Conceptualizing the rights to ‘fair compensation’ and ‘remuneration’ in anticipation of Article 12 of the proposed DSM Directive

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Conceptualizing the rights to ‘fair

compensation’ and ‘remuneration’ in

anticipation of Article 12 of the proposed

DSM Directive

Master’s Thesis

Program: LLM Informatierecht

Institution: Faculty of Law - University of Amsterdam Name student: Christiaan Schuurs

Supervisor: prof. mr. P. Bernt Hugenholtz

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Abstract

This thesis examines the requirements of EU law as regards the nature of the right to ‘fair compensation’ under exceptions and limitations to the reproduction right and ‘remuneration’ for public lending, with a particular view to the possibilities of

Member States to allow publishers to benefit therefrom. In addition, the legal effect of Article 12 of the proposed DSM Directive is examined.

The text starts with a brief look at the history of both compensation rights. It is determined that, although the rights have different origins, they are characterised as very similar concepts in EU law. Both exist to compensate for legally imposed limits to an exclusive right.

The main part of the text concerns the construction of the legal framework. It is determined that there are two lines of reasoning worth exploring. The first rejects some of the CJEU’s more consequential considerations, namely the decision that rights to ‘fair compensation’ and ‘remuneration’ are non-waivable, and the idea that only original rightholders pursuant to Article 2 ISD have a just claim to benefit from compensation. This interpretation of the acquis leads to the conclusion that the EU legislature has left Member States with a lot of discretion with respect to the nature of compensation rights.

The second line of reasoning tracks the considerations of the CJEU. This ultimately leads to the conclusion that the relevant compensation rights, although they originate in the reproduction rightholder, are separate from the reproduction right. In addition, the rights are intended solely to benefit the original rightholder. This leads to some leeway for Member States to allow transfers in return for fair payment, though

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Member States cannot allow for an automatic transfer on the basis of a transfer of the reproduction right. Article 12 of the DSM Proposal is designed for this second line, and results merely in the reversal of the main practical effect of Reprobel, in which it was decided that publishers may not benefit from a share of the compensation. Member States retain the option to create a sui generis right for publishers.

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1. Introduction

1.1. Explanation of the topic

Copyright law provides authors and other rightholders with exclusive rights to the reproduction, distribution, and the making available of their works. These rights, however, cannot extend to every single use that falls within these categories, for reasons ranging from fundamental rights, like the freedom of information, to practical considerations. Therefore, countries include limitations in their copyright legislation. These limitations are to the detriment of copyright holders, who are thought to have a just claim to financial benefit from their creative labour. Therefore, some exceptions and limitations come with a right to a form of compensation for the rightholder. In the EU, this compensation right is mandatory under, relevantly, the exceptions and limitations relating to private copying, reprography, and public lending, which are found in Article 5(2)(a) and (b) of the Information Society Directive (ISD) and Article 6(1) of the Rental and Lending Rights Directive (RLRD)

Many EU Member States have, since a time pre-dating EU harmonization efforts, applied such exceptions and limitations and, in addition, have implemented

remuneration schemes order to provide compensation to authors. Particularly in the area of reprography, many Member States had chosen to direct some of the money collected through those schemes to publishers, considering that these parties were financially hurt by new techniques of reproduction just the same.1

The CJEU’s decision Reprobel (2015) has called into question the possibility of this approach, considering that the Information Society Directive of 2001 does not directly appoint publishers as holders of the reproduction right.2_{This decision has had many}

casualties in the publishing industry, particularly in Germany, where around 300 million euros had to be returned by publishers.3_{In response, the European}

1 Kraft, MR 2015, p. 5.

2 CJEU 12 November 2015, C-573/13, ECLI:EU:C:2015:750 (HP/Reprobel), par. 44-49.

3https://publishingperspectives.com/2016/09/no-agreement-copyright-controversy-germany-vg-wort/

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Commission included, in its ‘Proposal for a Directive on copyright in the Digital Single Market’, a provision aimed at reversing that decision.4

The proposed provision has led to negative responses by author’s rights organisations and academic institutions.5_{Criticism ranges from the charge that the proposal is}

‘against basic principles of copyright’,6_{to the point that the Commission ‘misses the}

opportunity to shed light on the darkness created by the CJEU’.7_{In any case, it is}

evident from the responses that the neither the current acquis, nor the would-be effect of the proposal, is entirely clear. This thesis is aimed at bringing some light into this discussion, by attempting to find an interpretation of the current legal framework and the proposal that is coherent and consistent.

1.2. Research question & methodology

This thesis attempts to answer certain pertinent questions about EU copyright law that are interrelated. The primary objective of this thesis is to determine what EU law says about the nature of rights to ‘fair compensation’ and ‘remuneration’. This question is asked, particularly, in light of Article 12 of the DSM proposal, which deals with the possibility for EU Member States to provide for a publisher’s share. An inquiry into the nature of the right and the possibility of a publisher’s share would not be complete without asking the question whether Member States can provide that publishers may benefit from compensation on the basis of a sui generis right.

In order to encapsulate all of the objectives of this thesis, the research question is presented as follows:

‘By which legal method(s) can Member States allow publishers to become

beneficiaries of compensation for uses under exceptions and limitations and public lending, pre- and post-implementation of Article 12 of the proposed DSM Directive?’

4 Article 12 DSM Proposal.

5 European Copyright Society, Max Planck Institute.

6 European Copyright Society.

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In order to attempt to arrive at a comprehensive conclusion, this question can be divided into three parts. First, it must be determined whether, and by which methods, the relevant rights are transferable (in the broadest sense of the word). Second, the question whether Member States can provide publishers with a right to compensation that stands on its own. Third, the effect of Article 12 of the DSM proposal must be assessed in light of the findings from the first two questions. These questions read as follows:

1. Are rights to ‘fair compensation’ and ‘remuneration’ transferable? 2. Does EU law preclude a sui generis right to compensation for uses under

exceptions and limitations and public lending for publishers?

3. What effect will implementation of Article 12 have on the legal framework with respect to fair compensation and remuneration?

Considering that these questions concern the interpretation of the law, they must be answered by reference to all the materials of legal interpretation that a jurist has at his or her disposal. These include: (actual and proposed) legislation, jurisprudence, legislative history, and scholarly literature.

This text is set up at follows. The next chapter contains a brief discussion of the origins of the relevant rights. Subsequently, chapter 3 will contain a comprehensive examination of the law as it stands. Chapter 4 will be aimed at interpreting the proposed change to the law. Chapter 5 will contain a conclusion.

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2. History and purpose

2.1. Introduction

Over the previous six decades, many countries in Europe have introduced remuneration systems for uses under nationally implemented exceptions to the exclusive reproduction right for private copying and reprography.8_{These systems}

involve levies on products that are used to make the relevant reproductions. That way, the financial burden is ultimately supposed to fall on the persons who purchase those products. The next subchapter (2.2) will deal with the history of the development of the principles that underlie these systems. Subsequently, (in 2.3.) the history of the ‘public lending right’, which is rooted in a much older tradition of public lending, will be discussed. 2.4 Contains a preliminary conclusion.

