public consultation on the review of the eu satellite and cable...

Public Consultation on the Review of the EU

Satellite and Cable Directive Fields marked with * are mandatory.

MPA Submission in Response to the Commission’s Public Consultation on the SatCab Directive (November 16 2015)

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I. General information on respondents

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* What is your name?

Katharina Hiersemenzel / Jane Saunders

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95201401713-39

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□ Cable operators (or representative of)

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All Member States.

Please enter the name of your institution/organisation/business.

The Motion Picture Association.


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Avenue des Arts, 46 Brussels 1000 BELGIUM

Telephone number: (+32) 02 7782711

Email address: [email protected]; [email protected]

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mailto:[email protected]

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Executive Summary and Conclusion

In our response to this Public Consultation on the Review of the EU Satellite and Cable Directive, the Motion

Picture (MPA) first makes a number of preliminary remarks which cover the most salient points in our

submission and then provides more detailed responses to the questions related to evaluating the current rules

and extending the SatCab Directive. In short, the MPA takes the view that any extension of mandatory

collective rights management (CRM) and the country of origin principle is unwarranted and unnecessary in

light of the inherent differences between satellite/cable and the internet, market realities and low consumer

demand, practical and legal difficulties and likely conflict with international obligations binding the EU and its

Member States.

Consistent with fundamental EU legal principles and the EU copyright framework, the Audio-visual Sector

operates on the basis of contractual freedom, which permits individual exercise of exclusive rights. This

enables producers to license their content on a territorial or multi-territorial basis, based on their response to

marketplace and consumer demand. Such licensing is fundamental to the financing of audio-visual content.

The imposition of mandatory collective licensing in any new sectors of exploitation beyond cable

retransmission would punitively limit the options now available to audio-visual producers for financing of their

productions, eliminating their the ability to license their content directly to a wide range of new OTT platforms,

the growth market on the horizon for the audio-visual sector. Extending the country of origin principle to any

transmission/retransmission by any platform would also undermine the ability of producers to license content

appropriately in order to meet market demands and thus ensure the continued financing and production of

audio-visual content. The EU and its Member States have ongoing obligations under the current international

copyright framework, upon which the EU copyright acquis is premised. Changes considered in the consultation

would in our view not be compliant with those obligations and would raise issues in respect of rights protected

by the EU Charter of Fundamental Rights. We are thus opposed to any extension of the Directive. Our

arguments in sum are set out briefly here.

The EC should not introduce a country of origin principle for online distribution. Such a principle:

amounts to a disproportionate approach that is wholly unsuited to the Internet environment

particularly given the complete lack of evidence to justify such a radical interference in the exercise of

exclusive rights upon which rightholders rely to finance and produce creative content;

while at the time justified for and suited to the nascent satellite transmission sector, it is simply not

appropriate for transposition to the online ecosystem particularly in light of the lack of real consumer

demand (as confirmed by the recent Eurobarometer study cited below);

would give rise to severe practical and legal difficulties. Not only does determination of the country of

origin in the making available context present complex questions, but studies done for the

Commission have found that many other sensitive areas of national copyright law would have to

harmonised;

as a mechanism to impose cross border access to content it therefore would be a half-measure that

falls well short of the full harmonization of copyright that would likely be required to support such an

endeavour. However, the requisite political will and consensus for such a project are presently

lacking. In the interim, mediocre cherry-picking approaches which give rise to expropriation are futile;

will create serious enforcement difficulties for rightholders seeking to protect their new online

business models from the unfair competition wrought by infringing sites. Indeed many rightholders

are asking how the Commission will ensure that measures like injunctive relief remain meaningful in

environment where structurally-infringing sites are not considered to have infringing in the Member

State where protection is sought.;

is not required to meet the Commission goal to enhance cross border access to broadcasters services,

since the cross-border provision of services is already possible under the existing copyright regime,

which protects contractual freedom and supports multi-territorial licensing;

would be ineffective and inefficient to meet this goal, because any “country of origin” would be

difficult to identify in practice and be vulnerable to location shopping;


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would have a deleterious effect on the level of protection afforded to rightholders, thus undermining

other objectives such “the promotion of European works”, “preserving the financing of EU media and

innovative content” and “provid[ing] incentives to create and invest [in content]”;1

will have unintended consequences, including favouring large EEA-wide distributors to the exclusion

of local broadcasters who are best placed to satisfy local demand for local content. As a result, we

expect that such approach will actually undermine cultural diversity and flies in the face of Better

Regulation Principles which stipulate that proposals must meet policy goals at minimum costs and

deliver maximum benefits;

would flunk the three-step test, which is a fundamental feature of EU law, and forms part of the EU’s

and its Member States’ international law obligations under the WIPO Copyright Treaty (WCT) and the

WIPO Phonograms and Performances Treaty (WPPT) and the TRIPs Agreement;

is contrary to the EU Charter and Article 345 TFEU, because it constitutes an expropriation of property

rights without due process, without compensation, and without proportionate objectives.

The EC should not introduce mandatory collective rights management for Internet retransmission or other

forms of online distribution. This also applies with respect to cable operators offering new services and

functionalities based on rights that go beyond cable retransmission. A mandatory approach is not warranted or

justifiable. Such an approach:

would by necessity have to retain important safeguards, including flexibility in licensing options (e.g.,

Article 10) and contractual freedom (per Recital 16), both of which underpin the sector and benefit all

stakeholders including consumers.

would not be in the long term interests of consumers, rightholders or content providers, as it removes

the possibility of recognising the true value of a work and thus limits the ability of rightholders to

secure the revenues necessary to finance, provide and distribute new works.

Has the potential to create a dualist legal and collection regime for online distribution, given that the

EU may not harmonize purely intra-Member State activities. Introducing such a dualist legal and

collection regime for online distribution (assimilated with cable retransmission when the signal

crosses borders via wires, which may be difficult to determine, and subject to the national regime

when it doesn't cross borders or is wireless) is inefficient and bound to cause confusion.

Would run counter to the CJEU's jurisprudence in this area, which has analysed cable retransmission

in terms of the Article 3, communication to the public right, under the Copyright Directive and

emphasised the importance of rightholders authorising each specific technological means of

transmission or retransmission.

would violate international copyright law in particular it would not pass the three-step test, even in

the event it were to constitute a ‘certain special case' (the first step), which is unlikely the potentially

broad application, it would certainly amount to the a conflict with normal exploitation of works online

by creating unfair economic competition with the usual means by which rightholders derive value –

direct licensing to a wide range of platforms. Moreover, any extension of mandatory CRM to the

making available right would also be contrary to Article 8 of the WIPO Copyright Treaty.

1 A Digital Single Market Strategy for Europe COM(2015) 192 final


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Preliminary Remarks

The Motion Picture Association (MPA) is a trade association representing the interests of six major

international producers and distributors of films, home entertainment and television programmes.2 We

appreciate the opportunity to respond to this important Public Consultation. The MPA has significant

experience in addressing issues arising in the context of SatCab Directive arising from its representation of its

members directly before collective management organisations (“CMOs”) in virtually every Member State. As a

result, MPA deals regularly with national CMOs, and AGICOA, on matters concerning royalty distribution and

collection practices. MPA holds seats on the Executive Board of AGICOA as well as on boards of some national

CMO Boards, including in Spain, Germany, and Belgium. We have deep experience in all aspects of governance

matters within CMOs as a result. Through our participation in CMOs, we have regular discussions and

exchanges with local rightholder members on range of issues relating to national legislative developments and

case law.

