Source: EURLEX
Language: en
Format: md

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| CALL FOR EVIDENCE  FOR AN INITIATIVE (without an impact assessment) | |
| This document aims to inform the public and stakeholders about the Commission's work, so they can provide feedback and participate effectively in consultation activities.  We ask these groups to provide views on the Commission's understanding of the problem and possible solutions, and to give us any relevant information they may have. | |
| Title of the initiative | Initiative on the conditions for the remuneration of third country recorded music played in the EU |
| Lead DG – responsible unit | DG CONNECT, I.2 Copyright |
| Likely Type of initiative | Proposal for a directive |
| Indicative Timing | Q4 2022 |
| Additional Information | - |
| This document is for information purposes only. It does not prejudge the final decision of the Commission on whether this initiative will be pursued or on its final content. All elements of the initiative described by this document, including its timing, are subject to change. | |

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| A. Political context, problem definition and subsidiarity check |
| Political context |
| The Commission is considering an initiative that would introduce rules for third country nationals, whether natural or legal persons by amending the Article 8(2) of the Directive 2006/115/EC on rental and lending rights (RLR directive). Article 8(2) provides for a remuneration right for performers and record producers, irrespective of nationality (so called ‘single equitable remuneration right’), when their sound recordings are used i.e. broadcast to the public (such as on radio and TV) and played in public places (such as bars and restaurants). [1](#footnote3)  The remuneration is collected either by record producers and/or collective rights management organisations (CMOs) from the users (such as broadcasters and various venues) and shared between the relevant performers and record producers.   At international level, Article 8(2) of the RLR directive is the means by which the EU considers it has implemented its obligations under Article 15(1) of WIPO Performances and Phonograms Treaty (WPPT) to which the EU is a party. The WPPT allows countries to limit this right or not to apply the right at all [2](#footnote4) . Several third countries exercised this possibility to either limit the right to single equitable remuneration or to not apply it at all. In such event, the WPPT allows other contracting parties to restrict national treatment (Article 4 (2)) for nationals of those countries on the basis of the so-called principle of material reciprocity [3](#footnote5) .  Whilst Article 8(2) of the RLR directive has been subject to a number of rulings by the Court of Justice, it was only in September 2020, that the Court ruled on the relationship between Article 8(2) and the EU’s international obligations in case C-265/19 (the ‘RAAP’ judgement). The Court held that, as the EU law stands now, Article 8(2) interpreted in the light of the EU’s international obligations applies to use in the territory of the Union of phonograms published for commercial purposes irrespective of nationality. The Court also held that as the RLR directive makes no reference to national law, Member States cannot themselves choose the beneficiaries of the right to remuneration. In addition, as far as the EU’s obligations under the WPPT are concerned, this is a matter of exclusive competence and it is for the EU and not Member States to limit the single equitable remuneration right of the third country nationals, should it choose to do so.  Since the RAAP judgment, the consequences of the judgement have been regularly discussed with Member States in the Council working party on Intellectual Property (Copyright). The judgement has brought to the fore the debate about the potential consequences of the EU not having exercised the option of material reciprocity as allowed by Article 4(2) of the WPPT. Members of the European parliament have also taken an interest in the matter, as expressed in several written parliamentary questions received by the Commission.  In this context, the Commission is envisaging to introduce a proposal to amend the copyright acquis in order to put in place a Union wide solution to provide legal certainty, in full compliance with the EU’s international obligations under the WPPT, and in a uniform manner across Member States, within the respect of the internal market and the fundamental rights of all relevant performers and record producers.  To this end, the Call for Evidence collects initial stakeholder feedback on the application of Article 8(2) of the RLR directive in Member States’ laws and in practice and the impact, if any, of the RAAP judgment. This includes feedback on arrangements for the remuneration, collection, sharing between relevant performers and record producers, and arrangements with CMOs. As a follow-up action, the Commission will shortly launch a targeted public consultation to gather stakeholder feedback in a more detailed manner, related to certain specific aspects of the issue at hand (e.g. points of attachment, restrictions as regards certain types of use, sound recordings with multiple performers of various nationalities, ensuring no knock on effect for the EU’s other international obligations for record producers, performers and authors). |
| Problem the initiative aims to tackle |
| As stated by the CJEU, in certain cases, the fact that Article 8(2) applies to use of the sound recordings of third country nationals where no remuneration right applies in those third countries, may prejudice the ability of certain EU performers and producers to be involved in the recorded music business in those third countries on equal terms and with fair conditions vis-à-vis certain producers and performers of third countries. The refusal of certain third countries to grant, for all or certain uses on their territory of phonograms published for commercial purposes, the right to a single equitable remuneration to phonogram producers and performers who have contributed to the sound recording may have the consequence that nationals of Member States who operate in the – frequently international – recorded music business do not receive an adequate income and have greater difficulty in recouping their investments.  Article 8(2) will require specific amendment in order to respond to the reservations made by those WPPT contracting states with regard to the single equitable remuneration and the EU is bound to do so in a manner which is clear and precise in order to respect the fundamental rights of those performers and record producers. |
| Basis for EU action (legal basis and subsidiarity check) |
