Collective Management Organizations, Independent Management Entities, and multi-territorial licenses

The aim of the CRM Directive is to improve the functioning of collective management organizations, lay down requirements applicable to them in order to ensure a high standard of governance, financial management, transparency and reporting.  Collective Management Organizations (CMOs) are subject to specific requirements, and in particular they have to be i) owned or controlled by its members (i.e. rightholders or entities representing them); ii) organized on a not-for-profit basis.

The CRM Directive also allows Independent Management Entities (IMEs) to carry out intermediation activities regarding copyright and related rights. IMEs are commercial entities that i) are not owned or controlled by rightholders; ii) organized on a for-profit basis.

According to the CRM Directive, CMOs are entitled to grant multi-territorial licenses of copyright for the on-line exploitation of musical works, provided that specific requirements are met. It seems that Union Directive does not provide i) on-line multi-territorial licenses for the related rights; and ii) multi-territorial licenses on copyright by IMEs.

Implementation of CRM Directive in Italy: The end of SIAE’s monopoly

The implementation of the EU Directive has accordingly had a disruptive impact on the intermediation of copyright in Italy.

Italian Law of 4 December 2017, No. 172 ended the monopoly of SIAE (Società Italiana Autori ed Editori) on the intermediation of copyright, by amending article 180 of Italian Copyright Law (ICL). More precisely, article 180 ICL now provides that SIAE and any other CMOs are entitled to intermediate copyright, provided that they meet requirements set forth by law.

Article 180 ICL does not, however, refer to IMEs, which implies that IMEs are not entitled to intermediate copyright in Italy.  They can, nevertheless, intermediate related rights, provided that they meet requirements provided by law.

Impacts on publishing contracts of musical works

In the scenario following the implementation of the CRM Directive, the exploitation of copyrighted works may turn out complicated for users, in particular with reference to the individuation of the CMOs entitled to intermediate rightholders and for the related pro rata rights.

By way of example, during SIAE’s monopoly, publishing contracts of musical works expressly provided clauses with which parties agreed to give a mandate to SIAE to intermediate the copyright existing on such works. For these contracts, it is reasonable to believe that after the end of SIAE’s monopoly, any possible attribution to other CMOs should be allowed by the other party, and in particular by the publisher as the holder of the exploitation rights. For the parties, switching to another CMO may not be simple, at least for an initial period, because the uncertainty or difficulty of finding CMOs entitled to intermediate a work and in what proportions among all the rightholders might deter users from exploiting it, in contrast to giving a mandate for the use of the works to a single CMO, which would also reduce the cost of negotiations.

In the same respect, as for new agreements, they may alternatively (a) recognize that only one party has the power to choose the CMO; (b) provide that each party may freely appoint the CMO; (c) provide that parties jointly choose the CMO with the faculty of one party to pass to another CMO, in the limits of pro rata rights, subject to (or without) the consent of the other party.

In addition, EU CMOs may decide to comply with the requirements provided by Italian law and directly intermediate copyright in Italy. This decision may impact on the system of representation agreements.

Something disruptive could still happen.

 

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