Evaluating the Current Rules

As described in the Consultation Document, the Directive resides on two pillars: one conceived to impact the

functioning of the satellite broadcasting market and the other the cable retransmission sector.3 The principal

beneficiaries of the SatCab Directive, the satellite and cable platforms were nascent industries at the time

when the then European Community legislator determined for broader policy reasons as being worthy of

support; they have flourished since its introduction. Huge investments in cable networks and satellite

platforms were being made in Europe and both these industries offered a potential for consumers to receive

significantly improved reception and services (and indeed in some rural areas the possibility of actually

receiving the TV transmissions that were otherwise not available). The same considerations do not apply in the

digital environment and the current realities in the marketplace where there are already well-developed

services many of which are operating on a global level.

As, a general matter, the entire broadcasting sector, including broadcasters whose channels are carried on

these platforms, has experienced healthy growth since the early 1990s. This growth has also benefitted the

producers of the underlying content along with the creative participants – authors and performers.

The success of the broader audio-visual sector, in particular producers and other creative participants, derives

primarily from the existing EU copyright regime, which is grounded in strong exclusive rights and contractual

freedom. While the SatCab Directive contains some limitations on the exclusive rights of certain rightholders,

important safeguards, such as flexibility in licensing options (see e.g., Article 10) and contractual freedom

(Recital 16), ensure that rightholders can continue to exercise their rights efficiently, thus protecting the value

of the rights and guaranteeing compliance with important EU legal principles and international copyright

norms.

The SatCab Directive aims to facilitate cross-border transmissions by satellite and cable.4Two important

observations may be made in evaluating whether it has achieved this objective:

1. The SatCab Directive establishes a country of origin principle for satellite transmissions, meaning that

satellite broadcasters delivering their service into several territories only need to clear rights in the

territory of uplink. Notwithstanding this principle, cross-border activity for satellite services remains

low. This is because consumer demand, and consequently, the pattern of exploitation by

2 Paramount Pictures Corporation, Sony Pictures Entertainment Inc., Twentieth Century Fox Film Corporation, Universal

City Studios LLC, Walt Disney Studios Motion Pictures and Warner Bros. Entertainment Inc. The MPA's responses to this consultation are written in blue, font Calibri and font size 10. 3 See generally, K. Jorna and M. Martin-Prat, "New rules for the game in the European copyright field and their impact on

existing situations." E.I.P.R. 1994, 16(4), 145-153; B. Hugenholtz, SatCab Revisited: The Past, Present and Future of the Satellite and Cable Directive (2009) EAO Iris Plus Series 2008-2009. "Will the Satellite and Cable Directive eventually be revised? Probably not. More likely, it will slowly fade away, as contractual practice, technological measures, media convergence and the “horizontal” rules of European copyright law gradually supersede it" 4 Satellite and Cable Directive, Recital 3.


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broadcasters, remains largely national. Satellite platforms generally seek only the rights necessary to

serve national markets basis (see COM/2002/0430). This suggests that the “country of reception”

principle applicable before the SatCab Directive was not an appreciable barrier to cross-border trade

in itself, and that there appears to be no reason to extend the “country of origin” principle to other

broadcasts. Consumer demand for “foreign” channels is very low. Indeed in Brussels, for example, the

market share of the French channel, TF1, is significantly lower than that of the Belgian RTL – both of

which are of course French language channels.5

2. Rightholders and satellite broadcasters have continued to exercise their contractual freedom to

exploit content in the most commercially efficient manner. This, as the Commission itself has

observed, takes the form of exclusive territorial licensing.6 Thus, although a country of origin rule

gives authorized licensees the right to distribute content anywhere within their satellite footprint,

they have generally undertaken to encrypt content, so that their audience size (and thus a basis of

their licence fee) is only a subset of this footprint.

Thus, even where the copyright regime favours a multi-territorial system of licensing, market developments in

the context of the SatCab Directive demonstrate that content distribution within the EU is fundamentally

territorial., While pan-EU satellite services have failed to materialise due to a lack of demand, consumers have

benefitted immensely from the growth of the EU broadcasting sector, including an increased offering by

satellite and cable operators.

An Extension of the Directive

In light of the above, extending the main pillars of the Directive, that is, (1) country of origin for

communication to the public by satellite and (2) compulsory collective exercise of cable retransmission rights

(or even extended collective licensing with opt-out) to important exclusive rights used to license online

services is highly questionable.. Legislative action would appear not only unnecessary and even harmful, but

clearly contrary to the Commission’s own Better Regulation principles. Better Regulation requires that

proposals meet policy goals at minimum costs and deliver maximum benefits – clearly it would be highly

disproportionate to incur costs in furtherance of a policy initiative unlikely to deliver benefits while at the

same time harming rightholders.

With respect to the extension of the country of origin principle to all online transmissions, it should be

emphasized that this proposal was studied – and rejected – in the context of the drafting of the Copyright

Directive. Respondents to the consultation exercise which informed the legislative process

“were strongly against any harmonisation establishing the country of origin of a digital transmission as the country where the act of transmission is taking place and its law as the only one applicable. There were two reasons for this:

First, the technical nature of digital transmission is such that it is quite difficult to establish one single place where the transmission originates. This is [in] contrast to the case of transfrontier satellite broadcasting where such a solution was chosen within the Community.

5 More generally, the Commission's recent Eurobarometer survey, "Cross-Border Access to Online Content" confirmed the

limited demand for cross-border access to content. We recognise that there are higher numbers for portability but that obviously refers to a completely different concept. See news analysis: http://www.theregister.co.uk/2015/09/01/europe_yawns_at_robocommish_digital_plans/ 6 Report from the Commission Report from the European Commission on the application of Council Directive 93/83/EEC on

the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission COM/2002/0430. "A trend is thus emerging whereby producers sell their programmes to broadcasting organisations on condition that satellite transmissions are encrypted so as to ensure that they cannot be received beyond national borders. This encryption enables producers to negotiate the sale of the same programmes with broadcasting organisations in other Member States."

http://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=2&ved=0CCIQFjABahUKEwior86Lv4_IAhWq8XIKHQv7C2c&url=http%3A%2F%2Fec.europa.eu%2FCOMMFrontOffice%2FPublicOpinion%2Findex.cfm%2FResultDoc%2Fdownload%2FDocumentKy%2F67377&usg=AFQjCNG341j71C4eiy_nbiPGeao8vF_I8A


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Secondly, the application of such a “country of origin” principle bears the risk of leaving rightholders

without adequate protection – in particular when transmissions originate in third countries. However,

also in the Community, unless laws governing rights and their exploitation are almost completely

harmonised (such as first ownership, transfer of rights, scope of protection, including limitations and

exceptions to the right, etc.), such a solution could lead to a delocalisation of services being provided

from the country with the lowest level of protection for copyright and related rights. This, in tum,

would cause distortions of competition in the Internal Market and be severely detrimental to the

intellectual property regimes in other countries, by diminishing the effective value of the rights

awarded. It could have significantly adverse effects on the functioning of the Internal Market and on

creativity, competition and employment within the Community.”7

These concerns remain valid. Any such extension risks having a seriously disruptive effect on new digital

platforms and the audio-visual sector because:

It would eliminate, or severely undermine, the ability of producers to licence their content on a

territorial or multi-territorial basis, based on their response to marketplace demands. Such licensing

plays a vital role in the efficient production and distribution of audio-visual content in Europe.

