Communication from the Commission to the Council, the European Parliament and the European Economic and Social - Committee The Management of Copyright and Related Rights in the Internal Market (Text with EEA relevance)
Date: 2004-04-16
Institutions: European Commission
Subjects: copyright, intellectual property, single market

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 16.04.2004 
COM(2004) 261 final 

COMMUNICATION FROM THE COMMISSION 
TO THE COUNCIL, THE EUROPEAN PARLIAMENT AND 
THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE 

The Management of Copyright and Related Rights  
in the Internal Market 

EN 

   EN 

 
 
 
  
COMMUNICATION FROM THE COMMISSION 
TO THE COUNCIL, THE EUROPEAN PARLIAMENT AND 
THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE 

The Management of Copyright and Related Rights  
in the Internal Market 

(Text with EEA relevance) 

TABLE OF CONTENTS 

Executive Summary ................................................................................................................... 4 

Introduction ................................................................................................................................ 5 

1. 

Management of Rights in the Internal Market ............................................................. 6 

1.1. 

The Background and Main Features of Rights Management ...................................... 6 

1.1.1.  The Categories and Methods of Rights Management.................................................. 6 

1.1.2.  The Existing Legal Framework.................................................................................... 6 

1.2. 

The Impact of the Internal Market on Rights Management......................................... 7 

1.2.1.  The Territorial Nature of Intellectual Property ............................................................ 7 

1.2.2.  The Cross Border Exploitation of Copyright and Related Rights ............................... 7 

1.2.3.  Obstacles to an Internal Market in Rights Management.............................................. 7 

1.2.4.  The Call for Community-wide Licensing .................................................................... 8 

1.2.5.  Digital Rights Management (DRM) Systems ............................................................ 10 

1.3. 

Conclusions................................................................................................................ 12 

2. 

2.1. 

2.2. 

Individual Rights Management.................................................................................. 12 

The Main Features ..................................................................................................... 12 

The Issues................................................................................................................... 12 

2.2.1.  Ownership of Rights .................................................................................................. 12 

2.2.2.  Statutory Conditions for the Transfer of Rights ........................................................ 13 

2.2.3.  Content and Interpretations of Contracts ................................................................... 13 

2.3. 

Conclusions................................................................................................................ 13 

3. 

The Collective Management of Rights ...................................................................... 14 

3.1. 

The Functions of Collective Management ................................................................. 14 

3.1.1.  The Development of Joint Rights Management ........................................................ 14 

2 

 
 
  
 
 
 
3.1.2.  Main Features of Collective Management ................................................................. 14 

3.2. 

The Legal Framework................................................................................................ 14 

3.2.1.  Collective Management in the acquis communautaire .............................................. 14 

3.2.2.  Collective Management in National Law .................................................................. 15 

3.3. 

3.4. 

3.5. 

Consultations on Collective Management in the Internal Market ............................. 15 

Collective Rights Management and Competition ...................................................... 16 

The Issues that require a legislative approach ........................................................... 17 

3.5.1.  The Establishment and Status of Collecting Societies............................................... 18 

3.5.2.  The Relation of Collecting Societies to Users ........................................................... 18 

3.5.3.  The Relation of Collecting Societies to Rightholders................................................ 19 

3.5.4.  The External Control of Collecting Societies ............................................................ 19 

3.6. 

Conclusions................................................................................................................ 19 

3 

 
 
  
 
EXECUTIVE SUMMARY 

The  term  "management  of  rights"  refers  to  the  means  by  which  copyright  and  related  rights  are 
administered,  i.e.  licensed,  assigned  or  remunerated  for  any  type  of  use.  Individual  rights 
management  is  the  marketing  of  rights  by  individual  rightholders  to  commercial  users.  Collective 
rights management is the system, under which a collecting society as trustee jointly administers rights 
and monitors, collects and distributes the payment of royalties on behalf of several rightholders.  

In  the  period  since  1991,  the  Community  legal  framework  of  copyright  and  related  rights  has 
developed with seven Directives on substantive copyright law in force and, more recently, a proposal 
for  a  Directive  on  the  enforcement  of  rights  (sanctions  and  remedies)  that  was  presented  by  the 
Commission in January 2003. The management of rights has been dealt with only marginally in the 
acquis  communautaire  and  has  been  largely  left  to  the  laws  of  Member  States.  Between  1995  and 
2002, the Commission consulted widely  on the question of  management of rights -  both individual 
and collective. 

In concluding the consultation process, this Communication deals with both individual and collective 
management  and  considers  whether  current  methods  of  rights  management  are  hindering  the 
functioning of the Internal Market, especially with the advent of the Information Society. 

In Chapter 1, the management of copyright and related rights is presented, including its links to and 
impact  on  the  Internal  Market.  On  the  issue  of  Community-wide  licensing  of  certain  rights,  which 
have an impact across borders, several options for the way forward have been assessed. It should be 
market-driven  and  focus  on  creating  more  common  ground  on  the  conditions  for  collective 
management. Another issue addressed in Chapter 1 is the introduction of digital rights management 
(DRM)  systems.  In  the  view  of  the  Commission,  the  development  of  Digital  Rights  Management 
(DRM)  systems  should,  in  principle,  be  based  on  their  acceptance  by  all  stakeholders,  including 
consumers,  as  well  as  on  copyright  policy  of  the  legislature.  A  prerequisite  to  ensure  Community-
wide  accessibility to DRM systems and services by  rightholders as  well as users and, in particular, 
consumers, is that DRM systems and services are interoperable 

In  Chapter  2,  in  relation  to  individual  rights  management,  the  Commission  has  found  that  overall 
there is sufficient common ground in all Member States. At present, therefore, differences in national 
law  have  not  given  rise to  concern with  respect  to  the  functioning  of  the  Internal Market.  National 
developments will continue to be kept under review. 

Chapter 3 deals with the collective management of rights which is well established in all Community 
Member  States.  It  has  become  an  economic,  cultural  and  social  necessity  for  the  administration  of 
certain  rights,  also  in  the  Accession  Countries.  The  efficiency,  transparency  and  accountability  of 
collecting societies are crucial for the functioning of the Internal Market as regards the cross-border 
marketing  of  goods  and  provision  of  services  based  on  copyright  and  related  rights.  A  better 
functioning of the Internal Market in collective rights management can  only be achieved if there is 
greater  common  ground  which  includes  the  establishment  and  status  of  collecting  societies;  their 
functioning  and  accountability  subject  to  rules  of  good  governance;  as  well  as  their  internal  and 
external  control,  including  dispute  settlement  mechanisms.  Defining  general  conditions  for  these 
features  through  a  Community  framework  instrument  would  achieve  the  objectives  outlined  in  this 
Communication. 

4 

 
 
  
 
INTRODUCTION 

The market for goods and services based on copyright and related rights comprises a large variety of 
products and services. While traditional analogue goods and services have always played a significant 
role  for  the  exploitation  of  copyright  and  related  rights,  the  Information  Society  is  opening  new 
markets  in  which  protected  works  can  be  exploited  through  electronic  products  and  interactive 
services. 