2.2. Levies under the private copying and reprography exception

Legal questions about compensation for private copying first started coming to the forefront in Germany in the 1950s as private tape recording technology became available to consumers.9_{As this happened, the GEMA (the German collecting society}

for musical works) became concerned about what it saw as large-scale infringement of musical copyright.10_{This concern manifested itself in many different attempts to}

receive the remuneration GEMA believed rightholders were owed, including a rather unpopular, and, thus, unsuccessful voluntary levy scheme.11_{Ultimately, questions}

about whether the German private copying exception, drawn up in 1901,12_covered

copies with the aforementioned new types of technology, reached the German courts and, eventually, the Federal Supreme Court (Bundesgerichtshof).

8 See, for instance: Guibault; Kretschmer.

9 Hugenholtz, p. 181.

12 Gesetz betreffend das Urheberrecht an Werken der Literatur und Tonkunst, 19 June 1901, Reichsgesetzblatt 1901, 227, as amended, Art. 15(2).

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In 1955, the Bundesgerichtshof first decided a case on tape recording.13_{The Court}

first determined that the German legislature in 1910 could not have foreseen

reproduction by use of tape recorders. In a very consequential consideration, the Court took the view that the existence of a legal right does not depend on its enforceability. The author’s right to control over his work is a natural consequence of his intellectual property. A general principle that that right of control ceases in the private sphere of an individual was rejected.14_{As such, it was established that copyright holders retain}

their prohibitive right in the sphere of private copying. However, how that would manifest itself in practice was not yet clear. Although contributory liability was established for those companies that did not have a license with GEMA and advertised their products as suitable for copying copyrighted materials, companies were soon able to avoid liability by changing their advertising and ultimately by applying court mandated GEMA notices, which alerted users that they needed a license from GEMA if they wanted to make copies of protected works. Courts did not want to go so far as to mandate that retailers of tape recorders record and give out the names of all of their clients, due to severe and historically dictated privacy concerns.15

Eventually, in Personalausweise (1964), the fifth tape recorder case that reached the Bundesgerichtshof, the Court found that, if no good alternatives were available, a product levy system would be an option.16_{Soon after, this became a rule codified into}

German law. Since the German ‘saga’, other countries started following suit, and at the present moment, most EU countries and many countries around the world have implemented similar rules via legislation.17

The introduction of the photocopying machine by Xerox in 1959 created a similar situation to what happened after the tape recorder became popular. Whether

photocopying was covered by private copying exceptions or not, it could certainly not be prevented. Therefore, many countries introduced a similar system for

reprography.18

13 BGH, 18 May 1955 I ZR 8/54, GRUR 1955, 492.

14 Weimann, p. 155-156.

15 Hugenholtz, p. 186-187.

16 BGH, 29 May 1964, Ib ZR 4/63, GRUR 1965, 104.

17 See: WIPO, for an overview.

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In 2001, the Information Society Directive (ISD) came into force. Among other things, this EU Directive harmonized EU copyright law in the area of exceptions and limitations. The Directive includes facultative exceptions for reprography and private copying in Article 5(2)(a) and (b), that are conditional upon the provision of a right to fair compensation for the rightholder. After 9 years of silence on this point, the CJEU’s decision in Padawan ushered in a time of rather extensive judicial

interpretation of this concept. Many of these cases will be discussed in chapter three. 2.3. Remuneration for public lending

The phenomenon of public library lending dates back to the early 1800s, when it was first introduced in Denmark.19_{Stave attributes the later development of the idea of}

compensating authors for lending, from the early 1900s onwards, to several sets of events, namely the development of libraries, the broadening of copyright, increasing government support for culture, rising awareness of a need to nourish culture and language, and a trend towards economic activism.20_{It is important to note that an}

author’s right to be remunerated for lending has not always been viewed as a natural consequence of copyright law. In general, when a book is sold, it is liberated from further copyright control because of the exhaustion (or first-sale) doctrine.21

The compensation right for public lending is traditionally referred to as ‘public lending right’ or ‘PLR’. The case for this right was (and remains) essentially twofold. First, libraries infringe the intellectual property rights of the author. The source of this principle is natural or moral. The contention is simply that authors deserve to profit from their labour. Second, that infringement deprives authors of significant economic benefits and, in the worst case, of their livelihoods.22_{In addition, there is a view that}

does not view PLR as a right, though rather a measure of social welfare.23

19 Stave, p. 572-573.

20 Stave, p. 570-572.

21 Goldstein, p. 316-317.

22 Stave, p. 571; Schneck, p. 900-905.

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Common law jurisdictions tend to view PLR as a measure outside of copyright, whereas most EU Member States have treated it as an author’s right.24_{The EU Rental}

and Lending Rights Directive (RLRD) treats public lending not just as a remuneration right, but also gives Member States the option to include it as an exclusive right,25

thereby acknowledging that lending is a form of copyright exploitation.26_{PLR is in}

force in many countries around the world and in most EU countries.27_{In 2016, the}

CJEU decided that remuneration for public lending was also owed for e-books that are lent in a one-copy-one-user fashion.28

2.4. Preliminary conclusion

This brief history demonstrates that the right to compensation for private copying and reprography and public lending have roots in natural law theory. However, there is a significant difference in how the rights have come to be. Whereas the existence of an exclusive right with respect to private copying was established before the conclusion was reached that the only practicable method of ‘enforcement’ was a remuneration system, this was not the case for public lending. Lending was long thought not to be within the scope of an author’s exclusive rights. Nevertheless, the EU has adopted the lending right as, in principle, an exclusive right of the author that may be derogated from. As such, the right as it currently exists in the EU can be characterized as compensating for an exception.

24 Goldstein, p. 318.

25 Article 3(1) RLRD.

26 Von Lewinski, 6.1.6.

27 See, for an overview: https://www.plrinternational.com/established/established.htm (accessed on 24 july 2018).

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3. Legal framework

3.1. Introduction

This thesis is concerned with the nature of EU-permitted statutory remuneration rights that exist to compensate for private copying, reprographic reproduction and public lending and, in particular, whether such rights may be transferred, or legally directed to other parties. This primarily entails the laying out of the legal framework.

Paragraph 3.2 will examine the legislation with regard to the aforementioned exceptions and limitations. Paragraph 3.3 and 3.4 will explore the CJEU’s approach to, respectively, ‘fair compensation’ for private copying and reprography and

‘remuneration’ for public lending. Paragraph 3.5 and 3.6 will be concerned with two specific issues, respectively the (non-)transferability of the relevant compensation rights and the possibility of creating a sui generis right for publishers. Paragraph 3.7 will contain a preliminary conclusion.

