A recent dispute before an Austrian court has demonstrated a quirky conflict between EU and domestic law with regards to the granting of statutory exploitation rights in cinematographic works.

The plaintiff, Mr. Luksan, was a scriptwriter and principal director of a documentary on the topic of German photography from the Second World War.  The defendant, Mr. Van der Let, was hired to produce the film and was assigned all copyright and/or related rights in the film held by Mr. Luksan.  However, the assignment expressly excluded the right to broadcast the film, in almost any medium, to closed circles of users in return for separate payment.

In apparent violation of this express contractual exclusion, Mr. Van der Let made the film available on the internet and assigned the rights for this purpose to the website, movieeurope.com, where it could be downloaded by video on demand.  He also made the trailer available on Youtube and assigned the pay TV rights to Scandinavia TV.

Mr. Luksan contended that these forms of exploitation violated rights that were reserved to him in the contractual arrangement and demanded that half of the statutory rights to remuneration vest in him.  Mr. Van der Let responded by arguing that a statutory assignment of those rights is provided to him by virtue of Paragraph 38(1) of the UrhG  (copyright code) which grants all exclusive exploitation rights to the producer.  Furthermore, he alleged that this statutory grant renders any agreement diverging from the rule of reservation as void.

The dispute was further complicated, as the first and second sentences of Paragraph 38(1) of the UrhG, seemed to be contrary to European Union law.  The first sentence provides for the original and direct allocation of the exploitation rights to the film producer alone, rather than merely establishing a rebuttable presumption.  The second sentence provides that statutory rights to remuneration are to be shared equally by the producer and author of a film subject to any express agreement derogating from the rule.  On the contrary, EU law requires that the presumption in favour of the producer be rebuttable and that derogation from shared remuneration is prohibited.

As the dispute was dependent upon an interpretation between conflicting laws, the matter was referred to the European Court of Justice.  Firstly, the court explained that reproduction rights vest by operation of law in the principal director.  This vesting precludes national legislation which allocates those exploitation rights exclusively to the producer as was provided by the UrhG.  Nevertheless, EU law must allow the Member States the option of laying down a presumption of transfer, in favour of the producer, of exploitation rights provided that such a presumption is not an irrebuttable one that would preclude the principal director from agreeing otherwise.  The court also addressed the issue of statutory compensation and found that the principal director must be entitled to the right of fair compensation provided in Article 5(2)(b) of Directive 2001/29 (private copying exception).  Finally, the court held that EU law must be interpreted as not allowing Member States the option of laying down a presumption transfer in favour of the producer of the right to fair compensation vesting in the principal director of said work.

Andrew Baker is a LLB/BCL candidate at McGill University Faculty of Law.

Posted in Contracts, Copyright, European Union, Movies, Ownership