The  contribution  to  the  economy  of  the  copyright-based  industries  in  the  European  Union  ranges 
Community-wide  above  5%  of  GNP1.  For  most  forms  of  exploitation  and  in  order  to  achieve 
economies of scale, the Internal Market has become the appropriate environment. The borders for the 
marketing of goods and services based on copyright or related rights are increasingly being removed. 
Copyright-based goods and services are nowadays, and should, where this is economically feasible, 
be available and marketed Community-wide. 

The legal framework for the protection of copyright and related rights in the European Union has to 
match these realities. However, the national structures of copyright law are based on different legal 
and  cultural  traditions  At  the  same  time,  for  the  Internal  Market  to  function  properly,  without 
unnecessary  obstacles  to  the  free  circulation  of  goods  and  services  and  without  distortions  of 
competition, the need for harmonisation of national copyright law became apparent in the 1970s and 
was highlighted by several decisions of the Court2. 

There was an extensive period of consultation between 1995-2002 and the first harmonisation efforts 
concentrated on substantive copyright law. Seven Directives were adopted between 1991 and 20013, 
which harmonised rights and exceptions and certain other features of substantive copyright law. 

Besides  substantive  copyright  law,  common  ground  is  also  needed  with  respect  to  the  rules  on  the 
enforcement  of  rights,  in  order  for  the  Internal  Market  of  copyright-based  goods  and  services  to 
function properly. A Directive on this issue is therefore currently being adopted by the Community 
Legislator. The remaining aspect of intellectual property is the management of rights. Now that many 
aspects of substantive copyright law have been harmonised, a level playing field at Community level, 
of  rules  and  conditions  on  rights  management  should  also  be  ensured.  The  Commission  in  this 
Communication concludes on the consultations that have taken place and proposes required follow-
up. 

1 

2 

3 

The  economic  importance  of  copyright  and  related  rights  protection  in  the  European  Union  was  the  subject  of  a  study 
commissioned by the European Commission. The results of the study are available since November 2003. 
Case 158/86 Warner Brothers and Metronome Video v Christiansen (1988) ECR 2605; EMI Electrola GmbH v Patricia Case 
341/87 ECR (1989) page 79. 
Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs (OJ L 122, 17.5.1991, p. 42); 
Council  Directive  92/100/EEC  of  19  November  1992  on  rental  right  and  lending  right  and  on  certain  rights  related  to 
copyright  in  the  field  of  intellectual  property  (OJ  L  346,  27.11.1992,  p.  61);  Council  Directive  93/83/EEC  of 
27 September 1993  on  the  coordination  of  certain  rules  concerning  copyright  and  rights  related  to  copyright  applicable  to 
satellite  broadcasting  and  cable  retransmission  (OJ  L  248,  6.10.1993,  p.  15);  Council  Directive  93/98/EEC  of 
29 October 1993  harmonising  the  term  of  protection  of  copyright  and  certain  related  rights  (OJ  L  290,  24.11.1993,  p.  9); 
Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases (OJ 
L  77,  27.3.1996,  p.  20);  Directive  2001/29/EC  of  the  European  Parliament  and  of  the  Council  of  22  May  2001  on  the 
harmonisation  of  certain  aspects  of  copyright  and  related  rights  in  the  information  society  (OJ  L  167,  22.6.2001,  p.  10); 
Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the resale right for the benefit 
of the author of an original work of art (OJ L 272, 13.10.2001, p. 32). 

5 

 
 
  
 
                                                 
1. 

MANAGEMENT OF RIGHTS IN THE INTERNAL MARKET 

1.1. 

The Background and Main Features of Rights Management 

1.1.1.  The Categories and Methods of Rights Management 

Besides  the  more  general  economic  aims  of  stimulating  investment,  growth  and  job  creation, 
copyright  protection  serves  non-economic  objectives,  in  particular  creativity,  cultural  diversity  and 
cultural  identity.  Authors  of  literary  or  artistic  works  as  well  as  holders  of  related  rights  enjoy 
exclusive  rights  to  authorise  or  prohibit  the  use  of  their  works  or  other  subject  matter  for  a  fee  or 
royalty  payment.  In  cases  where  the  rights  cannot  be  enforced  vis-à-vis  individual  members  of  the 
public or where individual management would not be appropriate, given the number and type of uses 
involved, rightholders are granted a remuneration right instead. 

Rights management can be done either individually or collectively. Exclusive rights are traditionally 
managed  individually  by  rightholders  themselves,  who  license  them  to  commercial  users  such  as 
publishers or producers, or by intermediaries, such as publishers, producers or distributors. Individual 
rights management is usually by way of contractual licence, which may be either exclusive or non-
exclusive, and which may authorise a type of use only or all uses. Remuneration rights are usually 
managed by collecting societies that function as rightholders’ trustees. 

1.1.2.  The Existing Legal Framework 

At  international  level,  Articles  11bis(2)  and  13(1)  of  the  Berne  Convention4  and  Article  12  of  the 
Rome Convention5, deal with collective management and state that Member States may determine the 
conditions under which certain rights may be exercised (see above mentioned Articles of the Berne 
Convention). Article 2(6) of the Berne Convention touches upon rights management, as it provides 
that  "protection  shall  operate  for  the  benefit  of  the  author  and  his  successors  in  title".  Article 
14bis(2)(b) of the Berne Convention provides that certain authors of a cinematographic work cannot 
exercise their rights separately. 

At national level, significant differences exist with respect to both legislation and practice. In relation 
to  collective  management,  in  both  Member  States  and  Accession  Countries  there  have  been  recent 
developments in legislation which seem to evolve further in different ways.  

At Community level, the issue has been to a limited extent addressed in the acquis communautaire in 
several  of  the  Directives.  With  respect  to  individual  rights  management,  the  Directives  generally 
confirm  that  economic  exclusive  rights  may  be  transferred,  assigned  or  subject  to  the  granting  of 
contractual  licences  but  do  not  address  the  conditions  of  rights  management  as  such.  Regarding 
collective  rights  management,  in  many  instances,  the  Directives  of  the  acquis  contain  references  to 
management by collecting societies but again do not address the conditions of rights management as 
such6. 

4 

5 

6 

Berne  Convention  for  the  Protection  of  Literary  and  Artistic  Works  of  September  9,  1886  (Paris  Act  as  amended  on 
September 28, 1979). 
International  Convention  for  the  Protection  of  Performers,  Producers  of  Phonograms  and  Broadcasting  Organisations  of 
October 26, 1961. 
See point 3.2.1. 

6 

 
 
  
 
                                                 
1.2. 

The Impact of the Internal Market on Rights Management 

1.2.1.  The Territorial Nature of Intellectual Property 

Traditionally, the law applicable to the act of exploitation of any of the rights is the law of the place 
of exploitation. This principle is confirmed by Article 5(2) of the Berne Convention and recognised 
by national laws.  

For  the  European  Union,  this  implies  that  copyright  protection  is  granted  by  each  Member  State. 
There is no Community copyright. The harmonisation of substantive copyright law has not sought to 
remove  or  limit  the  territorial  nature  of  copyright  and  the  ability  of  rightholders  to  exercise  their 
rights  territorially.  The  principle  of  territorial  exploitation  has  been  recognised  by  the  Community 
legislature  and  has  also  been  confirmed  by  the  Court  of  Justice7,  though  to  a  certain  extent,  it  has 
diminished  its  impact.  The  Court  has  placed  limitations  on  its  exercise  only  in  respect  of  the 
Community-wide exhaustion of the distribution right in circumstances where this conflicts with the 
free  movement  of  goods  and  in  respect  of  competition  rules  where  it  arises  from  restrictive 
agreements or concerted practices or an abuse of a dominant position. 