3.2. Legislation

Copyright law provides protection to rightholders for their works, by providing them with an exclusive right to, in principle, the economically relevant uses of those works. EU law categorizes these as ‘reproduction’, ‘making available’, and ‘distribution’.29

Copyright directly relates to the intellectual creation (the work), which is an

immaterial object (corpus mysticum) that can be incorporated into a material object (corpus mechanicum).30

Copyright is recognized as a human right in Article 27(2) UDHR, Article 15(1)(c) ICESCR, Article 17(2) of the EU Charter. The Berne Convention (BC), WIPO Copyright Treaty (WCT) and the TRIPS-Agreement (TRIPS) provide for

international harmonization in this area, although they provide little guidance, beside the three-step test laid out in respectively Articles 9(2), 10, and 13, with respect to the exceptions and limitations this text is concerned with. The three-step test prescribes that an exception or limitation (1) is only applied in certain special cases, (2) does not 29 Articles 2-4 ISD.

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conflict with the normal exploitation of a work and (3) does not unreasonably

prejudice the legitimate interests of the rightholder. The test also applies to exceptions and limitations in EU copyright law, and is incorporated in the Information Society Directive (in Article 5(5)), which will be discussed below.

On the 22nd_{of June 2001, the Information Society Directive, by far the most}

encompassing harmonising effort in the area of copyright, entered into force. The legal basis of the Directive is found in the EU’s powers to regulate the establishment and functioning of the internal market.31_{Intellectual property rights, such as}

copyright, inherently restrict the movement of goods and services, which is why disparities between national intellectual property laws have an adverse impact on the internal market. In order to address this, the Information Society Directive, is

purposed towards harmonising and increasing legal certainty.32_Furthermore,

harmonisation in this field must take as a basis a ‘high level of protection’, as this is thought to be vital to intellectual creation.33_{Additionally, the Directive aims to}

promote learning and culture, which is required by Article 151 EC (now Article 167 TFEU).34

The directive lays out, among other things, the exclusive rights to be provided by member states and the 21 allowed exceptions and limitations to those rights (one of which, that for transient copies in 5(1), is mandatory).35_{That list is exhaustive in}

nature.36_{Limitations and exceptions are necessary to maintain an appropriate balance}

between interests of rightholders and users of protected works. The distinction between limitations and exceptions is, according to the CJEU, that exceptions completely remove the exclusive right in question, whereas limitations may partly exclude, restrict or allow the rightholder to retain that right.37

31 Art. 47(2), 55 and 95 of the EC Treaty, now Art. 53, 62 and 95 TFEU.

32 Recital 4 InfoSoc Directive.

33 Recital 9-11 InfoSoc Directive.

34 Recital 12 and 14 InfoSoc Directive.

35 Art. 2-5 InfoSoc Directive.

36 Recital 32 ISD.

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This text is concerned with exceptions and limitations to the exclusive right of reproduction, which is the right to authorise or prohibit any kind of reproduction of their work or parts thereof. Article 5(2)(a) and (b), cover the relevant acts for which an exception or limitation may be implemented in national law. These exceptions or limitations are conditional upon the provision of fair compensation to rightholders.38

The relevant acts concern, respectively, reproductions on paper or any similar medium, effectuated by photocopying or a similar process, and private copying by natural persons on any medium. Private copying and reprography tend to be covered by exceptions rather than limitations, presumably because one of the main reasons for these exceptions is the impossibility of effectively exercising a prohibitive right with respect to the relevant acts. ‘Fair compensation’ is only meant for cases where the right to authorise reproductions is excluded.39

Recital 36 makes clear that Member States may also make other optional exceptions and limitations conditional upon the payment of fair compensation.

With respect to fair compensation, recital 35 contains some guidelines. It is provided that, when determining the form, detailed arrangements and level of the fair

compensation, the ‘possible harm to rightholders resulting from the act in question’ is a relevant criterion. Additionally, it is mentioned that no separate payment may be due where rightholders have already received some form of payment. The degree of use of technological protection measures should also be taken into account. Where the prejudice to the rightholder is minimal, no obligation for payment may arise.

Beside exceptions and limitations in the ISD, this thesis is concerned with an

exception to the exclusive public lending right, which is found in Article 1(b) RLRD. This right entails that the author may prohibit the making available of a work, for use, for a limited period of time and not for economic advantage, through a public

establishment.40_{The exclusive lending right is actually an exception to the exhaustion}

38 The exception relating to non-commercial broadcasts, laid out in Article 5(2)(e), which is also conditional upon the provision of ‘fair compensation’ is of no relevance for the purposes of this text.

39 CJEU 27 June 2013, C-457/11 to C-460/11, ECLI:EU:C:2013:426 (VG Wort/Kyocera), par. 38-39.

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doctrine, which frees a particular copy (corpus mechanicum) from the control of the holder of the copyright on the work.41_{The lending right is transferable.}42

Member States may derogate from the lending right, provided that ‘at least authors obtain a remuneration for such lending.’43_{This condition may be read in the context}

of recital 5, which states that creative and artistic work necessitates an adequate income, which requires adequate legal protection of the rightholders concerned. Only the minimisation of the financial burden of payment of the lending fee can justify the discriminatory distinction between authors and other rightholders (such as phonogram producers).44_{The Article expressly recognizes Member States’ discretion in}

determining the amount of remuneration, taking account of their cultural promotion objectives. Member States may exempt certain categories of establishments from payment. Additionally, Member States may derogate from the copyright nature of the right, as it has always been understood that some legal traditions favour a different approach.45

3.3. The CJEU’s development of the concept of ‘fair compensation’

Originally, the use of the word ‘compensation’ in the ISD was due to a compromise between Continental Europe, which had a tradition of statutory remuneration rights, and the UK and Ireland, which had not. These latter countries had argued that a form of compensation other than remuneration would suffice for the purposes of the three-step-test.46_{Such a view was bolstered by the recitals, which recognize pre-existing}

national schemes and does not object to their continuation.47_{The Advocate General’s}

opinion in Padawan, the first case about ‘fair compensation’ that reached the CJEU, acknowledged the importance of keeping in mind the differences between common law and civil law traditions.48

41 Goldstein, p. 316; Stamatoudi, 6.21-6.22; Article 4(2) ISD.

42 Article 3(3) RLRD.

43 Art. 6(1) RLRD.

44 Stamatoudi, 6.67.

46 Walter, par. 11.5.24.

47 Recitals 36 and 37 ISD.

48 CJEU 21 October 2010, C-467/08, ECLI:EU:C:2010:620 (Padawan), Opinion of AG Trstenjak, par. 43.

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Nevertheless, in pursuit of coherence in, and harmonisation of EU law,49_{the CJEU}

has interpreted the requirement of ‘fair compensation’ as a uniform legal principle in EU law, that is necessarily linked to the concept of possible ‘harm’.50_{The existence of}

this harm does not need to be proven, as it is presumed that those who buy equipment that is levied for the purpose of gathering the compensation will make full use of the capacities thereof.51_{‘Harm’ has thereby been elevated to be the essential criterion.}52

As such, the CJEU went in a completely different direction than the AG, who had argued for requirement of a ‘fair balance’ between rightholders and users, and had emphasized that ‘harm’ was only a useful criterion, rather than an essential feature of the right.53_{It is noteworthy that the concept of harm was foreign to the legal tradition}

that was most influential in the positioning of the right of fair compensation in the ISD (Continental Europe).54

It appears that the Court interprets the use of a copyright-protected work under an exception as an inherently prejudice-causing activity, that, according to the wording of Articles 5(2)(a) and (b) ISD, must be compensated. Justice Green of the UK High Court argues that this means that ‘harm’ should be seen in a wide context, which takes account of actual consumer expectations and specific evolved market features.55

Accepting that view, it is reasonable to consider every single use as being a part of a widespread phenomenon that results in a harm that can be estimated. This view appears to be accepted by most countries in the EU. However, Member States still widely diverge in their methods of estimating the amount of harm.56

Kretschmer notices a technical problem with the concept of harm. If there is a copyright exception, then a use under that exception is not an infringement and does 49 CJEU 21 October 2010, C-467/08, ECLI:EU:C:2010:620 (Padawan), par. 35.

