Germany: Changes To The Case Law Regarding Rights Of Use Contracts Under Copyright Law

Last Updated: 6 December 2011
Article by Christian Donle

In a decision on 1 June 2011, 5 U 113/09, which has attracted much attention, the Hanseatic Higher Regional Court set out new basic principles for controlling the general terms and conditions of copyright-related contracts.

In this case, a media group had drawn up general terms and conditions of purchase of copyright authorisations and sent them to the originator. Every originator (journalist, photographer, graphic designer) who wanted to work for the media group in future had to sign these general terms and conditions. These conditions included very far-reaching rights of use and an effective "buy-out" of all copyrights and authorisations for a fixed-sum payment.

An association of authors and creators took action by carrying out an abstract review of the terms and in legal proceeding requested an interim injunction to ban these "terms and conditions of purchase". The media group was ultimately prohibited from using the essential components of the contract.

In this comprehensive decision, the Hanseatic Higher Regional Court examined the case law to date of the Federal Court of Justice. The Higher Regional Court determined that the decision of the FCJ (conditions of pay: broadcasting agreement) of 1982, on the widest extent of freedom of control of such copyright-related rights of use clauses, no longer applied since the Copyright Law of 2002 had come into force. In a decision on the one-off grant of rights, the FCJ had itself deviated from its former principles. Basically, the principle of transfer for a specific purpose therefore formed a yardstick for reviewing terms and conditions, against which the comprehensive grant of rights of use could and should be measured. The Higher Regional Court also made it clear that any one-off fee for comprehensive rights of use was invalid if it resulted in preventing reasonable remuneration of the originator.

The guiding principles of the judgement are as follows:

1. The legal regulation arising from Section 31 (5) Copyright Act may be a yardstick for the review of the content of general terms and conditions in accordance with Section 307 (2) subsection 1 of the German Civil Code. This regulation is not only a legal rule of interpretation, but also a compelling content standard, which is to be observed when reviewing general terms and conditions.

2. The determining factor for the applicability of Section 31 (5) Copyright Act should be the extent to which the rights of use transferred are removed from the actual purpose of the contract. The greater this is, the more likelihood there is of deeming that the other party to the contract has been unreasonably disadvantaged. This is always the case if no additional consideration in return is offered or agreed.

3. Section 31 (5) of the Copyright Act requires that an excessive transfer of rights as part of general terms and conditions should itself be subjected to review if the individual use types as provided by Section 31 (5) of the Copyright Act are expressly and individually designated.

4. The grant of rights of use for a one-off fee is not valid in general terms and conditions if it bars the originator from reasonable participation in the proceeds of his or her works, as provided by Section 32 Copyright Act.

5. The condition for the permissibility of a one-off fee for the transfer of rights of use is that, viewed objectively at the moment of conclusion of the contract, the one-off fee represents reasonable participation in the forecast overall revenue from the use (FCJ GRUR 2009, 1148 (1150) – Talking to Addison). It is not permitted to include an unclear transfer of rights of use for a one-off fee in general terms and conditions.

6. Fixed agreements with regard to amendments of general terms and conditions must be drafted subject to the reservation that the processing and rearrangement must, for example, "take place in such a way as to preserve the intellectual character of the work".

7. The right to the commercial use of press photographs for any desired purpose of any kind cannot be validly transferred for a fixed sum as a subsidiary right.

8. The right to recognition of authorship arising from Section 13 of the Copyright Act cannot be waived fully in advance in general terms and conditions.

9. If a provision in general terms and conditions is invalid in accordance with Section 307 (1) German Civil Code, there is automatically an infringement of Section 4 (11) Law Against Unfair Competition, as in that case it constitutes a control of market behaviour in the interests of the consumer and other parties involved in the market.

As the media company has made a final declaration in respect of almost all clauses, the Higher Regional Court decision is essentially final and conclusive. It therefore applies that all companies who acquire comprehensive rights of use from originators should find formulations that satisfy the case law and can lead to the acquisition of rights in accordance with the law. A decision of the FCJ is expected in 2012 in a case involving similar considerations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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