1.2.2.  The Cross Border Exploitation of Copyright and Related Rights 

For most forms of exploitation and in order to achieve economies of scale, the Internal Market has 
become the appropriate economic environment. 

With  the  advent  of  the  digital  environment,  cross-border  trade  in  goods  and  services  based  on 
copyright  and  related  rights  has  become  the  rule,  notably  for  the  rights  of  reproduction  and 
communication to the public and the making available right. These rights would be implicated in any 
digital transmission and were harmonised, for this purpose, under Directive 2001/29/EC. 

1.2.3.  Obstacles to an Internal Market in Rights Management 

Hence,  off-line  licensing  has  increasingly  become  a  cross-border  activity,  and  on-line  licensing 
permits  by  definition  a  cross-border  activity.  However,  as  the  law  of  the  country  of  exploitation 
applies to licensing, where exploitation extends to more than one Member State, different rules apply. 

As far as the individual management of rights is concerned, there are different rules on ownership and 
authorship,  conditions  applying  to  copyright  contracts,  or  on  points  of  attachment  (criteria  for 
protection). Conditions of rights management also vary in Member States with respect to collective 
management.  A  lack  of  common  rules  regarding  the  governance  of  collecting  societies  may 
potentially  be  detrimental  to  both  users  and  rightholders,  as  it  may  expose  them  through  different 
conditions applying in various Member States, as well as to a lack of transparency and legal certainty. 
The more divergence exists on such rules, the more difficult it is in principle to license across borders 
and to establish licensing for the territory of several or all Member States. 

7 

See Case 62/79, Coditel v. Ciné-Vog Films (1980) ECR 881; Case 262/81, Coditel v. Ciné-Vog Films (1982) ECR 3381. In 
Coditel II (para. 14), the Court clarified that "just as it is conceivable that certain aspects of the manner in which the 
right  is  exercised  may  prove  to  be  incompatible  with  Articles  59  and  60  it  is  equally  conceivable  that  some 
aspects may prove to be incompatible with Article 85 where they serve to give effect to an agreement, decision 
or  concerted  practice  which  may  have  as  its  object  or  effect  the  prevention,  restriction  or  distortion  of 
competition within the common market". 

7 

 
 
  
 
                                                 
1.2.4.  The Call for Community-wide Licensing 

A recurrent theme throughout the consultation process has been the call for more Community-wide 
licensing,  in  particular  by  commercial  users  notably  for  the  growing  market  in  the  on-line 
environment8.  In  this  context,  Community-wide  licensing  may  be  used  as  an  umbrella  term  to 
describe the grant of  a licence by a single collecting society in  a single transaction for exploitation 
throughout the Community.  

Stakeholders are already seeking contractual and technological solutions to ensure adequate access to 
protected works and other subject matter on a European or even worldwide scale. 

Direct Community-wide licensing used to be provided by the framework agreement between authors’ 
collecting societies and the association of phonogram producers (the BIEM/IFPI Agreement), which 
concerns mechanical reproduction rights. More recently, as regards transmission by electronic means 
including  webcasting  and  on-demand  transmission  of  music  by  acts  of  streaming  or  downloading, 
authors'  collecting  societies  have  notified  to  the  Commission  a  set  of  agreements  with  a  view  to 
negative clearance or an exemption under Article 81 of the EC Treaty. The parties' intention is that, 
as a rule, the Community-wide licence will be granted by the society of the country where the content 
provider is operating. In the area of music performing rights, nearly all the major authors’ collecting 
societies  representing  authors  have  concluded  a  reciprocal  trial  agreement  (the  “Santiago 
Agreement”),  which  allows  each  of  them  to  issue  multi-territorial  licences  of  public  performance 
rights  to  be  used  on-line.  Yet  another  model  concerns  the  remuneration  rights  of  phonogram 
producers  for  the  simultaneous  transmission  by  radio  and  TV  stations  via  the  Internet  of  sound 
recordings included in their broadcasts of radio and/or TV signals (the “Simulcasting” Agreement). 
Users  (in  this  case  broadcasters  whose  signals  originate  in  the  EEA)  may  obtain  a  Europe-wide 
license from any society within the EEA. Under another model, a Community-wide licence for on-
line  uses  of  works  of  art  and  photography  can  be  obtained  from  any  of  the  participating  collecting 
societies, and under the same conditions (OnLineArt Agreement). 

The first issue in this context is whether it should be left for the market to develop Community-wide 
licensing  further,  while  respecting  the  basic  rules  of  intellectual  property  protection,  including  its 
territorial nature, or whether the Community legislator should seek to facilitate greater Community-
wide licensing. 

At the outset, it should be noted that a legislative measure, which would require rightholders to grant 
a  Community-wide  licence,  could  amount  to  a  compulsory  licence.  A  careful  assessment  would  be 
required of the compatibility of such a measure with the Community's international obligations under 
the Berne and the Rome Conventions and the more recent WIPO Treaties WCT and WPPT. A similar 
evaluation  would  be  needed  with  respect  to  Article  295  of  the  Treaty.  These  considerations  are 
naturally without prejudice to the powers of the Commission in this respect under Article 82 of the 
EC Treaty, in line with the previous practice by the Commission, by the Court of First Instance and 
the European Court of Justice and the Community's international obligations. 

8 

In  a  similar  context,  the  Commission  notes  an  increasing  call  for  access  to  protected  satellite  TV  broadcast 
originating  from  a  Member  State  other  than  the  one  in  which  viewers  are  resident.  While  current  conditional 
access  technologies  make  it  perfectly  possible  to  determine  exactly  what  the  paying  audience  is  within  the 
footprint of the satellite, business models and contractual arrangements often result in service offerings based on 
territory. While this issue is related to the call for Community-wide licensing addressed in this section, it is based 
more on conditional access control than on copyright and related rights and their licensing. In that respect, see 
the  Commission  Report  on  the  Legal  Protection  of  Electronic  Pay  Services,  COM(2003)198final,  24.04.2003, 
point 4.4. 

8 

 
 
  
 
                                                 
A  most  effective  option  would  be  to  provide  through  Community  legislation  that  any  licence 
regarding the rights of communication to the public or making available, at least as regards activities 
with  a cross-border  reach,  authorises  by  definition acts  of  use  in  the  entire  Community.  Under this 
option, once an act of communication to the public or making available has been authorised anywhere 
in the Community, it could be legally performed also in any other Member State. This option would 
amount to a partial removal of the principle of territoriality. 