50 CJEU 21 October 2010, C-467/08, ECLI:EU:C:2010:620 (Padawan), par. 39-42.

52 Dias Pereira refers to the presumed harm as ‘the normative criterion’ (p. 594).

53 CJEU 21 October 2010, C-467/08, ECLI:EU:C:2010:620 (Padawan), Opinion of AG Trstenjak, par. 74-80.

54 Walter, par. 11.5.25.

55 BASCAcase, par. 188-192.

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not cause the loss of an opportunity to collect a licence fee.57_{Wigman takes a step}

towards solving this problem in conceptualizing the statutory remuneration right as a right that compensates for the legal expropriation (Dutch: ‘ontneming’ or

‘onteigening’) of a part of the copyright.58_{Since fair compensation is only required in}

cases where the prohibitive right is excluded, and not merely limited, this is an accurate categorization.59_{However, it is clearly the law itself that takes away the}

right, rather than the person who makes a legally permitted use. The user is merely benefiting from the expropriation that has already occurred. Thus, the use of the word ‘harm’ with reference to legally permitted activities remains somewhat imprecise. The presumption of harm is, according to the CJEU’s case law, fundamental to the concept of fair compensation. The Court has decided that, since it is this ‘harm’ that brings the requirement of compensation into being, it is necessarily the person causing the prejudice (the person making the reproduction), on whose shoulders the burden should ultimately fall.60_{This does not preclude national levy systems, which target}

those parties that make available the equipment that is necessary to make the reproductions. This is justified, as directly charging every single use is practically impossible. Furthermore, it is thought that, in these systems, the burden ultimately falls on the person who purchases the equipment or benefits from the copying services, as the levy will be passed on in the sale price.61

The following two cases shed some light on the application of the concept of harm and the limits to Member States’ discretion. In EGEDA, the Court determined that a system where the fair compensation is financed by the General State Budget, thereby burdening all taxpayers, fails to make appropriate exceptions for those persons who do not cause any prejudice to the rightholder, as they cannot perform actions covered by the private copying exceptions (primarily legal persons).62_{In Amazon.com}

International Sales the Court found that the Member State had acted within the

bounds of its discretion, in administering a system in which half of the fair 57 Kretschmer, p. 17-18.

58 Wigman, p. 2-3; Making reference to: Luksan, par. 68.

60 CJEU 21 October 2010, C-467/08, ECLI:EU:C:2010:620 (Padawan), par. 45.

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compensation due to rightholders under the private copying exception is directed towards an institution that was set up for the benefit of those rightholders.63_{The harm}

criterion, the Court found, in no way constitutes an obstacle to indirect payment.64_The

Court agrees with the Advocate General’s remark that remuneration systems are, at present, necessarily imprecise.65_{Furthermore, an institution like the one in question}

would be in line with the purpose of the ISD, to promote cultural creativity and production.66_{However, there are two essential conditions: the institution may not be}

discriminatory, and may not benefit persons other than those entitled to fair compensation in the first place.67

In Stichting de Thuiskopie, the Court found that the requirement of ‘fair

compensation’ actually imposes, on Member States, an obligation to achieve the result of effective recovery of the fair compensation.68_{This consideration is based}

upon the EU legislature’s desire for a high level of copyright protection and the need for copyright holders to receive an appropriate reward for the use of their work.69_This

consideration has had a far-reaching effect on the nature of the right to fair

compensation, as, in Luksan, it was decided that the requirement is incompatible with both a provision of domestic law that allows a rightholder to waive his right to fair compensation and a legal presumption of transfer. This consideration, which calls into question transferability, will be discussed more thoroughly in 3.5.

Luksan also laid the groundwork for the CJEU’s decision in Reprobel, which is the conditio sine qua non of Article 12 of the proposed DSM Directive. In Reprobel, the

Court was asked whether Member States might allocate part of the fair compensation to publishers that are not under an obligation to ensure a benefit for authors.70_This

63 CJEU 11 July 2013, C-521/11, ECLI:EU:C:2013:515 (Amazon.com International Sales and Others v. Austro-Mechana Gesellschaft mbH), par. 46.

64 CJEU 11 July 2013, C-521/11, ECLI:EU:C:2013:515 (Amazon.com International Sales and Others v. Austro-Mechana Gesellschaft mbH), par. 47-50.

68 CJEU 16 June 2011, C-462/09, ECLI:EU:C:2011:397 (Stichting de Thuiskopie/Opus), par. 34.

69 CJEU 16 June 2011, C-462/09, ECLI:EU:C:2011:397 (Stichting de Thuiskopie/Opus), par. 32; Recital 9 and 10 ISD.

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question was answered on the basis of the idea expounded in Luksan that Article 2 ISD is an exhaustive list of those who qualify as ‘rightholders’ for the purpose of the fair compensation condition of Article 5(2)(b) ISD. This conclusion is arrived at as follows. Since Article 5(2)(b) is an exception to the reproduction right, and comes with a right to receive fair compensation for the reproduction rightholder. Both of these rights are vested directly and originally, by operation of law, in those to whom the reproduction right originally belongs. Therefore, the rightholders pursuant to Article 2 ISD must be entitled to fair compensation.71

In Reprobel, the Court, in a remarkably brief set of considerations, follows the logic of Luksan. It is observed that publishers are not listed as holders of the exclusive reproduction right in Article 2 ISD.72_{As such, they do not suffer harm for the}

purposes of Article 5(2)(a) and (b) ISD. This leads to the conclusion that they cannot, to the detriment of rightholders who are listed, benefit from a part of the fair

compensation.73_{It is evident from the conclusion that publishers cannot be equated}

with social and cultural establishments set up for the benefit of authors, who may legally receive half of the fair compensation for the benefit of authors.74_Advocate

General Cruz Villalón had made a comment to this effect in his opinion.75

3.4. ‘Remuneration’

The concept of ‘remuneration’ in Article 6(1) RLRD has only been subject to interpretation by the CJEU once, namely in VEWA (2010). The Court’s decision in

SENA (2003), however, also merits examination in this subchapter, as this case

concerned the separate, though comparable concept of ‘equitable remuneration, which can be found in the same Directive. The purpose of discussing these two cases is twofold: to come to an understanding of the concept of ‘remuneration’, and to discover its distinguishing features from the concept of ‘fair compensation’.