It may be legally incoherent and present serious difficulties for implementation, such as in the

identification of the place where a transmission originates.

It would make it more difficult to take action against piracy.

Role of territorial licensing in audiovisual marketplace

The importance of territorial licensing – including exclusive territorial licensing – to the audiovisual industry

has been the subject of numerous studies, including:

The March 2014 CRA Report prepared by DG MARKT, which found that “country-by-country

exploitation of audiovisual works (whereby exclusive licences are typically granted to one local

distributor per Member State) is mostly deemed to be more profitable”.8 It concluded that “policy

changes which reduce the effectiveness of territorial licensing entail a risk of undermining the

associated efficiencies which do not appear to be justified by the possibility to reduce the risk of

harm.”9

An October 2013 Report by Enders Analysis, which considered that “territorial licensing of content

rights is the bedrock of the European audiovisual sector”, and “the prevailing outcome of the arms-

length negotiations between rightsholders and licensees”.10

An October 2013 report by Bomsel and Rosay, which stated: “[B]oth the mediatisation investment and

the patterns of each Member State industry oblige the right holders to design their licensing

agreements on a territorial basis. Any other approach would decrease the average revenue per

product, and therefore harm producers’ ability to compete on the international market or to finance

creation.”11

Territorial licensing is important for a number of reasons:

Financing: It is fundamental to the financing of audio-visual content, especially local content. In

practice, the production and distribution of film and other audio-visual content requires substantial

7 Proposal for a European Parliament and Council Directive on the harmonisation of certain aspects of copyright and related

rights in the Information Society of December 10, 1997 (COM(97) 628), para. 8. The Court has referred to this document to support its interpretation of the scope of the making available to the public right provided for under Article 3(2) of the Copyright Directive (see Case C-279/13 C More Entertainment AB v Linus Sandberg, judgment of March 26, 2015, para. 26). 8

Charles River Associates, Economic Analysis of the Territoriality of the Making Available Right in the EU, March 2014 (“CRA Report”), para. 173. 9 CRA Report, para. 481.

10 Enders Analysis, The Value of Territorial Licensing to the EU, October 2013, p.2-3.

11 Olivier Bomsel and Camille Rosay, Why Territories Matter, October 2013, p.5.


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upfront investments – more so than other forms of content; this carries with it significant financial

risks. There is no certainty of return on investment: even in a best-case scenario, it can take many

years to recoup costs for a successful production. As such, the production and distribution of audio-

visual content is often based on joint ventures, such as co-productions or co-financing mechanisms,

reliant on the pre-sale of rights on a territorial basis before filming even begins, thereby allowing

producers to share their financial risks with various distributors. Territorial licensing thereby

encourages investment in audio-visual content by ensuring that platforms taking the risk of investing

in content also get to share in the reward if the title proves a success.

Localised nature of distribution: Further, competition between platforms largely takes place between

national players, who focus on composing an offering that reflects the characteristics (linguistic,

cultural and other) of the audience in the territory in which they operate. Local distribution,

harnessing local experience and capabilities, is still the most efficient method of distribution, given

differences in consumer demand, national regulations, infrastructures, etc. Such local players would

have no reason to acquire rights on a wider geographic basis, as this would involve paying a much

higher licence fee for content which could not be as efficiently monetised by them as by other

national platforms. In fact, most national platforms could not afford a pan-EU licence fee. Those who

can, that is large international distribution platforms – which are already dominant in Europe, would

be the immediate beneficiaries of any legislative changes, such as extension of country of origin,

which would create de facto pan-EU licensing obligations unless firmly based on contractual freedom.

They would also be especially well-placed to free-ride off the localized promotional efforts of national

distributors. If at the same time new forms of exploitation in the OTT space are also made subject to

mandatory collective licensing, the incentive for producers and others to invest in new content and

services would be seriously undermined. Indeed, the simultaneous extension of both pillars of the

Directive would not only seriously deter investment in new content, but also promises to introduce

significant complexity and confusion in the marketplace.

Local Pricing. Consumers, and therefore distributors, in different territories have different levels of

willingness and ability to pay for any given item of content, reflecting differences in economic

conditions, preferences, local tastes, consumer options, income etc. Territorial licensing enables

producers to respond to differentiated demand by providing differentiated pricing. This increases the

output and range of content that is available to consumers in each territory, at the right price. The

ability to lower prices in countries where ability and willingness to pay are less, without prejudicing

the pricing in countries where they are higher, increases output and allows broadcasters to meet

demand that would otherwise remain unsatisfied.

Windowing. Audiovisual content is commonly exploited through a series of release windows. The

windowing system permits inter-temporal price differentiation, and is an important means for studios

to effectively commercialize their content and recoup high initial production costs. Release window

schedules vary across Member States, taking into account local factors such as school and public

holidays. Given the mismatch in windowing schedules, the system can only function properly within a

territorial licensing regime.

Legal incoherence

Imposition of the country of origin principle to the online environment not only engenders severe practical

difficulties given the inherent differences with the satellite space, but it is also not coherent from a legal point

of view. Subjecting the making available right to this principle, presents complex juridical questions that would

likely require full harmonisation of many other sensitive areas of national copyright law. As a result, the use of

the country of origin principle to impose cross border access to content is in fact a half-measure. It falls well

short of the full harmonisation of copyright that would be required to support such endeavour. However, the

requisite political will and consensus for full harmonisation are presently lacking. In the interim, expedient

cherry-picking approaches amount to expropriation.


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As noted by two studies commissioned by the Commission (the De Wolf Studies),12

there are a number of legal

difficulties associated with subjecting the making available right in Article 3 to the country of origin principle.

The "complement" to the De Wolf Study on the Application of the Copyright Directive (De Wolf 1) right was

released by the Commission on 19 December 2014. This new Study entitled "Study on the making available

right and its relationship with the reproduction right in cross-border digital transmissions" (De Wolf 2)

follows up on certain consequences considered by the first Study as potentially arising in the event the EU

were to proceed with measures to "localise the act of making available". These measures were identified as

the "country of origin principle" (making available only occurs in the Member State of upload) and "the place

of the exploitation of the work" (making available occurs only in Member States which are targeted).

Legislative approaches based on these measures could impact the rules governing enforcement (Article 8(3)

injunctions against Internet intermediaries in particular), authorship and initial ownership of copyright and

transfer of rights; and would face potential bottlenecks given the relationship between the making available

and reproduction rights including due to the fact that in some cases there would be reproductions in the

country of destination which require authorisation of the rightholders (and in certain cases other rightholders).

The Commission therefore asked De Wolf to prepare the further Study to assess and recommend "possible

accompanying legislative measures (in particular with regard to further harmonisation at EU level with regard

to authorship and ownership, transfer of rights, enforcement [Article 8(3) injunctions] and transitional

measures to allow for the adaptation of contracts) that are needed if one of the policy options in [the first]

study" were to be followed. In this regard, De Wolf was also told to consider if (and whether) specific measures

might be needed "to mitigate negative outcomes for rightholders" in the event of "a country of origin or

targeting approach".