A less radical option would be to adopt the model chosen for satellite broadcasting under Directive 
93/83/EEC  to  the  rights  of  communication  to  the  public  and  making  available.  Under  this  model, 
according to Article 1(2)(b) of the Directive, the relevant act of communication to the public “occurs 
solely  in  the  Member  State  where,  under  the  control  and  responsibility  of  the  broadcasting 
organisation,  the  programme-carrying  signals  are  introduced  into  an  uninterrupted  chain  of 
communication leading to the satellite and down towards the earth". However, if this model is applied 
to copyright and related rights without limiting the contractual freedom of the parties, as was done 
under  Directive  93/83/EEC,  it  does  not  necessarily  yield  the  desired  result  of  multi-territorial 
licensing9,  as  it  only  determines  the  applicable  law  and  does  not  by  itself  result  in  extending  the 
licence  to  the  footprint  in  question.  Alternatively,  one  could  seek  to  reduce  the  exclusive 
communication  to  the  public  and  making  available  rights  to  a  remuneration  right  subject  to 
mandatory  collective  management  (which  presupposes  an  efficient  functioning  of  collecting 
societies).  However,  since  both  Directive  2001/29/EC  and  the  WIPO  “Internet  Treaties”  WCT  and 
WPPT  establish  and  harmonise  these  rights  for  authors  and  the  right  of  making  available  also  for 
holders of  neighbouring rights as exclusive rights, it could be held that this option is not available. 
Another  possible  option  could  grant  commercial  users  the  freedom  of  choice  as  to  the  collecting 
society  in  the  EEA  granting  the  required  licence.  Such  a  model  has  been  put  in  place  by  the 
Simulcasting  agreement  which  has  been  established  by  collecting  societies  representing  certain 
rightholders  in  the  context  of  on-line  use,  and  combines  freedom  of  choice  with  increased 
transparency obligations on the part of collecting societies10. 

In  order  to  enhance  access  to  the  rights  in  question  even  further,  collecting  societies  could  be 
mandated,  under  certain  conditions,  to  offer  Community-wide  licences.  This  solution,  too,  would 
require efficient and accountable collective rights management across the Community, including the 
existence  of  the  necessary  reciprocal  agreements  between  collecting  societies,  which  put  them  in  a 
position to clear rights also for territories other than their own. 

At  the  less  interventionist  end,  another  model  would  be  to  focus  exclusively  on  the  modalities  of 
collective  management  by  collecting  societies,  as  they  are  mostly  in  charge  of  the  management  of 
those  rights  for  which  the  claim  for  Community-wide  licensing  has  been  strongest.  Collecting 
societies do already provide for a one-stop-shop of licensing of the respective group of rightholders’ 
world  repertoire  for  their  territory  of  operation.  This  constitutes  a  significant  advantage  for 
rightholders  and  users  alike  and  should  not  be  jeopardised.  At  the  same  time,  centralised  licensing 
arrangements, like the ones described above, could be fostered by eliminating further any disparities 
in  Member  States’  laws  regarding  the  conditions  of  collective  management  and  introducing  at  EU 
level good governance rules for the functioning of collecting societies. 

9 

10 

See  the  Report  from  the  European  Commission on  the  application  of  Council  Directive  93/83/EEC  on  the coordination  of 
certain  rules  concerning  copyright  and  rights  related  to  copyright  applicable  to  satellite  broadcasting  and  cable 
retransmission, COM(2002) 430 final, 26.07.2002. 
See point 3.4. 

9 

 
 
  
 
                                                 
1.2.5.  Digital Rights Management (DRM) Systems 

In the context of the discussions on the management of copyright and related rights in the new digital 
environment,  digital  rights  management  (DRM)  has  become  a  key  issue.  The  availability  of  DRM 
services through a technological infrastructure for the management of copyright and related rights is 
relevant to both individual and collective management.  

DRM systems can be used to clear rights, to secure payment, to trace behaviour and to enforce rights. 
DRM  systems  are,  therefore,  crucial  for  the  development  of  new  high  volume,  low  transactional 
value business models, which include the pricing of access, usage, and the service itself, subscription 
models, reliance on advertising revenue, credit sales or billing schemes. DRM systems are a means to 
an end, and as such, clearly are an important, if not the most important, tool for rights management in 
the Internal Market of the new digital services. 

The legal framework in which DRM systems are administered is set out in Directive 2001/29/EC. By 
legally  protecting  technological  measures  and  electronic  rights  management  information,  which 
rightholders may apply to their protected content, the Community legislature has established the legal 
parameters  of  DRM  systems  and  laid  the  groundwork  for  their  development.  Articles  6  and  7  and 
relevant  recitals  deal  with  the  protection  of  technological  measures  and  rights  management 
information respectively.  

Member States also have to take into account the application or non application i.e. the degree of use 
(Recital  35)  of  technological  measures  when  providing  for  fair  compensation  in  the  context  of  the 
private  use  exception  as  permitted  under  Article  5(2)(b).  The  Directive  requires  Member  States  to 
arrive  at  a  coherent  application  of  the  exceptions.  The  extent  to  which  this  has  been  achieved  in 
relation to the application of the requirement for fair compensation will be assessed when reviewing 
implementing  legislation.  Any  such  review  will  include,  in  particular,  the  criteria  which  Member 
States  refer  to  or  will  refer  to  in  order  to  take  such  application  or  non-application  of  technological 
measures into consideration when determining remuneration schemes in the context of the exception 
for  private  copying.  The  Commission  has  a  specific  mandate  to  do  so  within  the  context  of  the 
Contact Committee established under Article 12. A wider availability of DRM systems and services 
can only bring additional value to both rightholders and consumers if it contributes to the availability 
of protected content and facilitates the access of end-users to protected content. Transparency on the 
criteria and elements that Member States use or will use to take into consideration the application or 
non-application  of  technological  measures  must  therefore  be  ensured  and  clarification  provided 
through the required implementing measures.  

Arguably,  the  widespread  deployment  of  DRMs  as  a  mode  of  fair  compensation  may  eventually 
render  existing  remuneration  schemes  (such  as  levies  to  compensate  for  private  copies)  redundant, 
thereby  justifying  their  phasing  down  or  even  out.  At  the  same  time,  in  their  present  status  of 
implementation, DRMs do not present a policy solution for ensuring the appropriate balance between 
the interests involved, be they the interests of the authors and other rightholders or those of legitimate 
users, consumers and other third parties involved (libraries, service providers, content creators…) as 
DRM systems are not in themselves an alternative to copyright policy in setting the parameters either 
in respect of copyright protection or the  exceptions and limitations that are traditionally applied by 
the legislature. In this respect, the Commission is also under a duty to examine within the context of 
the Article 12 Contact Committee, whether acts permitted by law are being adversely affected by the 
use of effective technological measures (so called "technological lock up").  

10 

 
 
  
 
In  terms  of  technology  that  is  applied  to  DRM  systems,  Directive  2001/29/EC  acknowledges  that 
technological developments will facilitate the distribution of protected content, notably on networks. 
However,  it  also  recognises  that  differences  between  technological  measures  could  lead  to  an 
incompatibility of systems within the Community. 

While  the  choice  of  the  appropriate  business  model  remains  for  the  rightholders  and  commercial 
users  to  make  and  the  use  of  DRM  systems  and  services  remain  voluntary  and  market-driven,  the 
establishment  of  a  global  and  interoperable  technical  infrastructure  on  DRM  systems  based  on 
consensus among the stakeholders appears to be a necessary corollary to the existing legal framework 
and a prerequisite for the effective distribution and access to protected content in the Internal Market.  

