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Germany: Collecting society’s payout to publishers highly disputed

On 13 May 2014 the District Court of Berlin (16 O 75/13) rejected a claim brought by a songwriter and a composer against a collecting society’s payout to music publishers.. The claim was directed at a declaratory judgment that GEMA (the German collecting society responsible for licencing musical performances and musical reproduction) was not allowed to pay parts of the remuneration it had collected to music publishers.

The plaintiffs based their arguments on a previous judgment by the District Court of Munich (7 O 28640/11). In its decision, this court had to deal with a similar claim against the collecting society of authors (“VG Wort”) and held that the VG Wort’s assignment and distribution plan was not allowed to stipulate payouts to publishers as this would contravene the “prohibition on arbitrary actions” as stipulated in the German Copyright Act. The Munich court further stated that, after entering into an agreement with a collecting society, the initial right holder would hold no further rights which they could transfer to a publisher and which would entitle the publisher to any payouts. On 17 October 2013 this decision of the District Court of Munich was confirmed by the Higher Regional Court of Munich (6 U 2492/12), which held the articles of the VG Wort which allowed the payouts to publishers to be void under the German civil law provisions on standard terms.

However, in its current decision, the District Court of Berlin contradicts this position. It argues that agreements between copyright holders and publishers should be taken into account for the payment of remunerations as collecting societies are not in a position to completely assess the flow of rights between the right holder, the collecting societies and the publishers (in the individual case). Therefore, a collecting society could not validly exclude the publishers’ claims for payouts. In consequence, payouts to publishers would not violate the statutory prohibition on arbitrary actions under the Copyright Act.

In summary, the two decisions are diametrically opposed and both are open to appeal. In fact the appeal against the decision of the Higher Regional Court of Munich is currently pending at the German Federal High Court (BGH) and the District Court of Berlin has brought arguments which could be used by the BGH to grant the appeal. It therefore remains to be seen whether or not publishers are entitled to a piece of the large cake distributed by the collecting societies – according to its annual report, GEMA’s distribution sum in 2012 was EUR 692.3 million. This question, or at least the exact criteria which must be considered with respect for the payouts, will likely be clarified in the proceedings before the BGH.

For further information see also Gunnar W.G. Karnell in Essays in Honour of Michael Bogdan, 2013, pages 165 – 173.

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