71 CJEU 9 February 2012, C-277/10, ECLI:EU:C:2012:65 (Luksan), par. 89-95.

72 Reprobel, par. 47.

73 Reprobel, par. 48.

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In SENA, the Court was asked to answer questions about the ‘equitable remuneration’ to which the relevant performers and phonogram producers are entitled on the basis of the use of a commercially published phonogram for communications to the public.76

The Court determined that this was to be regarded as an autonomous concept, which must be uniformly interpreted in the (then) Community.77

With regard to calculating the amount of the equitable remuneration, Directive 92/100 deliberately omitted to lay down precise criteria.78_{The concept must merely be}

viewed as enabling a proper balance between the interests of the parties involved. It is up to the Member States to determine the criteria that must be used to assess whether that balance is achieved.79_{As for the case at hand, it was found that the domestic court}

was using objective criteria and was, as such, complying with the requirements of Article 8(2) of Directive 92/100.

‘Remuneration’ is also an autonomous EU legal concept.80_{In VEWA, the Court}

connected the concept of ‘remuneration’ to that of ‘fair compensation’, as it was interpreted in Padawan.81_{It is observed that concepts of EU law require an}

interpretation that is consistent with principles that have already been developed in the same field.82_{In that context, it is observed that both ‘fair compensation’ and}

‘remuneration’ are intended to compensate for harm suffered by authors.83

The Court continued by pointing out that public lending does not have a direct or indirect economic or commercial character. Therefore, the value of a use of a protected work in this context cannot be assessed by reference to its value in trade.84

However, the remuneration must, in light of recital 7 of Directive 92/100 (recital 5 of Directive 2006/115), allow authors to receive an adequate income.85_{As in SENA, the}

76 Artice 8(1) and (2) Directive 92/100/EEC, now Directive 2006/115/EC.

77 CJEU 6 February 2003, C-245/00, ECLI:EU:C:2003:68 (SENA), par. 23.

79 CJEU 6 February 2003, C-245/00, ECLI:EU:C:2003:68 (SENA), par. 36-38.

80 CJEU 30 June 2011, C-271/10, ECLI:EU:C:2011:442 (VEWA/Belgium), par. 26.

84 CJEU 30 June 2011, C-271/10, ECLI:EU:C:2011:442 (VEWA/Belgium), par. 23, 33.

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Court does not consider itself in a position to lay down a specific method of

calculation.86_{Member States have a wide margin of discretion to bring the amount of}

remuneration in line with their own cultural promotion objectives.87

Nevertheless, there are mandatory criteria. As the concept of ‘remuneration’ is necessarily linked to a conception of harm to authors, it must be determined where that harm originates. Harm is, according to the CJEU, caused by the extent to which works are made available without authorisation. This means that Member States should at least take into account the number of works that are made available, and the number of borrowers that are registered, per establishment.88

From VEWA, it can first be concluded that the concepts of ‘remuneration’ and ‘fair compensation’ are very similar. Although the Court chooses to stick to the wording of the relevant Directives in specific cases, it is clear that the actual difference between the concepts is minimal. Both concepts are fundamentally predicated on the idea that the protection of creative work merits a high level of copyright protection. The RLRDs reference to ‘adequate legal protection’ should, thus, be interpreted as

revelatory of the same principle, considering the importance of keeping EU copyright law consistent.89

The main difference between ‘equitable remuneration’, ‘remuneration’ and ‘fair compensation’ lies in how the amount of the payment must be determined. ‘Equitable remuneration’ must be determined, in particular, in light of the value of a use in trade.90_{This is specifically not the case for ‘remuneration’.}91_{The amount of ‘fair}

compensation’ is also not necessarily linked to the value of a use in trade. One somewhat significant difference between ‘remuneration’ and ‘compensation’ is that ‘remuneration must necessarily entail a monetary payment, whereas ‘compensation’ does not.92_{According to Reinbothe, an indirect monetary payment is, however}

88 CJEU 30 June 2011, C-271/10, ECLI:EU:C:2011:442 (VEWA/Belgium), par. 37-43.

89 For instance: CJEU 30 June 2011, C-271/10, ECLI:EU:C:2011:442 (VEWA/Belgium), par. 27.

91 CJEU 30 June 2011, C-271/10, ECLI:EU:C:2011:442 (VEWA/Belgium), par. 23 and 33.

92 CJEU 11 July 2013, C-521/11, ECLI:EU:C:2013:515 (Amazon.com International Sales and Others

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possible, for instance, through social or cultural funds that provide scholarships.93

Where Member States institute a remuneration system to comply with the ‘fair

compensation’ condition, the concepts are essentially identical, since the fundamental criterion for both is a notion of ‘harm’.

A question that has not yet been addressed is that as to the effect of Reprobel (and

Luksan) on the remuneration for public lending. In this context, it must be noted that

Article 6(1) RLRD does not refer to ‘rightholders’ as the recipients, though rather to ‘at least authors’. Nevertheless, it is likely that Reprobel can be used, by analogy, to make a strong case that public lending remuneration is meant solely (or, in any case, originally) for rightholders mentioned in Article 3(1) RLRD. This is supported by the fact that the decision in Reprobel is predicated upon the idea that fair compensation is meant to redress harm to the author.94_{The same is true for remuneration for public}

lending.95_{Additionally, it would be a major stretch to deduce from ‘at least the}

author’ that any party can profit, by operation of law, from the remuneration. Thus, in determining the limits, one must make use of principles already set out in EU

copyright law.96

3.5. Transferability

3.5.1. A voluntary transfer

The Information Society Directive does not address the issue of transferability of rights in any of its provisions. Recital 30 does, however, mention that the rights referred to ‘may be transferred, assigned or subject to the granting of contractual licences, without prejudice to the relevant national legislation on copyright and related rights.’ Thus, it appears that transferability is considered a given, except where national legislation provides otherwise. Nevertheless, supporters of a non-transferable right to fair compensation have championed Luksan as a decision that recognizes their

93 Reinbothe, p. 80.

94 CJEU 12 November 2015, C-573/13, ECLI:EU:C:2015:750 (HP/Reprobel), par. 36.

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position.97_{Therefore, it is important to fully understand the Court’s reasoning on this}

point.

The reason why the Court, in Luksan, got to the question about the possibility of waiver is that inquiry had to be made into the possibility of a presumption of transfer. Such a presumption necessarily allows the rightholder in question to waive his right to compensation.98_{This seems like a confusion of terms from the perspective of}

someone from, for instance, the Netherlands, where waiver nullifies a right, whereas transfer merely moves it from one person to another.99_{For the purposes EU law,}

however, waiver is a broad term that means that assignment is not possible, unless payment is safeguarded.100_{Thus, a presumption of transfer that is not challenged by}

the rightholder is a waiver for the purposes of EU law.

Questions about the transferability and waivability of rights are connected to the fundamental right to (intellectual) property. This right entails the principle that everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions.101_{This right is mentioned in Luksan, in the context of national}

legislation that deprives a rightholder of the exploitation rights that he acquires under EU law.102_{The right is, however, not mentioned again when the Court moves on to}

answer questions about waivability.103_{There are at least two conceivable reasons for}

this.