The  achievement  of  an  internal  market  will  better  serve  the  general  interest.  To  this  end,  research 
projects  and  standardisation  efforts  towards  open  standards  have  been  supported  at  EU  level,  the 
results  of  which  have  contributed  to  demonstrate  that  an  interoperable  infrastructure  can  be 
established. As demonstrated by the CEN/ISSS report on DRM standardisation and interoperability, 
there are commercially available solutions that have experienced some use in the market, even though 
interoperability  between  them  remains  an  issue  to  be  addressed.  In  the  absence  of  any  substantial 
progress towards the implementation of interoperable DRM systems and services in the short future, 
a  recommendation  will  be  envisaged  to  reinforce  the  requirement  for  interoperability  of  DRM 
systems  and  services.  Such  recommendation  would  encompass  the  publication  of  available  open 
standards on the basis of which global and interoperable DRM systems and services can be provided 
with  the  objective  to  avoid  the  starting  fragmentation  of  the  market  to  become  firmly  established. 
Doubts about the  viability of the available technology have been expressed by several stakeholders 
and  have  proven  to  be  a  disincentive  to  use  DRM  systems.  As  is  the  case  with  any  protected 
technological  systems  and  devices,  the  risk  of  DRM  systems  being  circumvented  cannot  be  fully 
eliminated. Protecting DRM systems against circumvention, against the production and marketing of 
circumvention  devices  and  protecting  copyright  and  related  rights  against  any  form  of  piracy  is, 
therefore, an  indispensable  condition  to  reduce this risk to  its  lowest level  and  to ensure  legitimate 
use of protected content and acceptance among rightholders, commercial users and consumers alike. 
Indeed, acceptance among consumers is a key for the success of DRM systems, but wider acceptance 
is  yet  to  be  reached.  Rightholders,  commercial  users  and  governments  have  begun,  and  should 
continue, to inform and educate the public about whether the  medium of delivery should affect the 
price and to foster a culture of licensing protected digital content that counteracts the perception that 
if protected content is available on the Internet it is necessarily for free. In so doing, both the freedom 
of  choice  (for  equipment,  network,  services  and  content)  and  at  the  same  time  the  preservation  of 
privacy (including the ensuring of security) should be maintained as essential elements contributing 
to consumers' trust. Although DRM systems and remuneration schemes are both designed to manage 
and  facilitate  access  to  protected  content,  they  have  a  different  function  and  follow  a  different 
rationale.  Remuneration  schemes  operated  by  efficient  collecting  societies  acting  as  trustees  should 
provide  access  to  potential  end  users  while  safeguarding  the  economic  shares  of  all  rightholders, 
including  small  and  non-corporate  ones.  DRM  systems  used  by  individual  rightholders  provide 
access on the discretion of the latter only (or their licensees), as those systems operate on the basis of 
direct exercise of exclusive rights (to authorise or prohibit use). 

The  decision,  as  to  which  rights  management  system  is  preferred,  should  in  principle  be  left  to 
stakeholders  and  the  development  of  the  marketplace  and  will  eventually  be  based  on  the  relevant 
copyright  policy. In  this  perspective,  a  close  monitoring  of  the  market developments  is essential  to 
ensure the public interest is safeguarded. 

11 

 
 
  
 
1.3. 

Conclusions 

Reflections on rights management in the Internal Market should be based on the inherent principles 
of intellectual property protection. An operational framework for the management and marketing of 
copyright  and  related  rights,  both  individually  and  collectively,  is  a  pre-condition  for  safeguarding 
and  further  developing  the  potential  of  intellectual  property  for  creativity,  the  economy,  the 
functioning of the Internal Market and societies at large.  

Legislation of present and future EU Member States in this area is evolving together with emerging 
changes regarding technology and new markets. The Community legal framework on copyright and 
related  rights,  the  acquis  communautaire,  makes  reference  to  rights  management,  but  does  not 
include separate rules thereon. As there is no Community copyright, copyright protection is asserted 
and enforced on the national territorial basis of each Member State; and yet, rights management has 
increasingly become a cross-border activity.  

The  development  of  Digital  Rights  Management  (DRM)  systems  should,  in  principle,  be  based  on 
their  acceptance  by  all  stakeholders,  including  consumers,  as  well  as  on  copyright  policy  of  the 
legislature. A prerequisite to ensure Community-wide accessibility to DRM systems and services by 
rightholders  as  well  as  users  and,  in  particular,  consumers,  is  that  DRM  systems  and  services  are 
interoperable.  

A  close  monitoring  of  the  market  developments,  notably  through  consultation  of  the  stakeholders, 
remains essential.  

2. 

INDIVIDUAL RIGHTS MANAGEMENT 

2.1. 

The Main Features 

Individual  rights  management  has  been  addressed,  to  some  extent,  in  the  Directives  of  the  acquis 
communautaire.  Directive  2001/29/EC  confirms  in  its  Recital  (30)  that  the  exclusive  rights  of 
reproduction, communication to the public including making available, and distribution (for authors) 
may be transferred, assigned or subject to the grant of contractual licences, without prejudice to the 
relevant  national  legislation  on  copyright  and  related  rights.  Similar  provisions  are  contained  in 
Articles  2(4),  7(2)  and  9(4)  of  Directive  92/100/EEC  regarding  the  exclusive  rights  of  rental  and 
lending  and  of  reproduction  and  distribution.  In  addition,  Articles  2(5)  and  (6)  of  Directive 
92/100/EEC contain particular rules on presumptions relating to the transfer of rights. 

2.2. 

The Issues 

2.2.1.  Ownership of Rights 

Individual  rights  management  is  based  on  the  initial  allocation  of  ownership  of  rights:  the  initial 
owner of copyright in a work is, in principle, the natural person who created it. However, under some 
jurisdictions, also legal persons may be initial owner of rights. 

On the specific issue of authorship of audiovisual works, a certain degree of harmonisation has been 
achieved at Community level. For example, all Member States designate at least the principal director 

12 

 
 
  
 
of an audiovisual work as one of the authors of the work. This issue has been addressed in more detail 
in the Commission’s Report of 6 December 200211. 

2.2.2. 

Statutory Conditions for the Transfer of Rights 

Transfers of rights pertain to the transfer of economic rights of the author or performer (as the initial 
creative rightholder) to a third party by assignment or by licence12. The copyright legislation of most 
Member States imposes certain obligations on the contracting parties on the scope of the transfer of 
rights (e.g. on limitations on the transfer of rights relating to forms of exploitation that are known or 
foreseeable at the time the copyright contract was concluded or on rules on termination of contracts). 
Such conditions vary from one Member State to another. 

Most  Member  States  require  also  formalities  of  some  sort  (usually  a  written  document)  for 
assignments or licenses to be valid or validly proven. 

2.2.3.  Content and Interpretations of Contracts 

Many Member States apply a restrictive interpretation of copyright contracts: any transfer  of rights 
shall be narrowly interpreted, consistent with the purpose of transfer and, in the case of some Member 
States, in favour of the author or performer, when in doubt. 

Concerning the amount of the payment, as a basic rule, the majority of Member States have left this 
amount to be paid to the author or performer to be determined by the contracting parties. However, 
some  Member  States  do  require  the  payment  be  calculated  as  a  proportional  or  an  equitable  share. 
The contract can be subject to modification if the remuneration agreed upon is disproportionate to the 
income generated from the use of the work (e.g. “best seller” clause or application of the equity and 
fairness principles). 

2.3. 

