The European Union Directive on Copyright in the Digital Single Market 2019/790 of 17 April 2019 (the “Directive”) has been implemented in different phases by the French Government. On 12 May 2021, the Government adopted a statutory instrument (“Ordonnance”) transposing Articles 17, 18, 19, 20, 22 and 23 of the Directive. The Government did not deem it necessary to cover Article 21 of the Directive, on alternative dispute resolution, as it considered that provisions on conciliation and mediation were already provided in the French Civil Code and were sufficient.
Appropriate and proportionate remuneration extended to performers
French law already imposed appropriate and proportionate remuneration for the benefit of authors. Article L. 131-4 of the Intellectual Property Code indeed provided that the transfer by an author of their rights should “include for the benefit of the author the proportional participation to the receipts coming from the sale or the exploitation”. With the implementation of Article 18 of the Directive, the right to appropriate and proportionate remuneration extends to performers. The Ordonnance provides that proportionality must be assessed in light of “the performer's contribution to the work as a whole and all other circumstances of the case, such as market practices or the actual exploitation of the performance”. The Ordonnance also lists the limited instances where remuneration can be based on a fixed rate.
Royalty adjustments
The Intellectual Property Code already defined a revision mechanism wherever the fixed remuneration agreed was “disproportionately low compared to the subsequent relevant revenue derived from the exploitation of the works” and the author suffered a loss of more than seven twelfths. Under the Ordonnance, authors are entitled to additional remuneration when the proportional remuneration, such as a negotiated royalty rate, turns out to be unreasonably low in light of the total income subsequently derived from the exploitation. This additional
remuneration (to the proportional remuneration) is not conditioned upon the seven twelfth threshold which applies to fixed remuneration. Article L. 131-5-3 of the Intellectual Property Code clarifies the fact that adjustment provisions are mandatory, therefore, the right to revision of fixed or proportional remuneration is unwaivable.
“What you don’t use, you lose” principle
The Ordonnance has implemented Article 22 of the Directive by giving authors and performers the ability to terminate an exclusive or non-exclusive licence or rights assignment where the relevant work is not exploited by the licensee(s) or the assignee(s). The French Government has used the word “terminate” as opposed to the term “revoke” used in the French version of the Directive. As “revoke” could be interpreted as having a retroactive effect, “terminate” reduces the risk of disputes and the complexities linked to a contract rescission, such as the restitution of a recoupable advance or a fixed payment made to an author or performer.
Transparency obligation
As provided in the Directive, the transparency obligation which imposes licensees and assignees to submit to the assignors and licensors, at least once a year, information on the exploitation of their works and performances, including all revenues generated and remuneration due, extends to sublicensees to the extent the assignee or licensee does not have the complete required information. The Ordonnance also provides that accounting information shall be given by means of “electronic communication” and that, with regard to contracts entered into with on-demand audiovisual media services, information on the “number of acts of downloading, consultation or viewing of the works” should be given to the licensors or assignors.
Collective management organisations and stakeholder discussions
The practical aspects of materialising the Ordonnance are left to interprofessional agreements. They include the traditional institutions such as SACEM/SDRM, the collecting right society representing authors for performing rights and mechanical rights. The Ordonnance also gives a seat to the negotiation table to ADAMI (Société pour l’administration des droits des artistes et musiciens interprètes), the collecting society dedicated to performing artists. ADAMI now has a key role in negotiating and collecting performers’ appropriate and proportionate remuneration. Collective bargaining is also expected to cover the conditions and thresholds related to the transparency obligations, the termination of licence or assignment agreements for non-exploitation of the work and the remuneration adjustments. In the event that no agreement is reached, the Government can decide to adopt the necessary regulations as of May 2022.
Authored by David Taylor, Aissatou Sylla, Gabrielle Creppy and Sophia de Almeida Martins