First, the right to ‘dispose’ is simply thought not to be as fundamental as the right to ‘own’ or ‘use’. This might be gleaned from the text of the Charter, which states that the right to ‘own’ may only be expropriated where it is in the public interest or provided by law, and the right to ‘use’ may only be regulated by law where it is

97 European Copyright Society, p. 6.

98 CJEU 9 February 2012, C-277/10, ECLI:EU:C:2012:65 (Luksan), par. 97.

99 IE-Goederenrecht 2016, p. 193.

101 Article 17 EU Charter.

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necessary for the general interest. No explicit limiting criterion for interferences with the ‘right to bequeath property’ is mentioned in the provision.104

Second, the non-waivability is in the interest of the rightholder. Rights in the Charter that correspond to rights guaranteed by the ECHR have the same scope as rights in the ECHR. The right to the protection of property can be found in Article 1 of the

Protocol to the ECHR. From the text of this article it is clearer yet, that this right is mostly concerned with the protection of ownership against, for instance, arbitrary interferences by the state. The essence of the right appears to lie in the protection of the position of the property owner. The non-waivability of the right to fair

compensation is regarded as being in the interest of the rightholder, as it presumably strengthens his economic position. As such, non-waivability does not seem to be in conflict with the essence of the right to (intellectual) property.

The decision as to non-waivability in Luksan was ultimately based on the following arguments. First, the wording of the provision (‘… on condition that the rightholders receive fair compensation …’) makes, according to the Court, clear that rightholders must receive remuneration and that waiver is not a possibility.105_{To support this view,}

the Court uses the concept of ‘remuneration’ from the RLRD by analogy. This term, as was established in VEWA, is designed to compensate authors for harm.106_The

Court extends the analogy to ‘equitable remuneration’ for rental, which is non-waivable, as it states in 5(2) RLRD. In doing so, the Court invokes Recital 12 of that Directive to argue that this condition of non-waivability also applies to the

‘remuneration’ for lending.107_{It is added to this that no provision of the Information}

Society Directive envisaged the right of waiver either.108_{In the absence of such an}

explicit permission to introduce the possibility of waiver, the Court finds that concepts for the protection of intellectual property must be deemed to be ‘kept’, and thus applicable in the present case.

104 Article 52 EU Charter, which lays out the general scope of the rights recognized in the Charter, provides that limitations of those rights must be provided for by law and respect the essence of those rights. Non- transferability, within the reasoning of the Court, appears to meet a genuine need in the general interest, and is, apparently, not repugnant to the essence of the right to (intellectual) property.

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It is evident that the analogy with ‘equitable remuneration’ is fundamental to the Court’s argument. There are, however, problems with this analogy.

The non-waivability of ‘equitable remuneration’ is, in effect, extended to

‘remuneration’, and, thereupon, further extended to ‘fair compensation’. However, it is clear from the text of the Directive that the characteristic of non-waivability is specific to rental rights. This can be demonstrated by going over the relevant recital. Recital 12 concerns an ‘equitable remuneration’ for authors and performers that is not waivable. Article 5, which concerns rental, uses the words ‘equitable remuneration’, whereas Article 6, which concerns lending, uses only the word ‘remuneration’. Furthermore the equitable remuneration established in Article 5 is specifically meant for authors and performers, whereas the remuneration established in Article 6 is meant for ‘at least authors’. Additionally, Article 6 does not explicitly provide a non-waivable right, whereas Article 5 does.

Whereas it makes sense to carry over principles between essentially similar situations, this is not true for dissimilar situations. Remuneration for public lending and

compensation for uses under exceptions are fundamentally similar. Both concern the situation where countries have determined that it is necessary to limit the scope of an author’s right for the public good. This legal expropriation of a prohibitive right harms the rightholder in her interests.109_{‘Fair compensation’ and ‘remuneration’}

balance the interests of rightholders with those of users.110_{Equitable remuneration for}

rental is entirely different in nature. This unique111_{type of remuneration exists even}

though the author or performer has chosen to transfer or assign her rental right. The remaining remuneration right is aimed at protecting the weaker party (the author or performer) against the stronger party (the producer).112_{It is true that the ‘equitable}

remuneration’ also protects the author or performer against the presumption of transfer or even the automatic transfer that Member States are allowed to provide.113

109 See chapter 2 and 3.4.

110 Stamatoudi 6.65 and 11.104.

111 Goldstein, p. 316.

112 Stamatoudi, 6.62.

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However, this in no way recommends the application of the concept of ‘harm’, which is designed for exceptions to exclusive rights.114

The Court also attaches weight to what it considers a conceptual irreconcilability, namely, Member States’ obligation to achieve the result of fair compensation and a rightholder’s right to waive that right.115_{This argument is understood in light of the}

required high level of copyright protection.116_{In effect, the CJEU is, thus, arguing that}

a high level of IP protection requires that rightholders be protected from themselves. Kabel rightly characterizes this idea as ‘paternalistic’.117_{To this, it can be added that it}

is not obvious that a high level of protection is not achieved as long as the opportunity of receiving the compensation is safeguarded. Furthermore, nothing suggests that ‘remuneration’ and ‘fair compensation’ exist to protect authors from stronger parties in negotiations.

I conclude that the CJEU has failed to interpret the ISD correctly, by reading non-waivability into the fair compensation condition. This conclusion makes the question about transferability rather easily answerable – it is left up to the Member States. However, since the Court is unlikely to abandon it’s current position, I will continue by temporarily accepting the Court’s premise to see where it leads.

Temporarily accepting the CJEU’s position on the non-waivability of compensation rights, there are arguments on both sides of the question whether the right is

voluntarily transferable. On the one hand, Kabel views the Court’s focus on the unlawfulness of a legal presumption of transfer as recognition of the possibility of a voluntary transfer.118_{Besides being appealing from a common sense point of view,}

this interpretation appears to be more in line with recital 30 and Article 17 of the EU Charter. Additionally, it must be noted that the Information Society Directive only harmonises ‘certain aspects of copyright and related rights’. Thus, it may be taken as a starting point that transferability is generally within Member States’ discretion.

116 CJEU 9 February 2012, C-277/10, ECLI:EU:C:2012:65 (Luksan), par. 106; CJEU 16 June 2011, C-462/09, ECLI:EU:C:2011:397 (Stichting de Thuiskopie/Opus), par. 32-34.

117 Kabel AMI 2012, p. 198.

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On the other hand, the Court has clearly accepted the view that Member States have an obligation to secure recovery of fair compensation that is meant to benefit original rightholders.119_{Furthermore, the Court has established in Reprobel that other parties}

cannot receive fair compensation when such receipt has the result of depriving original rightholders of any of the fair compensation they are entitled to.120_{It should}

be noted that Reprobel was not about a voluntary transfer and the consideration in

Luksan concerned a waiver. What could, thus, be provided for in national law, is the

possibility of a transfer of the right that is dependent on payment of a fair

compensation to the original rightholder.121_{Such a transfer does not go against any}

principle presently discoverable in the legal framework.