Conclusions 

There  appears  to  be  a  considerable  commonality  of  approach  among  Member  States  including 
Accession Countries on a number of issues in the area of individual rights management.  

For the time being, the degree of common ground regarding the rules on copyright contracts across 
Member States appears to be sufficient, so as not to necessitate any immediate action at Community 
level. While, at this stage, national developments have not given rise to any particular concern from 
the point of view of the functioning of the Internal Market, the Commission will nevertheless have to 
continue to keep the matter under review. 

11 

12 

Report  from  the  Commission  to  the  Council,  the  European  Parliament  and  the  Economic  and  Social  Committee  on  the 
question of authorship of cinematographic or audiovisual works in the Community, COM (2002) 691 final, 6.12.2002. 
An  assignment  is  a  transfer  of  rights  in  an  exclusive  and  definitive  manner.  A  licence  is  the  permission  to 
perform an act, which without that permission would be an infringement of copyright or a related right. A licence 
may be exclusive or non-exclusive. 

13 

 
 
  
 
                                                 
3. 

THE COLLECTIVE MANAGEMENT OF RIGHTS 

3.1. 

The Functions of Collective Management 

3.1.1.  The Development of Joint Rights Management 

Due  to  the  number  of  uses  and  users  as  well  as  rightholders  involved,  licensing  certain  rights 
individually  has  been  impractical,  as  previously  seen.  This  is  particularly  the  case  for  rights  of 
remuneration.  Consequently,  rightholders  have  appointed  agents  to  engage  in  the  joint  licensing  of 
their works. Similarly, users have preferred to have a single point of reference when seeking a licence 
both in terms of authorisation and payment. 

In view of the perceived advantages of collective management regarding remuneration rights, several 
legislatures require mandatory collective management, i.e. such rights may only be administered by 
collecting societies. 

3.1.2.  Main Features of Collective Management 

The collecting society, a trustee, usually administers, monitors, collects and distributes the payment 
of royalties for an entire group of rightholders, on the basis of the national law of its territory, with 
respect to that territory. 

Collecting  societies  administer  rights  in  the  area  of  music,  literary  and  dramatic  works  as  well  as 
audiovisual works, productions and performances for activities such as communication to the public 
and cable retransmission of broadcasting programmes, mechanical reproductions, reprography, public 
lending, artist’s resale right, private copying or certain educational uses. Most societies form part of a 
network of interlocking agreements, by which rights are cross-licensed between societies in different 
Member States. 

From  the  users’  viewpoint,  therefore,  collecting  societies  occupy  a  key  position  in  the  licensing  of 
certain  rights  in  so  far  as  they  provide  access  to  a  global  catalogue  of  rights.  Collecting  societies 
function in this respect as a one-stop-shop of licensing. Collective management also allows particular 
rightholders, whether corporate or not, within a less lucrative or niche market, or who do not dispose 
of  sufficient  bargaining  power,  to  manage  their  rights  efficiently.  From  this  perspective,  collecting 
societies carry the joint social responsibility of rightholders to make sure that all of them benefit from 
their intellectual property rights at a reasonable cost. 

3.2. 

The Legal Framework  

3.2.1.  Collective Management in the acquis communautaire 

In  many  instances,  the  Directives  of  the  acquis  communautaire  on  copyright  and  related  rights 
contain  references  to  rights  management  by  collecting  societies.  Directive  92/100/EEC,  when 
harmonising  the  right  to  equitable  remuneration,  addresses  in  Articles  4(3)  and  (4)  collective 
management as a model for its management. Under Article 9 of the Directive 93/83/EEC collective 

14 

 
 
  
 
management  is  obligatory  for  cable  redistribution  rights.  Article  1  (4)  of  that  Directive  contains  a 
definition of the term “collecting society”13. 

The  Directive  2001/29/EC  on  Copyright  in  the  Information  Society  does  not  mention  collective 
management  in  its  Articles.  However,  with  regard  to  the  making  available  right,  Recital  (26) 
addresses  the  desirability  of  encouraging  collective licensing  arrangements  in  order to  facilitate the 
clearance of the rights concerned in on-demand services by broadcasters of their radio or television 
productions  incorporating  music  from  commercial  phonograms  as  an  integral  part.  Finally,  the  fact 
that  collective  management  is  relevant  for  the  operation  of  the  Directive  is  also  apparent  from  its 
Recitals (17) and (18) 14.  

Collective  management  appears  also  to  be  the  de  facto  basis  for  the  operation  of  the  artists’  resale 
right  under  Directive  2001/84/EC,  even  if  it  is  not  mandatory.  The  Directives  of  the  acquis 
communautaire  have  left  it  to  Member  States  to  regulate  the  activities  of  collecting  societies,  and 
only  the  two  most  recent  Directives  2001/29/EC  and  2001/84/EC  include  appeals to  ensure  greater 
transparency and efficiency in relation to the activities of collecting societies. 

3.2.2.  Collective Management in National Law 

Collective rights management by collecting societies is regulated by law to a greater or lesser extent 
in  most  Member  States.  However,  significant  differences  exist  with  respect  to  both  legislation  and 
practice. Moreover, Member States and Accession Countries’ legislation on collective management is 
evolving  further.  In  France,  Belgium,  the  Netherlands,  Luxemburg  and  Portugal,  for  instance,  new 
legislation has been adopted or initiated with the aim of rendering rights management by collecting 
societies more transparent and of improving their accountability. It seems that such legislation does 
not necessarily share the same structure or objectives. 

3.3. 

Consultations on Collective Management in the Internal Market  

Ever since the discussions at Community level about copyright in the Information Society began in 
the 1990’s, rights management in general and collective rights management in particular has been at 
the  centre  of  attention  and  was  discussed  at  each  of  the  four  international  Copyright  Conferences 
organised  by  the  Commission15.  In  1996,  the  Commission  presented  its  preliminary  views  in  the 
Communication on the follow-up to the 1995 Green Paper. In addition, the Commission organised, in 
November 2000, a two day hearing exclusively on collective rights management.  

The  general  conclusions  of  these  consultations  were  threefold.  Firstly,  there  was  overall  consensus 
that  an  Internal  Market  in  rights  and  exceptions  could  not  be  achieved  without  sufficient  common 
ground on how the rights are exercised. Secondly, collective management is, in several sectors of the 
market,  in  the  interest  of  both  rightholders  and  users.  Most  stakeholders  agree  upon  the  economic, 
cultural  and  social  functions  of  collecting  societies.  Thirdly,  there  is  a widespread call  for  a  higher 
degree  of  convergence  of  the  conditions  under  which  collecting  societies  operate  with  a  view  to 

13 

14 

15 

Article  1 (4)  of the  Satellite  and Cable Directive reads as follows: “For the  purposes  of  this Directive,  ‘collecting  society’ 
means any organisation which manages or administers copyright and right related to copyright as its sole purpose or as one of 
its main purposes”. 
Recital  (17)  reads  as  follows:  “It  is  necessary,  especially  in  the  light  of  the  requirements  arising  out  of  the  digital 
environment,  to  ensure  that  collecting  societies  achieve  a  higher  level  of  rationalisation  and  transparency  with  regard  to 
compliance with competition rules.”; Recital (18) reads as follows: “This Directive is without prejudice to the arrangements 
in the Member States concerning the management of rights such as extended collective licences.” 
Florence (1996), Vienna (1998), Strasbourg (2000) and Santiago de Compostella (2002). 

