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World IP Day “Movie – A Global Passion” / Fair compensation for authors of movies

Next 26 April – as every year – the World Intellectual Property Organization (WIPO) celebrates the World IP Day. 26 April is the day on which the WIPO Convention came into force in 1970 and it has become an opportunity for those who deal with IP to join a global discussion on a specific topic every year.

For 2014, the theme is “Movie – A Global Passion“. And our department certainly does not want to miss the opportunity to have its say on this exciting issue, which is truly one of our passions!

We celebrate the upcoming World IP Day with a series of posts dedicated to movies and intellectual property, which will be published in this blog during the week.

Today’s topic is very hot in Italy: a few days ago, it ended the first round of the battle between Sky and SIAE – the Italian collecting society of authors and publishers – on fair compensation for authors of movies who have assigned their broadcasting rights to producers.

According to Article 46 bis of Italian Copyright Law (Law No. 633/1941, ‘ICL’), as amended by Legislative Decree No. 154/1997, such compensation has to be paid by broadcasters. But in its first text, introduced by Legislative Decree No. 581/96, which implemented Directive EEC 93/83, Article 46 bis ICL provided for such compensation to be paid by producers.

In 2012, Sky started a lawsuit before the Court of Milan, maintaining that the fair compensation for authors of movies had to be paid by producers and that 1997 Legislative Decree – which changed the subject liable for such payment by replacing producers with broadcasters – was contrary to the Italian Constitution and to the EU law, including the principle of freedom to provide services. Sky also asked the Court to ascertain that the payment of fair compensation could not be determined by means of collective negotiation and arbitration, as provided by Article 46 bis ICL, but should be determined by means of individual negotiation only.

The Business Court of Milan, in its judgment of 3 January 2014, recently published (see here), rejected Sky’s pleas and confirmed the validity of the disputed Article 46 bis ICL. In particular, the Court took the view that the Article at stake clearly provides for the payment of a fair compensation to the author of a movie by the broadcaster and that the Italian Legislator has made such change to provide legal certainty and to simplify payment operations, by referring the payment obligation to the subject who materially exploits the movie. In doing so, according to the Court, the Italian Legislator has not exceeded its powers, since its only binding limit was that the fair compensation had to be related to the broadcasting of the movie. As a consequence, the Court held that Article 46 bis ICL is not in contrast with the Constitution. Similarly, the Court held that Article 46 bis ICL is not contrary to Article 56 of the Treaty on the Functioning of the European Union (‘TFEU’), prohibiting restrictions on freedom to provide services, since Article 36 TFEU entitles Member States to introduce such restrictions if they are justified on grounds of the protection of intellectual property. Finally, the Court confirmed that the amount of the fair compensation must be determined on the basis of collective or individual negotiation, or, in lack of the above, by three arbitrators.

We will see if Sky appeals this decision. In the meantime, don’t miss our next posts on IP and movies! Follow us on our IPT Italy blog or contact me at sara.balice@dlapiper.com

Happy (IP) Day!