In Finland Kopiosto, the joint copyright organization, administers reprographic reproduction rights. Its member organizations have mandates from their members. The mandates are by contract transferred to Kopiosto. Thus Kopiosto represents 26.500 individual right owners.

On the basis of a general provision covering all areas of use, Kopiosto has negotiated terms and conditions of use and remunerations applicable to the different areas, i.e. for use in education, in the administration of the State, municipalities and church, as well as in business and industry. The agreements which have been concluded safeguard the right of non-represented right owners to prohibit the use of their works. In practice, however, there has been no need for this right of veto.

Although the member organizations of Kopiosto have decided to use the collected remunerations mostly for the joint purposes of the right owners, non-represented right owners have according to the law the right to individual remuneration.

In Denmark, Norway and Sweden the corresponding provisions regarding reprographic reproduction are applicable only to photocopying for educational purposes.

Cable distribution in Norway

In Norway, an agreement between a cable operator and NORWACO, which represents various groups of right owners, provides the user full indemnity against claims by outsiders. NORWACO has been approved by the appropriate ministry and represents a substantial proportion of Norwegian authors and right owners. An agreement concluded by NORWACO binds all Norwegian and foreign right owners and also film producers.

If the parties are unable to agree within six months regarding the terms and conditions and the remunerations, either party may submit the terms and conditions to a specific committee or tribunal for decision. The committee has, for example, handled the effect of the size of a cable network on the liability to pay remuneration. - If a broadcasting company does not give permission or sets unreasonable conditions for it, the matter is respectively decided by the committee.

Non-represented right owners have no subjective right provided by the law to prohibit the use of a work. The right of veto has been left to depend on the agreement. Both parties have a genuine interest to organize cable distribution without interruptions.

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Copyright functions well in the Nordic countries

by Åse Kleveland, the Norwegian Minister of Culture. She has worked with copyright questions many years. She herself is also a performing artist.

The significance of copyright has grown greatly during the past decades. Copyright-related industries account for about 3 per cent of the GNP of the industrialized countries. Intellectual property rights are nowadays negotiated even in fora of international trade policy. The GATT Uruguay Round is the best example.

Copyright has become an important source of income for large groups of authors, performing artists, publishers and producers. For example, the whole business economy in the cinema and television field is based on copyrights. The items traded are the rights of broadcasting, exhibition and distribution.

From the standpoint of culture the significance of copyright cannot be exaggerated. The economy of culture is closely linked to copyright. In particular, the audiovisual field is increasing vigorously. Copyright ensures the continuity of production and safeguards the distribution.

Owing to technological progress, the use of protected materials is more and more often taking place far beyond the possibility of control by the right owners themselves. Collective administration of rights is in such situations the only solution which works.

Since no organization can represent all the authors of the world, a pure contractual alternative is conceptually impossible. There will always be authors who have not authorized or will not authorize anyone to represent them. This does not mean that these authors - when asked - would be absolutely opposed to the use of their works.

The Nordic extended license system has worked with respect to broadcasts for over 30 years. In the 1980s it underwent a kind of renaissance; it was observed that extended license was precisely the best solution to the sometimes difficult problems of reprographic reproduction, cable retransmission, and even rebroadcasting.

The system had thus been launched with respect to primary broadcasts; extended license was established first as the solution to the problems of broadcasting rights in music. The practical training in completely new solutions occurred with respect to reprographic reproduction. The most complicated and most multi-faceted copyright arrangement - arranging the rights of retransmission of an entire television channel - was last carried out in the latter half of the 1980s.

I was very surprised when, in the discussion concerning the draft additional protocol to the Council of Europe Convention on Transfrontier Television and the Broadcasting and Copyright Discussion Paper of the Commission of EC, the merits of the extended license method were not fully appreciated by all.

I noticed that most of these comments were based on the fact that the system was not known sufficiently well. There seemed to prevail a misconception, for example, regarding the degree of intervention by public authorities; there is no interference by a public authority with the negotiations. The agreements are negotiated freely and the extension effect enters after the conclusion of the contract directly on the basis of the law.

Another misconception concerned the question of what types of organizations can conclude such agreements. In the Nordic countries the organizations which have sprung up to conclude the extended licenses have had unusually wide coverages, and they are professionally attended to. Their operation is largely transparent, and they publish, among other things, their precise financial data.

My opinion is that the scope of application of the extended license system can be extended even further. A few proposals to this effect have been made in committee work in the Nordic countries. I believe that, for example, the applications of data processing technology - for example the use of protected materials in data base activity - could be an international area of application, comparable to reprographic reproduction.

The extended license system, first adopted in the Nordic countries, is well suited to be one of the European solutions.

Åse Kleveland