15 

 
 
  
 
                                                 
increasing  their  efficiency  and  achieving  more  accessible  licensing  especially  at  Community  level. 
However, the Commission notes that the perception of commercial users, consumers and rightholders 
themselves  about  collective  management  varies  considerably.  This  has  resulted  in  rather  different 
positions in Member States as well as at Community level. 

Criticism from users has focused on the tariffs, supervision of collecting societies and access to the 
courts  or  arbitration.  More  recently  it  has  also  extended  to  administrative  fees  charged  by  the 
societies,  the  length  of  the  negotiations,  alleged  shortcomings  in  their  internal  decision-making 
process and an apparent lack of transparency regarding the pricing policy. Collective management is 
also subject to criticism from among certain rightholders. Those who dispose of sufficient bargaining 
power, such as major phonogram producers, increasingly seek not to depend on collecting societies to 
manage  their  rights.  From  their  perspective,  in  facilitating  the  watermarking,  identification  and 
tracking  of  the  use  of  works,  digitisation  has  in  principle  empowered  rightholders  to  individually 
control the licensing and royalty payment process, so that the role of collective rights management is 
questioned. 

This view is not necessarily shared by rightholders with less bargaining power of their own, as they 
can manage certain rights only via collecting societies. However, most rightholders would like to opt 
for more flexibility on the part of collecting societies  in respect of the acquisition of rights and for 
greater influence in the distribution of royalties. In addition, concerning reciprocal agreements, there 
have  been  concerns  among  rightholders  of  related  rights  that  the  system  of  the  so-called  “B” 
contracts,  under  which  no  money  is  transferred  and  each  society  collects  and  distributes  royalties 
used  in  its  territory  only  to  its  own  rightholders,  does  not  function  properly  between  the  societies 
managing related rights16. 

3.4. 

Collective Rights Management and Competition 

As regards the application of EU competition law to collecting societies, intervention by the Court of 
Justice  and  the  Commission  traditionally  addressed  three  broad  issues:  (i)  the  relationship  between 
collecting  societies  and  their  members,  (ii)  the  relationship  between  collecting  societies  and  users 
and, 
the  reciprocal  relationship  between  different  collecting  societies.  Recent 
technological developments such as the Internet have required the Commission to reassess some of 
the principles previously established in the analogue area. 

lastly,  (iii) 

(i)  From  the  rightholders'  viewpoint,  collecting  societies  act  as  trustees,  which  manage  their  rights 
and interests. The basic framework of the relationship between collecting societies and their members 
remains that laid down by the Commission in the three GEMA decisions17, in particular as regards 
the extent to which it is compatible with Articles 81 and 82 of the EC Treaty for societies to require 
the assignment of rights by their members in respect of all utilisation forms of a musical work. The 
Commission is of the view that there is a possible need, in the light of technological evolution, (e.g. 
online  services),  to  reconsider  the  "GEMA  categories"  established  in  the  70's.  In  a  more  recent 
decision,  the  Commission  considered  that  a  mandatory  requirement  in  the  statute  of  a  collecting 
society  that  all  rights  of  an  author  be  assigned,  including  their  on-line  exploitation,  amounts  to  an 
abuse  of  a  dominant  position  within  the  meaning  of  Article  82(a)  of  the  Treaty,  given  that  such 

16 

17 

NB : « A » contracts provide for the reciprocal transfer of royalties collected without any deadlines applying to 
claim or transfer. 
GEMA  I,  Decision  of  20.06.1971,  OJ  L134/15;  GEMA  II,  Decision  of  06.07.1972,  OJ  L  166/22;  GEMA  III,  Decision  of 
04.12.1981, OJ L 94/12. 

16 

 
 
  
 
                                                 
practice corresponds to the imposition of an unfair trading condition18. As far as the membership of a 
collecting society is concerned, the Commission has also stated that a collecting society in a dominant 
position is not allowed to exclude rightholders from other Member States19. . 

(ii) The relationship between collecting societies and users has given rise to three main issues: effects 
on trade between Member States, the material scope of the licences granted to users and the level of 
tariffs  charged  to  licensees.  For  example,  as  dominant  (often  even  monopolistic)  undertaking,  a 
collecting  society  cannot  refuse  -  under  Article  82-  to  license  a  user  in  its  own  territory  without  a 
legitimate  reason.  The  Court  made  it  clear  that  collecting  societies  may  not  engage  in  a  concerted 
action having the effect of systematically refusing to grant direct access to their repertoires by users 
located in foreign territories, a possible justification for such a refusal being the impracticability of 
setting up a monitoring system in the foreign territory20. In relation to the tariffs, the Court observed 
that one of the most marked differences amongst collecting societies in the Member States lies in the 
level of operating expenses. It has held that the possibility cannot be ruled out that it is the lack of 
competition in the market that accounts for high administrative costs and the high level of royalties21. 
The  Court  said  also  that  Article  82  of  the  Treaty  must  be  interpreted  on  the  basis  that  a  collecting 
society in a given Member State abuses its dominant position if it imposes unfair conditions on its 
trading  partners  by,  namely,  imposing  appreciably  higher  tariffs  than  those  applicable  in  other 
Member States unless the differences were justified by objective and relevant factors22. 

(iii)  Concerning  the  reciprocal  agreements  between  collecting  societies,  the  Court  of  Justice 
addressed  the  reciprocal  relationship  between  collecting  societies  in  the  Tournier  and  Lucazeau 
cases23 back in 1989 and concluded that the reciprocal representation agreements entered into by the 
collecting  societies  in  Europe  did  not,  as  such,  fall  under  Article  81(1)  of  the  Treaty,  provided  no 
concerted action or exclusivity was evidenced. Accordingly, the reciprocal representation agreements 
appeared  economically  justified  in  a  context  where  physical  monitoring  of  copyright  usage  was 
required.  The  recent  Commission  decision  "Simulcasting"24  adapts  the  existing  principles  to  the 
online  environment  and  carries  out  a  new  assessment  under  EC  competition  rules  of  rights 
management activities. The absence of territorial boundaries in the on-line environment induced by 
the internet and digital format of the products enables users to  choose any collecting society in the 
EEA  which  is  a  member  of  the  one  stop  shop  mechanism  for  the  delivering  of  the  licence. 
Furthermore,  the  parties  undertook  to  increase  transparency  as  regards  the  payment  charged  by 
separating the tariff which covers the royalty proper from the fee meant to cover the administrative 
costs. This way, commercial users will be able to recognise the most efficient societies in the EEA 
and seek their licences from the collecting societies that provide them at lower cost. 

3.5. 

The Issues that require a legislative approach 

Whilst competition rules remain an effective instrument for regulating the market and the behaviour 
of  the  collecting  societies,  an  Internal  Market  in  the  collective  management  of  rights  can  be  best 

18 

19 
20 
21 
22 
23 
24 

Banghalter  et  Homem  Christo  v  Sacem  (so-called  "Daftpunk"  Decision),  case  COMP/C2/37.219,  decision  of 
06.08.2002, available at http://europa.eu.int/comm/competition/antitrust/cases/decisions/37219/fr.pdf 
GEMA I, Decision of 20.06.1971, OJ L134/15; GVL, Decision of 29.10.1981, OJ L370/49. 
Ministère public v Tournier, case 395/87, 13 July 1989, ECR (1989) p.2521. 
See previous footnote. 
Lucazeau v SACEM, cases 110/88, 241/88 and 242/88, 13 July 1989, ECR(1989) p.2811. 
See above. 
Case COMP/C2/38.014 IFPI Simulcasting, Decision of 8 October 2002, OJ L107 of 30.04.2003, p.58. 

