Author: Stefano Barazza (Studio Legale Barazza)
Martin Luksan v Petrus van der Let, Case C-277/10, European Court of Justice (ECJ), 9 February 2012
Journal of Intellectual Property Law & Practice (2012) doi: 10.1093/jiplp/jps059, first published online: April 23, 2012
The ECJ has clarified that the rights concerning the exploitation of cinematographic works, as well as the right to fair compensation provided under the ‘private copying’ exception, vest by law, originally and directly, in the principal director; while the former may be subject to a rebuttable presumption of transfer, the latter cannot be waived or transferred. The decision hints at the necessity of achieving a fair balance between the needs of commercial productions and the protection of intellectual creators.
The Berne Convention provides a set of basic rules aimed at ensuring a uniform protection of the rights of authors in their literary and artistic works. Article 14 bis, specifically dealing with cinematographic works, leaves to members the task of identifying the owners of copyright but expressly allows national legislation to deny the principal director certain exploitation rights.
The European Union has frequently intervened on the matter, aiming at easing an approximation of the laws of Member States. Provisions applicable to cinematographic works may be found in Directive 2006/116 (which repealed and re-enacted Directive 93/98), concerning the term of protection of copyright and related rights, and Directive 2001/29, which specifically deals with the information society and allows member states to provide for limitations to the reproduction right, among which is the so-called ‘private copying’ exception. Directive 93/83 is also dedicated to satellite broadcasting and cable retransmission, while Directive 2006/115 (which repealed and re-enacted Directive 92/100) addresses lending and related rights.
In Austria, Paragraph 38 of the Law on Copyright (Urheberrechtsgesetz, BGBl. 111/1936) states that exploitation rights in cinematographic works vest in the producer. The author's statutory rights to remuneration, according to the same provision, are to be shared equally by the film producer and the author, unless the parties have agreed otherwise. Provisions concerning personal or private use of copyright material may be found in Paragraph 42.
Mr Luksan sued the producer, alleging breach of contract and claiming that the defendant had exercised the exploitation rights specifically excluded from the agreement. Mr van der Let maintained in response that, according to Paragraph 38 of the UrhG, all exploitation rights vested in him as the producer of the film and that the contract's provisions on the issue were void. He also claimed to be entitled to the entire amount of remuneration rights, arguing that they necessarily share the fate of exploitation rights and that the statutory provision acknowledged the possibility of contrary stipulations.
The Handelsgericht Wien referred several questions to the ECJ, noting that Paragraph 38 of the UrhG, as consistently interpreted by case law, provides for the original and direct allocation of exploitation rights to the film producer and that statutory rights to remuneration are deemed waivable and may be subject to agreements departing from Paragraph 38.
As to exploitation rights, the court asked whether their original and exclusive allocation to the film producer was inconsistent with the European Union law and whether a statutory presumption of transfer, achieving the same effect, is allowed. With reference to the right to equitable remuneration provided under the ‘private copying’ exception, the referring court demanded whether the original ownership enjoyed by the author must also be applied to remuneration rights and whether a presumption of transfer is permitted, questioning the compatibility of the principles enshrined in Paragraph 38 with the European Union law.
The ECJ first clarified that, within the European Union law, the principal director is always considered an author of the cinematographic work, irrespective of any choice made in national law.
The court draws its conclusion from a careful recognition of the applicable directives, emphasizing the necessity of a coherent interpretation of their provisions, which constitute a uniform set of principles and rules (see Joined Cases C-403/08 and C-429/08 Football Association Premier League Ltd and Others ). The status of author is unanimously attributed to the principal director by Directives 93/83, 2006/115, and 2006/116, while recital 20 in the preamble of Directive 2001/29 openly declares that it shares the same principles (additional remarks may be found in the Commission's Report of 6 December 2002 (COM(2002) 691 Final).
The interpretative path followed by the ECJ falls in line with the objectives set by these directives, which aim at ensuring the maintenance and development of creativity in the interest of authors (recital 9 in the preamble of Directive 2001/29), recognizing IP as an integral part of property, promoting the European cultural creativity, and safeguarding the independence and dignity of artistic creators and performers (recital 11). Accordingly, the ownership of copyright and related rights necessarily vests in the authors themselves, as exploitation rights merely represent one aspect of the property right protected by Article 17 of the Charter of Fundamental Rights. Among the provisions that expressly link ownership to authorship, the court mentions Article 2 of Directive 93/83, Article 2 of Directive 2001/29, and Article 3 of Directive 2006/115.