De Wolf 2 found that "the efforts of localising the act of making available in certain Member States (one or

several) risk being undermined by the existence and localisation of reproductions directly associated to the act

of making available to the public. Especially the “downstream” reproductions may take place in any Member

State where the work is accessed (temporary copy or permanent download)."13

Moreover, it also considered

that the "existence of reproductions and their relation to the making available right entail complications in

terms of licensing and infringements of rights." While there are a number of means to address this situation

and the Study considers some "safeguards" for rightholders, De Wolf has "not found one construction that

solves all issues".14

Indeed, many of the proposals are subject to serious political and legal obstacles (including

at the international level). As such, the De Wolf Studies provide support for the assertion that, as per the

principles of Better Regulation, the Commission should refrain from extending the application of the country

of origin principle to exclusive rights protected by the EU and international copyright order. In this context, we

note that an extension of the SatCab Directive's country of origin principle would be anathema to the

Commission's own statement in relation to its Strategy for a Digital Single Market that any action must

"respect the value of rights in the audio-visual sector".

Quite apart from these issues, there is the problem of defining the place of “origin” of an online transmission

in a way which provides adequate protection to rightholders, against circumvention and location shopping,

including through the use of technologies such as mirrored websites, multiple places of storage or upload, or

split storage. This problem is further complicated when one considers how to deal with transmissions whose

“origin” might be considered to be outside of the EEA.

12

Study on the Application of Directive 2001/29/EC on Copyright and Related Rights in the Information Society, De Wolf & Partners, October 2013 (De Wolf 1); Study on the making available right and its relationship with the reproduction right in cross-border digital transmissions, De Wolf & Partners, December 2014 (De Wolf 2) 13

Page 79, De Wolf 2 14

Page 104, De Wolf 2


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Enforcement against online copyright infringement

The extension of the country of origin principle would very significantly increase the difficulty of taking

enforcement action against structurally-infringing sites which operate in direct competition with new online

platforms. It would increase the difficulty of proving an infringement in the first place, if not create a loophole

that could be exploited to put content online without any authorisation being made or remuneration being

paid to the relevant rightholders: websites could locate their servers, upload content, or carry out the “origin”-

defining act in a jurisdiction where such act does not constitute an infringement, or which offers relatively

weak copyright protection. As the De Wolf 1 report observed, the risk of location shopping could not be

excluded even within the EU, “since important parts of the copyright systems are still left to the Member

States, such as copyright contracts”.15

As explained further in response to Question 19 below, the problems establishing a primary infringement has

knock-on effects on practical enforcement against structurally infringing sites, which is typically carried out by

targeting Internet intermediaries including access providers, hosting services and others, rather than the sites

themselves which tend to operate offshore and anonymously.

Recent EU legislation, Regulation 1215/2012, allows enforcement of civil and commercial judgments handed down by the courts of one Member State in all other Member States, without any special procedure or declaration of enforceability being required (Articles 36 and 39). All that is needed is a copy of the judgment and a certificate in the form of Annex 1 (Article 37). However, this remedy is of no assistance in the case of Article 8(3) injunctions. The named intermediary respondents are likely only to have a presence in one Member State. Even where rightholders were successful in securing an injunction against intermediary(ies) in one Member State, the injunction would not be enforceable against unnamed intermediaries in other Member States. In other words, the judgment would apparently not be enforceable against new defendant intermediaries regardless of the fact that the same infringing site is involved. Thus, under a regime of country of origin online, even if it were possible to secure an injunction against intermediaries in one Member State because a court there had determined the making available to the public occurred there (and as noted above the sites are usually not in the same country) and therefore the intermediary’s service was being used to infringe within the jurisdiction, this judgment would not be enforceable against intermediaries in other Member States. Moreover, action in other Member States would not be possible because no making available has occurred there.

International Obligations

As suggested above, we also take the view that an extension of the country of origin principle and/or

mandatory collective rights management does not seem compatible with the EU’s and its Member States’

international law obligations.

The EU and its Member States are Contracting Parties to the WIPO Copyright Treaty (WCT), the WIPO

Phonograms and Performances Treaty (WPPT) and the TRIPs Agreement. As a consequence, these instruments

bind the institutions of the EU and the Member States. Moreover, the CJEU has found that the provisions of

agreements concluded by the EU "form an integral part of the EU legal order" and therefore apply in the EU

(see, for example, Società Consortile Fonografici v Marco Del Corso, Case C-135/10, Judgment of the Court of

15 March (Del Corso), at 39).

Important concepts, such as the communication to the public/making available right in Directive 2001/29/EC,

which is intended to implement the EU's obligations under the WCT and WPPT, "must be interpreted in the

light of the equivalent concepts contained in those international agreements and in such a way that they are

compatible with those agreements, taking account of the context in which those concepts are found and the

purpose of the relevant provisions of the agreements as regards intellectual property." (Del Corso, at 55),

Further, the CJEU has held that: "Community legislation must, so far as possible, be interpreted in a manner

that is consistent with international law, in particular where its provisions are intended specifically to give

15

De Wolf 1, p.147.


page 14 of 38

effect to an international agreement concluded by the Community." (Case C-306/05 Sociedad General de

Autores y Editores de España (SGAE) v Rafael Hoteles SA, at 35) (our emphasis).

Extending the principles of the SatCab Directive either through subjecting the exclusive right of making

available or the more general exclusive right of communication to the public to country of origin and/or by

imposing mandatory collective rights management would result in a hamstrung Article 3; and, the rights

protected by Article 8 WCT would be severely undermined. As noted above, it is not even clear on what basis

one would determine the country of origin of making available.

In particular, the imposition of mandatory collective licensing beyond cable retransmission to the internet

whether in respect of linear or non-linear (on-demand, interactive) transmissions would audio-visual

producers’ ability to license their content to a wide range of new OTT platforms, the growth market on the

horizon for the audio-visual sector. Assuming the question of which country would indeed be the “country of

origin were to be satisfactorily answered,” extending the country of origin principle to any

transmission/retransmission by any platform would undermine the ability of producers to license content

appropriately in order to meet market demands and thus ensure the continued financing and production of

audio-visual content. Further, it would severely jeopardise the ability of rightholders to protect their rights

against structurally infringing sites. In short, the communication to the public/making available right would no

longer constitute the cornerstone for bringing audio-visual content to the digital market and then protecting it.

In addition, such extensions would not be compatible with the three-step test, which of course is a

fundamental feature of not only EU law (Article 5(5) of Directive 2001/29/EC) but also international law

(Article 10, WCT; Article 16, WPPT, TRIPs Article 13). This test clearly applies to any limitation on the scope of

exercise of an exclusive right protected under international copyright law regardless of whether it concerns a

retransmission regime based on Article 11bis(2) of the Berne Convention or relates to a weakening of the

making available right protected by Article 8 of the WCT by means of imposition of the country of origin.

Market forces in current copyright regime can deliver cross-border services

Both single-territorial and multi-territorial licensing – and thus the provision of cross-border services - are

possible under the current copyright regime for online content. Similarly, with the potentially unlimited

number of channels online, specific demand from small audiences such as expats and visitors (who may seek

foreign language content, or specialized content), can easily be met. It is a matter of demand and supply, and

there is no need to change the copyright regime.