| Article 8(2) of the RLR Directive is a harmonised rule of EU law that also implements the WPPT. In relation to the WPPT, as pointed out by the Court of Justice, the EU has the exclusive competence referred to in Article 3(2) of the TFEU. Hence, the initiative falls under a policy area where the EU has exclusive competence, and the subsidiarity principle does not apply. |
| Legal basis |
| The legal bases of the Rental and Lending directive are Articles 53(1), Articles 62 and 114 of the TFEU. |
| Practical need for EU action |
| EU action is needed to amend Article 8(2) in order to apply material reciprocity under the WPPT by introducing specific rules as explicitly stated by the CJEU. |
| B. What does the initiative aim to achieve and how |
| The initiative aims at amending in a targeted manner Article 8(2) of the Directive 2006/115/EC on rental right and lending right and on certain rights related to copyright in the field of intellectual property.  The goal of the amendment is that the EU exercises the option set out in Article 4(2) of the WPPT and apply material reciprocity for the right of remuneration, thus limiting the rights of certain third country nationals that in respect of the right to remuneration under Article 8(2) when their records are used in in the European Union whether this is by being played the on radio, TV and in public places such as bars and restaurants, This should not affect the EU’s other obligation under Articles 10 and 14 of the WPPT with respect to performers and record producers which are implemented by Article 3(2) of Directive 2001/29. |
| Likely impacts |
| The initiative aims at better defend European performers and producers internationally. According to the preliminary evidence, it appears that as a result of the absence of material reciprocity in Union law, the transfer of payments from all MS to the third countries that do not apply at all or in part the single equitable remuneration right may in future amount to more than 150 million EUR annually, while significantly smaller amounts would be transferred from those third countries to EU producers and performers. The legislative intervention would aim at preventing such an unbalanced situation to materialise.  Therefore, the initiative may incentivise those third countries, which currently do not do so, to introduce the right and thereby would also contribute to an adequate income for all performers and record producers as a basis for further creative and artistic work and incentivise the cultural and creative industries to promote and invest in local talent in those third countries. If so, it would have positive economic, social, impactsas it would safeguard the level-playing field between EU and certain third country performers and phonogram producers as well as supporting the EU in the international scene with regard to those third countries that currently limit the single equitable remuneration. |
| Future monitoring |
| The legislative intervention is likely to take the form of a directive. Therefore, Member States will have to ensure a complete transposition and implementation of the new rules and they will have to notify the transposition measures to the Commission. The Commission will assess the compliance of notified national transposition measures in its role as guardian of the Treaty. |
| C. Better regulation |
| Impact assessment |
| An Impact assessment is not being conducted for this initiative. The initiative should not entail significant new impacts considering that, in essence, it would introduce a legal basis which meets the objectives set out by the Court in its judgment in order to redress the balance in the international music market and within the limits set by the Court. The initiative therefore follows the option explicitly indicated by the Court in the RAAP judgment, which has explicitly pointed to the possibility for the EU legislator to lay down the principle of reciprocity in the EU directive. |
| Consultation strategy |
| Prior and in parallel to this call for evidence, the Commission engaged in different activities to gather the views of and evidence from a variety of stakeholders.  ·Information and data gathering exercise: The Commission maintains regular exchanges on this topic with Member States in the framework of Council Working Party on Intellectual Property (Copyright). In this context, the Commission promoted an information and data gathering exercise in the Council working party in 2021.  ·Study: In February 2022, the Commission launched a study on the legal and economic impacts of the judgement. The study is expected to run until July 2022. A wide range of stakeholders, including the national authority of selected Member States, industry associations, collective management societies, independent managing entities, etc. participated in a series of different data-gathering activities (interviews, workshop, etc.).  ·On-line targeted consultation: the on-line targeted consultation following up on this call for evidence with more detailed questions will be launched in Q3 2022. The questionnaire for the targeted consultation will be available in English, French and German. The on-line targeted consultation and the factual summary will be published via the DG CONNECT website: https://digital-strategy.ec.europa.eu/en/consultations. |
| Why we are consulting? |
| The consultation described in this document seeks stakeholders’ views on the situation with respect to Article 8(2) of the RLR directive and whether there has been a material change since September 2020 or not, for example:  ·impact on EU performers, producers and users in the absence of an equitable remuneration right in certain third countries;  ·the arrangements including national rules or practices for collection and distribution, and apportionment between third country relevant performers and record producers and EU performers and record producers;  ·arrangements including national rules or practices with CMOs for collection, and distribution including those in third countries;  ·the requirement of published for commercial purposes in Article 8(2);  ·the specific rules at national level for third country nationals such as establishment or residence and how such rules apply for natural persons (performers) and record producers (legal persons);  ·impact on third country performers and record producers and whether any limitation for third country nationals should match the limitation applied by third countries;  ·views on the potential legislative initiative as described in this document. |
| Target audience |
| The list of main stakeholders includes national authorities, collective management societies, independent managing entities, broadcasters and other commercial users of recorded music, organisations representing any of the interested stakeholders. |

:   [(1)](#footnoteref3)
     Article 15(1) of the WPPT
:   [(2)](#footnoteref4)
     Article 15(3) of the WPPT
:   [(3)](#footnoteref5)
     Article 4(3) of the WPPT

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