17 

 
 
  
 
                                                 
achieved  if  the  monitoring  of  collecting  societies  under  competition  rules  is  complemented  by  the 
establishment of a legislative framework on good governance. 

The results of the consultation present a case for a legislative approach based on Internal Market rules 
and principles within the copyright framework, which would safeguard the functioning of the Internal 
Market for all players in respect of collective management. In order to achieve a level playing field 
on  collective  management  in  the  Internal  Market,  common  ground  on  the  following  features  of 
collective rights management would be required: 

3.5.1.  The Establishment and Status of Collecting Societies 

Diverging conditions and a number of models exist for establishing a collecting society. Regarding 
their status, collecting societies may be corporate, charitable, for profit or not for profit entities. The 
consultation process demonstrated that apparently, the efficiency of a collecting society is not linked 
to its legal form. A collecting society may be duly constituted in the form it chooses or is required 
under national law, as long as it complies with the relevant national legislation pertaining to any such 
entity  and  provided  the  respective  national  law  has  no  discriminatory  effects.  This  is  subject  to 
compliance  with  and  review  under  Articles  82  and  86  of  the  Treaty  where  a  collecting  society  is 
constituted as a legal monopoly or where it is granted special rights under national law. 

However, as collecting societies, in their role as rightholders’ trustees, have particular responsibilities 
due to the economic, cultural and social functions they fulfil, the establishment of a collecting society 
should be subject to similar conditions in all Member States. In order to promote good governance, 
common  ground  appears  to  be  required  at  Community  level  in  relation  to  the  persons  that  may 
establish a society, the status of the latter, the necessary proof of efficiency, operability, accounting 
obligations, and a sufficient number of represented rightholders. 

3.5.2.  The Relation of Collecting Societies to Users 

Collecting  societies  usually  represent  a  wide,  if  not  worldwide  repertoire  and  have  an  exclusive 
mandate  for  the  administration  of  rights  in  relation  to  their  field  of  activity.  This  puts  them  in  an 
exclusive  and  strong  position  vis-à-vis  users.  This  position  is  appreciated  by  most,  as  it  enables 
collecting  societies  to  function  as  one-stop-shops  for  licensing.  However,  users  express  some 
concerns  about  collective  management,  usually  focused  on  the  tariffs  they  have  to  pay  and  the 
licensing  conditions.  Societies  should  be  obliged  to  publish  their  tariffs  and  grant  a  licence  on 
reasonable conditions. Furthermore, it is essential for users to be in a position to contest the tariffs, be 
it through access to the courts, specially created mediation tribunals or with the assistance of public 
authorities which supervise the activities of collecting societies. 

With  respect  to  the  licensing  conditions,  it  should  be  noted  that  in  some  Member  States,  the 
obligation of collecting societies to grant licences is combined with the rule that such licences should 
be  granted  under  appropriate  or  reasonable  conditions.  In  turn,  use  without  payment  should  not  be 
permitted. Some Member States provide that potential users, who contest the tariffs of the collecting 
society can only proceed with the exploitation of the rights, if they have deposited a certain amount 
with the collecting society. A Community-wide application of these principles should be established 
in order to promote or safeguard access to protected works and other subject matter on appropriate 
terms.  

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3.5.3.  The Relation of Collecting Societies to Rightholders 

Usually only one society operates for each group of rightholders in the territory in question as their 
trustee and it is the only gatekeeper of their market in respect of the collective management of their 
rights. The principles of good governance, non-discrimination, transparency and accountability of the 
collecting  society  in  its  relation  to  rightholders  are,  therefore,  of  particular  importance.  These 
principles  should  apply  to  the  acquisition  of  rights  (the  mandate),  the  conditions  of  membership 
(including the end of that membership), of representation, and to the position of rightholders within 
the society (rightholders’ access to internal documents and financial records in relation to distribution 
and  licensing  revenue  and  deductions,  genuine  influence  of  rightholders  on  the  decision-making 
process as well as on the social and cultural policy of their society). Regarding the mandate, it should 
offer  rightholders  a  reasonable  degree  of  flexibility  on  its  duration  and  scope.  Furthermore,  in  the 
light of the deployment of Digital Rights Management (DRM) systems, rightholders should have, in 
principle, and unless the law provides otherwise, the possibility if they so desire to manage certain of 
their rights individually. 

3.5.4.  The External Control of Collecting Societies 

In  some  Member  States,  collecting  societies  are  subject  to  control  by  public  authorities  or  specific 
bodies, but with very differing scope and efficiency. The external control encompasses the behaviour 
of the societies, their functioning, the control of tariffs and licensing conditions and also the dispute 
settlement.  From  an  Internal  Market  viewpoint,  the  existing  differences  regarding  the  control  of 
collecting  societies  are  significant  and  cannot  be  ignored.  Divergent  rules  on  control  from  one 
Member State to another constitute obstacles to the interests of rightholders and users alike, given the 
exclusive  position  of  most  collecting  societies  and  their  network  of  reciprocal  agreements.  As  a 
consequence, in all Member States, adequate external control mechanisms should be available. From 
an  Internal  Market  viewpoint,  it  would  appear  useful  to  establish  common  ground  on  certain 
parameters  of  external  control  and  make  specific  bodies  (e.g.  specialised  tribunals,  administrative 
authorities or arbitration boards) available in all Member States and to establish common ground on 
their competencies, their composition and the binding or non-binding nature of their decisions. 

3.6. 

Conclusions 

In  order  to  achieve  a  genuine  Internal  Market  for  both  the  off-line  and  on-line  exploitation  of 
intellectual property, more common ground on several features of collective management is required. 
This  would  safeguard  its  functioning  throughout  the  Community  and  permit  it  to  continue  to 
represent  a  valuable  option  for  the  management  of  rights  benefiting  rightholders  and  users  alike. 
Achieving more common ground on collective management should be guided by copyright principles 
and the needs of the Internal Market. It should result in more efficiency and transparency and a level 
playing  field  on  certain  features  of  collective  management.  Abstaining  from  any  legislative  action 
does not seem to be an option anymore. To rely on soft law, such as codes of conduct agreed upon by 
the  market  place,  appears  to  be  no  appropriate  option.  The  conclusions  of  the  consultation  process 
have confirmed the need for complementary action on those aspects of collective management, which 
affect  cross-border  trade  and  have  been  identified  as  impeding  the  full  potential  of  the  Internal 
Market.  Such  an  action  would  respect  the  subsidiarity  and  proportionality  principles  and  would 
harmonise  certain  features  of  collective  management.  In  order  to achieve  the  objectives  outlined  in 
this Communication, the Commission intends to propose a legislative instrument on certain aspects of 
collective management and good governance of the collecting societies. This initiative which will be 
subject  to  a  public  consultation,  will  take  account  of  recent  developments  in  the  market  and 
legislation of the present and the new Member States. 

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