The Digital Single Market Strategy

Finally, we note that it is vitally important that the Commission’s action, if any, in this area is co-ordinated with

its overall Strategy for the Digital Single Market, given the potential for interplay between action in this area

and any action on portability of, and cross-border access to, content services. Obviously, any legislative

initiative will need to be fully compliant with the Commission’s Better Regulation Guidelines.


page 15 of 38

II. Assessment of the current provisions of the Satellite and Cable Directive

1. The principle of country of origin for the communication to the public by satellite

For satellite broadcasting, the Directive establishes (Article 1.2) that the copyright relevant act takes place

"solely in the Member State where, under the control and responsibility of the broadcasting organization,

the programme-carrying signals are introduced into an uninterrupted chain of communication leading to the

satellite and down towards the earth" (often referred to as “the country of origin” principle). So, rights only

need to be cleared for the "country of origin" of the broadcast (and not for the country/ies of reception, i.e.

the countries where the signals are received [1]). The Directive indicates that in determining the licence fee

for the right of communication to the public "the parties should take account of all aspects of the broadcast

such as the actual audience, the potential audience and the language version" (Recital 17).

[1] There is no case-law from the Court of Justice of the European Union regarding the interpretation of

Article 1.2 of the Directive.

1. Has the principle of "country of origin" for the act of communication to the public by satellite under the

Directive facilitated the clearance of copyright and related rights for cross-border satellite broadcasts?

□ Yes

□ To a large extent

□ To a limited extent

No

□ No opinion

While we query the premise of the question, in particular since it implies that there existed or exists a need to

facilitate the clearance of rights for cross-border satellite broadcasts, we nevertheless note that the answer is

no.

It is not clear that there is sufficient demand from consumers to access cross-border content to warrant

market let alone legislative action. Even where such demand exists, the country of origin principle is not a

necessary means of clearing rights. While in principle it is arguably more a rule of applicable law, without the

appropriate safeguards it would operate to expropriate property. There is simply no justification for such an

expropriation. There is no obstacle currently in copyright law to negotiating and granting multi-territorial

licences for content; the producer and the platform can engage in commercial negotiations to assign the

necessary rights for exploitation in one or more territories. Assuming licensors and licensees of content are

rational actors, market demand would be met with a negotiated license. Moreover, as we note below, while

copyright is not a barrier to cross-border services, there are obviously a range of legitimate factors which may

impede such services.

If there is no sustainable demand for cross-border satellite broadcasts and no obstacle to granting licences

covering several territories, then facilitation of rights clearance of cross-border satellite broadcasts is not

necessary.

1.1. If you consider that problems remain, please describe them and indicate, if relevant, whether they

relate to specific types of content (e.g. audio-visual, music, sports, news).

It can be queried whether there is a real demand for cross-border access to content delivered by any means.

Indeed, as noted in The European Commission's Cross-Border Access to Online Content Report, commissioned


page 16 of 38

by DG Connect and published in August 2015, only 5% of respondents have tried to access audio-visual content

through online services generally meant for users in other Member States.16

Fifty-four percent (54%) of those

who haven't tried to access content meant for users in another Member State said they are not interested in

this content, and 51% say they have sufficient choice of content in their own country.17

2. Has the principle of "country of origin" for the act of communication to the public by satellite increased

consumers' access to satellite broadcasting services across borders?

□ Yes



No

□ No opinion

As the Commission itself has noted, the country of origin principle has not necessarily had its intended effect.

It can also be queried whether there is a real demand for cross-border access to content delivered by satellite

(or, indeed, by other means). National languages, tastes and interests vary, such that substantial demand for

cross-border access to content has not materialised. If it does, the market will respond.

Indeed, where there is such a demand, or where such demand arises, cross-border access to content can be

delivered by the market under the current framework. This has already occurred in a range of different

situations for channel content, for example content available on certain UK channels. There are no obstacles to

multi-territorial licensing and multi-territorial distribution of content. If a satellite platform wishes to acquire

rights for more than one market, it would be a matter of commercial negotiation between the platform and

the rightholders.

2.1. Please explain and indicate (using exact figures if possible) what is, to your knowledge, the share (%) of

audiences from Member States other than the country of origin in the total audience of satellite

broadcasting services.

2.2. If you consider that problems remain, describe them and indicate, if relevant, whether they relate to

specific types of content (e.g. audio-visual, music, sports, news) or to specific types of services (e.g. public

services broadcasters', commercial broadcasters', subscription based, adverting based, content specific

channels) or other reasons.

3. Are there obstacles (other than copyright related) that impede the cross-border provision of broadcasting

services via satellite?

Yes



□ No

16

See above, Page 5 17

Page 6


page 17 of 38

□ No opinion

As set out above (see question 2), copyright law does not present an obstacle to the cross-border provision of

satellite services. However, in addition to the lack of consumer and, by extension, platform demand, there are

certainly other factors that may constrain the cross-border provision of content via satellite and indeed online.

3.1. Please explain and indicate which type of obstacles.

Platforms providing television services are heavily regulated. While some aspects of the provision of

audiovisual media services are harmonised at EU level in the Audiovisual Media Services Directive (the AVMS

Directive), many areas remain a matter for the Member States. Thus, by way of illustration, a broadcaster in

the Luxembourg transmitting into France must comply with (i) the Luxembourg rules implementing the

Directive; (ii) any other relevant Luxembourg rules; and (iii) any relevant French rules which fall outside the

areas harmonised by the Directive (the coordinated areas).

While the AVMS Directive has achieved a measure of harmonisation, the provision of audio-visual media

services across borders is still quite onerous from a regulatory point of view. The DSM Strategy has also

acknowledged a range of further impediments: tax ("reducing VAT related burdens and obstacles when selling

across borders" as key to increasing cross-border online activity"); contract law ("Having 28 different national

consumer protection and contract laws discourages companies from cross-border trading and prevents

consumers from benefitting from the most competitive offers and from the full range of online offers"); and,

consumer protection ("Having 28 different national consumer protection and contract laws discourages

companies from cross-border trading and prevents consumers from benefitting from the most competitive

offers and from the full range of online offers"). Of course, there a number of other areas of content

regulations, which may be relevant including: news reporting/elections, offence to human dignity/taste and

decency, privacy, protection against crime and disorder, protection against racial or ethnic hatred, quotas and

standards for religious programmes and even defamation law. The MPA is fully supportive of the DSM

Strategy’s objective of breaking down unjustified barriers to the cross-border provision of services. While we

take the view that copyright is not a barrier, we are supportive of efforts that facilitate the content sector’s

efforts to meet the demands of its consumers.

4. Are there obstacles (other than copyright related) that impede the cross-border access by consumers to

broadcasting services via satellite?

Yes



□ No

□ No opinion

As noted above, it can be queried whether there is a real demand for cross-border access to content delivered

by satellite (or, indeed, by other means). Indeed, as noted in The European Commission's Cross-Border Access

to Online Content Report, commissioned by DG Connect and published in August 2015, only 5% of

respondents have tried to access audio-visual content through online services generally meant for users in

other Member States.18

Fifty-four percent (54%) of those who haven't tried to access content meant for users

in another Member State said they are not interested in this content, and 51% say they have sufficient choice

of content in their own country.19

Consumer demand for content varies on a territorial basis, and consumers

18

See above, Page 5 19

Page 6


page 18 of 38

tend to favour national services. In most markets, the main platforms are focused on building services that

offer the particular content demanded by the audience in the territory in which they operate. These platforms

do not often seek to offer services on a multi-territorial basis as this would require them to acquire rights in

content that may have a very limited potential audience.