3.5.2. An automatic transfer

Wigman argues that the right to fair compensation, as codified in Dutch law, is an accessory right.122_{A right is an accessory right under Dutch law, when it cannot exist}

without the principal right.123_{This means that it can, in principle, not be separated}

from the principal right, and instead follows the principal right when it is

transferred.124_{The principal right, in this case, would be the right the right to which an}

exception is made – the reproduction right. Wigman considers that harm is only incurred by the (actual) reproduction rightholder, who is deprived of his prohibitive right in certain cases.125_{The alternative view is, as Wigman acknowledges, that the}

reproduction rightholder cannot transfer the part of the reproduction right that covers uses under exceptions, as the law has already expropriated that right.

For the purposes of this thesis, the relevant question is not whether Wigman’s view of Dutch law is correct, but whether EU law permits the accessory right approach in the first place. To answer this question, it must first be determined whether Reprobel has 119 CJEU 9 February 2012, C-277/10, ECLI:EU:C:2012:65 (Luksan), par. 106.

120 CJEU 12 November 2015, C-573/13, ECLI:EU:C:2015:750 (HP/Reprobel), par. 44-49.

121 As is generally presumed to be possible with respect to the Dutch implementation of the right to ‘equitable remuneration’ (Visser, T&C IE, art. 12a Aw, note 4).

122 Wigman, p. 2.

123 Article 3:7 Dutch Civil Code.

124 Article 3:82 Dutch Civil Code.

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the effect of precluding a situation where a publisher becomes holder of the right to fair compensation on the basis of a transfer of the reproduction right. This is likely the case, considering the sweeping nature of the following two considerations of the Court. First, it is stated that publishers are not rightholders for the purposes of Article 5(2)(a) and (b) ISD. Second, it is stated that the (original) rightholders may not be deprived of any of the fair compensation to which they are entitled.126

These statements permit several readings. The least restrictive interpretation is that the publisher can never originally be a rightholder, solely on the basis of his designation as ‘publisher’ (regardless of status as derivative rightholder). This first reading is possible, as the Court never addresses the publisher in his capacity as derivative rightholder. However, this interpretation is unlikely. If the Court, in Reprobel, were not addressing publishers in their capacity of rightholder, the decision would be, in many countries, bereft of practical relevance. This is because publishers, in many national legal traditions, operate on the basis of a (temporary) transfer of rights.127_{It is}

unlikely that the Belgian law would have directed fair compensation to publishers who did not have the right to reproduce the relevant works.

The more likely interpretation is that publishers can never be ‘rightholders’ of (a share of) the fair compensation, by operation of law. It has been argued in 3.5.1 that

Member States may provide that rightholders can transfer the right of fair compensation, in return for a fair payment. This is be possible, because authors remain in control: they have the opportunity not to transfer the right if no fair payment is offered. Authors do not have that opportunity where the right is automatically transferred together with the reproduction right.

This interpretation has the consequence that the ‘separate entitlement’ approach must be the correct one for the purposes of EU law. Although the right to fair compensation originates in the reproduction right, it necessarily exists separately. The right must be conceptualized as an entitlement of the author that must have the result of fully 126 CJEU 12 November 2015, C-573/13, ECLI:EU:C:2015:750 (HP/Reprobel), par. 48.

127 In Germany, the copyright stays with the author, and an exclusive ‘right of use’ is transferred. In the Netherlands, a transfer of the full copyright is possible (Article 2 Dutch Copyright Code). The question whether a licence is a temporary transfer or a different kind of right is outside of the scope of this thesis (See: Lenselink).

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compensating the author for the harm she incurs because she can neither exploit, nor licence or sell this part of the reproduction right. On the one hand, this inability to transfer the reproduction right with respect to uses under exceptions could be seen as a consequence of the nemo plus principle (one cannot transfer more than one has). On the other hand, it remains the case that the right to compensation exists by virtue of the existence of the reproduction right. This calls into question the reasonableness of separating the rights from each other.

It will be argued below that this interpretation of Reprobel leads to unreasonably restrictive outcomes. Nevertheless, it does have the merit of being fit for consistent and coherent application. In this capacity, the rights to ‘remuneration’ and ‘fair compensation’ are conceptually identical to the non-waivable right to equitable remuneration in Article 5(2) RLRD, which is clearly meant to protect certain original rightholders against derivative rightholders.

At this point, I will argue that it would be advisable for the CJEU, in further cases, to interpret Reprobel restrictively and as only designating the original holder of the reproduction right as the original holder of the compensation right, permitting an accessory right approach. First, a complete negation of derivative rightholders’ right to compensation runs into problems with the essential criterion for determining the level of that compensation in the first place – a presumed harm. As has been explained, the concept of harm is based on the idea that every single use under an exception produces some measure of economic prejudice. It is obvious that the original rightholder, who retains his reproduction right, incurs economic harm from uses under exceptions. When a different party acquires that right, that party incurs essentially the same type of harm. It would be contrary to the non-discrimination principle laid down in Article 20 of the EU Charter to exclude the derivative rightholder from compensation.128

It is correct to note that, in the case just described, the original rightholder may still incur harm as well. This could be the case where the author is compensated on the basis of the derivative rightholder’s revenues. However, this is only an indirect harm. Furthermore, if it were argued that Member States’ obligation of result extends to 128 Kraft, p. 7.

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indirect harm incurred by original rightholders, it can be argued that they have a claim against the derivative rightholder. This is essentially the reasoning that underlies Article 5 RLRD.129

In interpreting the Information Society, one must take into account the whole acquis and the principles that have already been developed. This is repeated ad nauseam in cases concerning fair compensation.130_{In this context, it would make sense to at least}

take account of the fact that ‘rightholder’ is defined in Directive 2014/26, as ‘any person or entity, other than a collective management organisation, that holds a copyright or related right or, under an agreement for the exploitation of rights or by law, is entitled to a share of the rights revenue’. This definition, perhaps except the exclusion of CMO’s, tracks the ordinary meaning of the word. This ordinary meaning should be authoritative, considering Article 31(1) VCLT.131_{Furthermore, this}

interpretation is in line with principles of international trade law, including the TRIPS agreement, which is part of the EU’s competence.132_{It is understood that the TRIPS}

agreement uses the term ‘right holder’ in order to cover all types of actual

rightholders, considering that rights of companies exploiting rights and authors are coextensive.133_{This is also the ordinary meaning of the word and in line with the}

object and purpose of the agreement. As such, the agreement should be interpreted thusly. As the three-step test in Article 13 TRIPS concerns rightholders, it may be assumed that a fair compensation condition, that is meant to compensate for prejudice (the third step considers unreasonable prejudice to rightholders interests), should also compensate those rightholders. It may also be noted that the Berne convention

explicitly mentions in Article 2(6) that protection is provided for both authors and successors in title.134_{The Berne Convention and WIPO Copyright Treaty are also}

relevant for the purposes of EU law.135_{Although Article 9(2) BC and Article 10 WCT}

129 Max Planck Institute, p. 11.

130 See 3.3 and 3.4.

131 In principle, the Vienna Convention rules of interpretation apply to ‘all international courts or tribunals, irrespective of their institutional set-up, subject matter, or geographical scope.’ (Beck, 2016, p. 489); Article 31 VCLT is customary international law and, thus, applicable even though the EU is a supranational organisation (see: CJEU, 11 March 2015, C-464/13, ECLI:EU:C:2015:163 (Europäische

Schule München/Oberto) par. 35-38. 132 Daiichicase, par. 49-61.