As observed by the Austrian government, however, Article 14 bis of the Berne Convention, which benefits from the protection offered by Article 351 TFUE and binds the European Union under Article 1 of the WIPO Copyright Treaty, allows Member States to deny the principal director certain exploitation rights. On the point, the ECJ notes that the international agreement allows, but does not require, a similar provision: in this case, Member States are expected to refrain from adopting an optional measure which is contrary to the European Union law (see Case C-324/93 Evans Medical and Macfarlan Smith  ECR I-00563) and cannot exempt themselves from the obligations arising from it.
Accordingly, a fair balance may be achieved between the protection of the creative and artistic work of authors and the investments required for the commercial production of cinematographic works (see recital 5 in the preamble of Directive 2006/115, recital 10 in the preamble of Directive 2001/29, and case C-61/05 Commission v Portugal  ECR I-06779) only through a rebuttable presumption of transfer of exploitation rights from the authors to the producer or through a contractual agreement between the parties. The path is clearly laid out by Article 3(4) of Directive 2006/115, which contains a presumption of transfer, subject to contractual clauses to the contrary, in relation to rental rights originally attributed to performers, and Article 3(5) which allows Member States to provide for a similar presumption with respect to authors. As the ECJ infers, Directive 2001/29, sharing the same principles and aims set by Directive 2006/115, is compatible with a presumption of transfer of the exploitation rights governed by the directive.
In her Opinion of 6 September 2011, the Advocate General observes that a similar solution had already been suggested by the Commission (see COM(92) 602 Final). She notes that the presumption should fulfil three conditions: the existence of a contract between the principal director and the film producer, the possibility of contrary stipulations, and the attribution of a fair compensation to the author. The exploitation rights vested in the author are subject to the protection guaranteed to property rights by the Charter of Fundamental Rights: subsequently, any restriction affecting them is subject to the conditions set by Articles 17 and 52 of the Charter.
With reference to the right to equitable remuneration, the court limited its judgment to the fair compensation provided by Article 5(2)(b) of Directive 2001/29 under the ‘private copying’ exception. The ECJ, with a restrictive interpretation, clarified that the exception refers solely to the reproduction right and cannot be extended to remuneration rights. The conclusion is supported by Article 5 and recital 12 of the preamble of Directive 2006/115, which state that the right to an equitable remuneration cannot be waived by authors: as previously mentioned, Directive 2001/29 shares the same principle, despite using the word ‘compensation’, instead of ‘remuneration’ (the court, recalling case C-271/10 VEWA v Belgische Staat , explains that the concept of ‘remuneration’ is also designed to establish recompense for authors). Moreover, member states which adopted the ‘private copying’ exception must ensure that the fair compensation attributed to the right holders is actually recovered (Case C-462/09 Stichting de Thuiskopie ), which implies that the related right cannot be waived.
A presumption of transfer of the right to fair compensation, whether rebuttable or otherwise, appears, therefore, incompatible with the European Union law. The same remark applies to the partial presumption laid out by Paragraph 38, which allocates only half of the statutory rights to the director (the Advocate General notes that a separate compensation for the producer may be provided under Article 5(2)(b) and Article 2(a) and (b) of Directive 2001/29).
The ECJ accurately draws the perimeter of a set of rules and principles that, within the court's interpretation, prove to be coherent and uniform (implicitly addressing some of the doubts expressed by E. I. Obergfell, ‘No need for harmonizing film copyright in Europe?’ (2003) 4 The European Legal Forum 199–205). By recognizing the principal director as a statutory author, to whom copyright and related rights are originally attributed, while openly acknowledging the possibility of transferring exploitation rights to the producer, providing authors with a fair compensation, European Union law achieves a fine balance between the aims of protecting authorial rights and facilitating the production and exploitation of cinematographic works. The widespread adoption of similar measures, as well as the affirmation of the parties’ contractual autonomy, seems to question the traditional dichotomy between copyright and authors’ rights systems (see P. Kamina, Film Copyright in the European Union, Cambridge University Press 2002).
Although the path laid out by the ECJ clearly diverges from the transatlantic doctrine of ‘work made for hire’ (see T. Kreutzer, Das Modell des deutschen Urheberrechts und Regelungsalternativen, Nomos 2008), it contributes to the development of a flexible system which, despite differences in national legislation, appears ready to face the economic, social, and technological challenges of our time (see the Green Paper on the online distribution of audiovisual works in the European Union: opportunities and challenges towards a digital single market of 13 July 2011, COM (2011) 427 Final).