4.1. Please explain and indicate which type of obstacles.

See above.

5. Are there problems in determining where an act of communication to the public by satellite takes place?

□ Yes



No

□ No opinion

5.1. Please explain.

In the context of satellite, this has largely been a non-issue.

6. Are there problems in determining the licence fee for the act of communication to the public by satellite

across borders, including as regards the applicable tariffs?

□ Yes



No

□ No opinion


Determining the licence fee for the act of communication to the public by satellite across borders is done on

the basis of commercial negotiations between rightholders and platforms. It is a matter addressed by the

marketplace.

In view of the application of the “country of origin” principle, the Directive harmonised the rights of authors

to authorise or prohibit the communication to the public by satellite (Recital 21, Article 2), established a

minimum level of harmonisation as regards the authorship of a cinematographic or audio-visual work

(Article 1.5) and as regards the rights of performers, phonogram producers and broadcasting organisations

(Recital 21, Articles 4 to 6).

7. Is the level of harmonisation established by the Directive (or other applicable EU Directives) sufficient to

ensure that the application of the "country of origin" principle does not lead to a lower level of protection of

authors or neighbouring right holders?


page 19 of 38

Yes



□ No

□ No opinion

Yes. In practice, we are not aware of the Directive’s regime for satellite having resulted in reduced protection

for authors and other rightholders. We believe that this is due to the fact that the country of origin principle in

the SatCab Directive has in practice had very little impact in the marketplace. We note with concern, however,

that the findings of the De Wolf studies (cited above) that a more radical application of country of origin to the

making available right would likely visit a host of ills upon rightholders, including from a licensing and

enforcement perspective, and probably give rise to a need for additional prior harmonisation of copyright in a

number of sensitive and contentious areas, such as harmonisation of the notion of authorship and initial

ownership of a work.

7.1. Please explain. If you consider that the existing level of harmonisation is not sufficient, please indicate

why and as regards which type of right holders/rights.

We consider that the existing level of harmonisation is sufficient and would argue that action is not needed.

We recall that the De Wolf Study noted that the “existing disparities in the legislation of the Member States

with regard to the determination of authorship on cinematographic or audio-visual works are mitigated by the

existence, in all the European countries, of a legal presumption operating in favour of the transfer of the rights

from the co-authors to the producer”20

.

For the purposes of evaluating the current EU rules, the Commission should assess the costs and relevance,

coherence and EU added value of EU legislation. These aspects are covered by questions 8-9 below.

8. Has the application of the “country of origin” principle under the Directive resulted in any specific costs

(e.g. administrative)?

Yes

□ No

□ No opinion


As a limitation on the exercise and scope of an exclusive right, the country of origin principle has required the

introduction of complex contractual practices and increased administrative costs. Any artificial intervention in

the marketplace is likely to complicate the contractual practices associated with licensing as the relevant

parties need to adapt their business practices and closely monitor their activities. This entails an additional

administrative burden for all stakeholders including ultimately consumers.

20

Pages 105 and 106 which repeat this point more generally. See also more generally page 108, where it is noted that “[i]n practice, we have found no such conflicts in the cases reported in the Member States under consideration. This suggests that the disparity of national rules on authorship and ownership is not insurmountable”. Although there may be issues with transaction costs, a previous EU commissioned study found no need to harmonise rules on authorship at EU level. This finding was repeated in E. Derclaye, Research Handbook on Future of EU copyright, 526. See also, Luksan v Van Der Let, Case C-277/10, Judgment of the Court (Third Chamber) of 9 February 2012.


page 20 of 38

9. With regard to the relevance, coherence and EU added value, please provide your views on the following:

9.1. Relevance: is EU action in this area still necessary?

□ Yes

No

□ No opinion

No. For the reasons set out above, action would either not have its intended effect or it would have the effect

of undermining the audio-visual sector, its financing, production and distribution of works as well as

potentially creating a result contrary to international law and fundamental rights in EU law.

9.2. Coherence: is this action coherent with other EU actions?

□ Yes

No

□ No opinion

It is unclear how action in this area will be co-ordinated with broader action planned under the Strategy for a

Digital Single Market. As noted above, it is vital that any action in this space is carefully thought out, given the

interplay between the various policy areas under review, and internally coherent. We recall the Commission's

own statement in relation to its Strategy for a Digital Single Market that any action in this space must "respect

the value of rights in the audio-visual sector".

9.3. EU added value: did EU action provide clear added value as compared to an action taken at the Member

State level?

□ Yes

No

□ No opinion

No. And further action will not add value either, since the rules are already harmonised.


See above.

2. The management of cable retransmission rights

The Directive provides a double track copyright clearing process for the simultaneous retransmission by a

cable operator of an initial transmission from another Member State (by wire or over the air, including by

satellite) of TV or radio programmes (Article 1.3). Broadcasters can license to cable operators the rights

exercised by them in respect of their own transmission, irrespective of whether the rights concerned are

broadcasters' own or have been transferred to them by other copyright owners and/or holders of related

rights (Article 10). However, according to Article 9, all other rights (of authors and neighbouring right

holders) necessary for the cable retransmission of a specific programme can only be exercised through a

collecting society. Finally, Articles 11 and 12 introduce negotiation and mediation mechanisms for dispute

resolution concerning the licensing of the cable retransmission rights.

10. Has the system of management of rights under the Directive facilitated the clearance of copyright and

related rights for the simultaneous retransmission by cable of programmes broadcast from other Member

States?


page 21 of 38

□ Yes


To a limited extent

□ No

□ No opinion

As a general matter, the system of management of cable retransmission rights established by Article 9 of the

SatCab Directive is not supported by the MPA Member Companies and we question whether this system is still

necessary in the digital environment. This is due to the fact audio-visual producers prefer to exercise their

exclusive rights on an individual basis and would prefer to have the same exclusive right protections that are

available to broadcasters under Article 10. That said, we are aware of the political, economic and legal context

within which this system was conceived. Moreover, we are fully cognizant of the international regime

established by Article 11bis of the Berne Convention (though we note that this is indeed limited by the three-

step test). We do not dispute the fact other rightholder groups as well as cable operators will prefer to clear

rights through collective management organisations. Further, we believe that the SatCab Directive system for

cable retransmission has functioned relatively well because it includes the crucial safety valve in Article 10

which provides producers with the ability to license their cable retransmission right directly to the initial

broadcasters. This safety valve is a crucial part of the cable retransmission regime and we believe it has played

a vital role in ensuring contractual freedom as well as compliance with international norms.21

10.1. Please explain. If you consider that problems remain, please describe them (e.g. if there are problems

related to the concept of “cable”; to the different manner of managing rights held by broadcasters and

rights held by other right holders; to the lack of clarity as to whether rights are held by broadcasters or

collective management organisations).