133 Geiger, p. 170.

134 According to Article 3 of the WCT, Article 2 BC applies mutatis mutandis for the purpose of that treaty.

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mention the author, rather than the rightholder. This should, however, not be taken to mean that derivative rightholders do not deserve protection, considering Article 2(6) and the fact that the interests of the author and derivative rightholders align.

On the basis of all the previous considerations, it must be concluded that the exclusion of derivative rightholders from the right to fair compensation lacks a sufficient legal basis. As such, the CJEU’s considerations, which appear to exclude publishers from the right to compensation, altogether, should be read to only cover the particular instance that the right is originally assigned to a person other than the original reproduction rightholder pursuant to Article 2 ISD. This entails that a successor in title, such as a publisher, can still become a rightholder for the purposes of Article 5(2)(a) and (b) on the basis of a transfer. This transfer can be voluntary, or on the basis of a transfer of the reproduction right.

3.5.3. ‘Remuneration’

Since this subchapter has mostly made mention of ‘fair compensation’, it is

appropriate to make a separate remark on ‘remuneration’ for public lending. As was established in 3.4, ‘remuneration’ and ‘fair compensation’ are essentially identical concepts. With respect to the option of voluntary transferability, most of the principles will, therefore, carry over. It is worth pointing out that the lending right in itself must be transferable.136_{Since there is no mention of transferability for ‘remuneration’ it}

should be presumed that this is left for the Member States to decide. The Court’s position on non-waivability is likely to carry over to ‘remuneration’, since the

requirement of a high level of copyright protection is also applicable to lending rights. Furthermore, the Court used the term ‘remuneration’ by analogy, to argue against waivability in the first place.137

It is not possible to conceptualize ‘remuneration’ as an accessory right, since this entitlement comes in the place of the exclusive lending right.138_{A transfer of the full}

copyright might also entail a transfer of the remuneration right. 136 Article 3(3) RLRD.

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3.6. A publisher’s sui generis right

The question whether Member States have any leeway to direct compensation to publishers as original rightholders seems a closed book upon a quick look at

Reprobel. This, however, would be a false assumption. In fact, the Belgian Court of

Appeals decided, following the CJEU’s decision, that the Belgian compensation for publishers did not affect that of authors and was, thus, permitted.139_{It must be noted,}

that in this case, the Belgian Government relied on the argument that the ‘publisher’s share’ was in fact a sui generis right, that did not affect the rights of the author. This argument has its basis in the legislative history of the Belgian Law in question, which makes clear that publishers have a right to remuneration ab initio.140

This result can be contrasted with the actions of Stichting Reprorecht, the Dutch CMO that collects the reprography levies, which decided to stop directing money to

publishers that are not legally awarded authorship status.141_{Information about the}

procedure that led to this decision by the CMO is not publicly available. However, it appears to be a coherent presumption that the decision was reached because an argument that Dutch law contains a sui generis right for publishers would be very weak indeed. The Dutch Copyright Code only contains reference to ‘a compensation’ for reprography.142_{There is nothing in the Dutch law that suggests that publishers are}

to be regarded as rightholders ab initio. This is also evident in the explanatory memorandum.143

In Germany, the Bundesgerichtshof judgment in the case between Vogel and CMO VG Wort even led to an approximate 300 million euros having to be returned by publishers, which, in turn, resulted in several publishers getting into trouble or filing

139 Brussels Court of Appeals, 12 may 2017 IEFbe 2203 (HP Belgium/Reprobel), par. 23; Referencing CJEU 12 November 2015, C-573/13, ECLI:EU:C:2015:750 (HP/Reprobel), Opinion of AG Villalón,, par. 140-141.

140 CJEU 12 November 2015, C-573/13, ECLI:EU:C:2015:750 (HP/Reprobel), Opinion of AG Villalón,, par. 134-136.

141https://www.reprorecht.nl/auteurs-en-uitgevers/verdeling-2018 (accessed on 11 July 2018)

142 Art. 16h Dutch Copyright Code.

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for bankruptcy.144_{The BGH came to this decision, because the German Copyright Act}

does not directly assign a right to the publisher.145_{Furthermore, publishers are not}

entitled to participate in statutory remuneration claims on the basis of their publishing right.146

As far as there is legal uncertainty as to the question whether EU law precludes a specific (sui generis) statutory remuneration for publisher, this is due to the refusal of the Court to accept AG Cruz Villalón’s suggestion to reframe the third question in

Reprobel to ask just that.147_{The AG answered this question in the negative,}

considering that Directive 2001/29 harmonises only certain aspects of copyright and related rights, and does not contain a provision precluding a publisher’s right to fair compensation.148_{This would be different if this publisher’s right were to affect the}

compensation for authors negatively. Assessing this, however, would be difficult considering Member States’ wide discretion in determining the level of compensation in the first place.149

The CJEU, before getting into its main argument that publishers are not rightholders listed in Article 2 ISD, had noted that the question by the domestic court concerns a situation where the amount payable to a publisher corresponds to a ‘substantial reduction’ in the reproduction rightholder’s compensation.150_{This is a fair reading of}

the domestic court’s question.151_{Nevertheless, the result is that it appears that the}

Court’s decision leaves open the possibility laid out by the Belgian Government and the AG.

144 Bundesgerichtshof, Vogel/VG Wort, 21. April 2016 (I ZR 198/13);

https://publishingperspectives.com/2016/09/no-agreement-copyright-controversy-germany-vg-wort/; In 2018, a constitutional complaint to this decision was declared inadmissible by the Constitutional Court (NJW 2018, 2036).

145 Bundesgerichtshof, Vogel/VG Wort, 21. April 2016 (I ZR 198/13), par. 62.

146 Bundesgerichtshof, Vogel/VG Wort, 21. April 2016 (I ZR 198/13), par. 73; Section 63a German Copyright Act.

147 CJEU 12 November 2015, C-573/13, ECLI:EU:C:2015:750 (HP/Reprobel), Opinion of AG Villalón,, par. 138.

148 CJEU 12 November 2015, C-573/13, ECLI:EU:C:2015:750 (HP/Reprobel), Opinion of AG Villalón,, par. 139-140.

149 CJEU 12 November 2015, C-573/13, ECLI:EU:C:2015:750 (HP/Reprobel), Opinion of AG Villalón,, par. 141.

150 CJEU 12 November 2015, C-573/13, ECLI:EU:C:2015:750 (HP/Reprobel), par. 45.

Conceptualizing the rights to ‘fair compensation’ and ‘remuneration’ in anticipation of Article 12 of the proposed DSM Directive