While we believe that Article 10 has played an important role ensuring functioning of this system, the system

is far from perfect and significant problems remain. In particular, the system does not yet fully protect

producers from rejections of their claims by cable operators who often benefit from distribution of copyright

content even while refusing to pay equitable remuneration.22

For many producers and other rightholders,

broadcasters are able to extract rights without payment and then work with cable operators to deny royalty

claims via the CMOs. Cable operators have significant financial power and leverage in the marketplace. Some

cable operators are able to obtain guarantees from broadcasters about rights clearance which some national

courts now find is sufficient evidence to shift the burden to the rightholders. As such they have used the courts

in some countries successfully to limit royalty claims of producers and other rightholders. A further case in

point is a series of legal actions based on the argument that direct injection technology, by which channel

content is distributed only by cable without any over the air exhibition, precludes an obligation to remunerate

rightholders through a CMO. This position ignores the reality for some producers as their content has been

licensed only to the channel and not to the cable operator. While the cable operator benefits economically

from the use of the work without rightholder authorisation, the cable operator seeks to avoid payment for

that use and consequent benefit. Other problems stem from discriminatory treatment of international and EU

rightholders by national CMOs. Cooperation among CMOs representing producer rights within the system of

most Member States is evident, but insufficient protections remain in cases where national CMOs seek to

discriminate in favour of local right holders at the expense (or even complete rejection) of international and

EU rightholders.

21

See above, Hugenholtz, arguing that this "exceptional status [for broadcasters] is wholly justified". 22

Indeed, while Article 10 may be "wholly justified", the same commentator has noted that "it allows commercial broadcasters to offer a “clean product” (all rights cleared) to cable operators. This may be attractive and efficient for broadcasters and cable operators alike, but is likely to lead to unfair outcomes for authors and performing artists." Hugenholtz at 15.


page 22 of 38

In the digital environment, one might question whether the current regime for cable still makes sense. In this regard, we welcome this in-depth consideration of whether the current regime actually delivers value for all stakeholders as part of the SatCab review.

Cable might be considered a special case for the purposes of the three-step test. The system generally operates in a manner that does not conflict with normal exploitation of works. However, there is tension particularly in the cross-border context where transmissions from other territories interfere with exclusive licenses and undermine release patterns. This raises issues with the second step of the test. As for the third step (which is only relevant in the event the second step is satisfied), any unreasonable prejudice is at least in part assuaged by the receipt of royalties from cable platforms.

Cable platforms generally operate in closed, geographically defined and limited environments. As described above, the system is designed to leave to producers the discretion to license retransmission rights directly to broadcasters or exercise them through a CMO, which can license the retransmission rights and/or collect the remuneration flowing from the retransmission of protected works.

To date, the regime has enabled cable providers to operate effective and lucrative services, but there is now wide range of other services to consider, including satellite platforms which, although they are not subject to (or benefitting from) the cable regime, appear to be thriving.

Any generalisation of the regime that would extend mandatory collective licensing beyond cable retransmission is potentially problematic under EU and international norms as it would not be in compliance with the three-step test and would likely dis-incentivise investment in new content (see further below).

11. Has the system of management of rights under the Directive resulted in consumers having more access

to broadcasting services across borders?

□ Yes


To a limited extent

□ No

□ No opinion

Yes – but demand is low (see above). We note that demand for cross-border access to audiovisual content

services generally is low. The Commission's recent Eurobarometer survey, "Cross-Border Access to Online

Content" confirmed the limited demand for cross-border access to content. In particular, the survey confirmed

that out of the 95% of respondents who had not tried to access audiovisual content through online services

meant for users in another Member State, 54% reported that they are not interested in this content and 51%

that they have sufficient choice of content in their own country.23

11.1. Please explain. If you consider that problems remain, please describe them and indicate, if relevant,

whether they relate to specific types of content (e.g. audio-visual, music, sports, news) or to specific types of

services (e.g. public services broadcasters', commercial broadcasters', subscription based, advertising based,

content specific channels) or other reasons.

23

Eurobarometer survey, pages 93 and 103


page 23 of 38

12. Have you used the negotiation and mediation mechanisms established under the Directive?

□ Yes



No

□ No opinion

12.1. If yes, please describe your experience (e.g. whether you managed to reach a satisfactory outcome)

and your assessment of the functioning of these mechanisms.

12.2. If not, please explain the reasons why, in particular whether this was due to any obstacles to the

practical application of these mechanisms.

No experience.

For the purposes of evaluating the current EU rules, the Commission should assess the costs as well as the

relevance, coherence and EU added value of EU legislation. These aspects are covered by questions 13-14

below.

13. Has the application of the system of management of cable retransmission rights under the Directive

resulted in any specific costs (e.g. administrative)?

Yes

□ No

□ No opinion

13.1. Please explain your answer.

Considerable administrative costs are involved in the collective management of rights, which can deprive

producers, authors and performers of some of the return on their creations. CMO costs can be duplicated as

CMOs can assess collection fees and administration fees at national level even with respect to royalties

distributed via another CMO abroad. It is possible that implementation of the CRM Directive at national level

could alleviate this problem but, so far, our experience is that it likely will not.

14. With regard to the relevance, coherence and EU added value, please provide your views on the

following:

14.1. Relevance: is EU action in this area still necessary?

□ Yes

No

□ No opinion


page 24 of 38

14.2. Coherence: is this action coherent with other EU actions?

As noted above, it is clearly very important to ensure that any reform of the Satellite and Cable Directive is co-

ordinated with the overall Strategy for the Digital Single Market.

□ Yes

No

□ No opinion

14.3. EU added value: did EU action provide clear added value when compared to an action taken at

Member State level?

□ Yes

□ No

No opinion

14.4. Please explain your answers.

No response.


page 25 of 38

III. Assessment of the need for the extension of the Directive

The principles set out in the Directive are applicable only with respect to satellite broadcasting and cable

retransmissions [2]. They do not apply to transmissions of TV and radio programmes by other means than

satellite or to retransmissions by other means than cable. Notably these principles do not apply to online

transmissions or retransmissions.

Until relatively recently, broadcasters' activities mainly consisted of non-interactive transmissions over the

air, satellite or cable and broadcasters needed to clear the broadcasting/communication to the public rights

of authors, performers and producers. However, the availability of broadcasters' programmes on an on-

demand basis after the initial broadcast (e.g. catch-up TV services) is on the increase. Providing such services

requires broadcasters to clear a different set of rights than those required for the initial broadcast, namely

the reproduction right and the making available right. Forms of transmission such as direct injection in cable

networks or transmissions over the internet (e.g. webcasting) are also increasing. Digital platforms also

enable programmes to be retransmitted simultaneously across networks other than cable (e.g. IPTV, DTT,

simulcasting).

[2] The concept of retransmission is generally understood as the simultaneous transmission of a broadcast

by a different entity such as a cable operator.

1. The extension of the principle of country of origin

15. Please explain what would be the impact of extending the "country of origin" principle, as applied to

satellite broadcasting under the Directive, to the rights of authors and neighbouring right holders relevant

for:

Before proceeding to answer the specific questions below (15.1-15.4), it must be recalled again that evidence

suggests that there is no compelling marketplace dynamic that points to the need for extension of the country

of origin principle. This begs the question, why we are looking for a solution when we have yet to locate a

problem. Moreover, subjecting the exclusive right of making available to the country of origin principle which

is, of course, what would happen in the event of the extensions described herein, is entirely problematic for a

number of reasons elaborated in our response, including by giving rise to a number of additional issues related

to the reproduction right (see above references to the De Wolf Study).

The making available right is technically, legally, and commercially very different than the right of

communication to the public by satellite. In the context of communication to the public by satellite, the

country of origin principle serves as little more than a rule of applicable law. In practice, the satellite

transmission right is licensed on the basis of direct commercial negotiation with the relevant broadcasters,

platforms and producers (which acquire the necessary rights from authors and performers by contract and/or

by operation of law). As set out in our introduction, an extension of the country of origin principle to other

types of transmissions and to other platforms is, rather than increasing or even facilitating cross-border

subscriptions, unnecessary to achieve multi-country licensing (which can be achieved under the current

regime), and would have a seriously disruptive effect on new digital platforms and the audio-visual sector as a

whole as well as potentially contravene the EU’s and its Member States’ international obligations. As noted

above, there is also the practical question, how will the country of origin for an online transmission be

determined in a manner that would provide even a modicum of legal certainty while avoiding a

counterproductive race to the bottom?

As the Commission itself has recognised in its Terms of Reference for the De Wolf Study 1 “the act of making

available is in all likelihood an act relevant in each of the Member States where the content is accessed (plus,

probably, the country in which the content is uploaded).” Since the De Wolf Study 1 was published the CJEU

has further clarified in several cases cited herein that, in the online environment, the act of making available

takes place both where the work accessed and where it is capable of being accessed (i.e. accessible) by

consumers. This is explained further in response to Question 18 below. This is important not only to the

licensing of content but also to determining the jurisdiction and/or the applicable law for rightholders to

enforce their rights against infringers and online intermediaries (see the response to Question 19 below).


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The above mentioned De Wolf Studies concluded that the making available right is “not entirely clear” as to its

“constitutive elements” and is subject to “some legal uncertainty” as to its “territorial reach”. However,

subsequent CJEU case law has provided further clarification.24

We note that De Wolf 1 then considered the

“alternative approaches” (country of origin and targeting) to address so-called “bottlenecks” and found that

these would not only create “new bottlenecks” and significant legal uncertainty as well as require extensive

harmonisation of copyright law in a number of other areas including as it pertains to authorship/initial

ownership as well as contracts. Moreover, the Study questions the effectiveness of these alternative

approaches in light of the Commission’s policy objectives. The follow-up Study did nothing to dispel these

concerns and indeed, as noted above, identified further problems.

Indeed, in light of these points, it would appear futile and disruptive to embark on one of these “alternative

approaches”. Moreover, any approach to the making available right that would artificially alter the inherent

nature of this right would risk undermining its utility as a licensing and enforcement tool. As explained in the

Preliminary Remarks and below, the imposition of the country of origin approach could diminish the value of

the making available right to such an extent as to constitute an unjustified expropriation of intellectual

property thereby raising questions under the EU Charter of Fundamental Rights and Freedoms, international

obligations, as well as national constitutions. Finally, any limitation on scope of the exercise of exclusive rights

must also meet the conditions enshrined in the three-step test pursuant to international copyright treaties

(see also above references to Better Regulation Guidelines).

Since the entry into force of the Lisbon Treaty, EU institutions are required to consider the impact of all their

activities on fundamental rights. As such, fundamental rights have a role to play in all areas of the law which

come under the competence of the EU and its institutions, including intellectual property. Article 17(2) of the

EU Charter imbues intellectual property with the status of a fundamental right by providing that: ‘Intellectual

property shall be protected.’ Intellectual property is a form of property (see Article 17(1)).25

However, this is

not to suggest that copyright is therefore some kind of an absolute right. It is clear from the nature of

copyright – and indeed CJEU jurisprudence – that this fundamental right is to be balanced with others.

Against this backdrop, it has to be reiterated that consumer demand for content varies on a territorial basis,

and consumers tend to favour national services, as borne out by the European Commission's Cross-Border

Access to Online Content Report, published in August 2015 (see above).

The MPA takes the view that the extensions of the country of origin principle considered in this consultation

document would narrow the scope of the making available right to such an extent as to give rise to an

unjustified expropriation of intellectual property in manner that is contrary to Article 17 of the EU Charter,

Article 345 TFEU26

and national constitutions (see e.g., Article 14 of the German Constitution). This

expropriation of property is not simply about regulating the use or exercise of the right– it is about a radical

change in the definition of the right that affects its existence. – whereas in the current regime the rightholder

can control both uploading and accessibility, the latter right would be eliminated. It is about an unjustified

interference with the right of making available – not only is such an interference against the public interest it is

also clearly disproportionate to the policy goals that might be attained (this point is recognised by the Study).

We do not refer here to new forms of intellectual property protection or additional exclusive rights – we are

addressing a right that is currently used to license and enforce protected works across the EU. Subjecting the

making available right to the country of origin principle is manifestly disproportionate. It would be a significant

curtailment - a “taking” without proportionate justification of a right which is currently enjoyed, the taking of

24

See, for example, Case C-279/13 C More Entertainment AB v Linus Sandberg, judgment of 26 March 2015 and Case C-466/12 Svensson (Svensson), judgment of February 13, 2014 25

See also Article 15 of the International Covenant on Economic, Social and Cultural Rights; and, Article 27 of the Universal Declaration of Human Rights. Paragraph 2 of the latter provides “Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.” 26

“The Treaties shall in no way prejudice the rules in Member States governing the system of property ownership.” Thus, intellectual property law cannot be modified to such an extent that its essential elements, and thus the existence of the right, are prejudiced.


page 27 of 38

which was not foreseeable, and which has formed the basis since 2001 alone for billions of euros of

investment.

We therefore take the position that Article 17(2) of the EU Charter and Article 345 TFEU are directly relevant

to any proposal that would annul, reduce or curtail the scope and specific subject matter of the existing

exclusive right of making available, or that would exceed the margin of appreciation afforded to the EU as a

legislator.

One must also consider the potential impact on other core copyright issues including authorship/initial

ownership of the protected works, the status of rights transfers, access to remuneration and enforcement

particularly online. The country of origin approach would indeed undermine the position of rightholders in

several respects.

In the audio-visual sector, cross-border and multi-territorial licensing is not only feasible but also takes place

where there is sufficient consumer demand and where the operator has the necessary resources to provide

services on a multi-territorial basis. Indeed, the rights necessary to finance, produce and exploit a film or TV

programme are generally consolidated in the hands of the producer. The De Wolf Study 1 notes that the

“existing disparities in the legislation of the Member States with regard to the determination of authorship on

cinematographic or audio-visual works are mitigated by the existence, in all the European countries, of a legal

presumption operating in favour of the transfer of the rights from the co-authors to the producer”27

. However,

rightholders in the country of reception would still be harmed and deprived of various statutory

remunerations and/or contractual residuals. In terms of financing, European independent films, which rely

heavily on the pre-sale of exploitation rights and especially co-productions where the rights are split between

the co-production partners would also be put at risk – here we are talking about films that would not be made

otherwise. Thus, the impact would be felt not only by producer/distributors but also authors and performers

who would also not be remunerated for their creative contributions in the country of reception.

As regards enforcement, the MPA believes that the “country of origin” approach could seriously hamper the

ability of rightholders to take legal action to address structurally infringing websites28

, which invariably are

based in other Member States or outside of the EU itself.

15.1. TV and radio transmissions by other means than satellite (e.g. by IPTV, webcasting).

Extending the country of origin principle to TV and radio transmissions by other means than satellite is not

justified, would deprive rightholders of the ability to license such content on the most appropriate commercial

basis (be it territorial, multi-territorial or on another basis). It would limit the possibility to extract value for

such rights, to recoup the costs of producing content, and to remunerate authors and performers in

accordance with the marketplace rates. And this would take place in an environment where many

independent EU producers already lack their own capital and are under serious pressure from major

financiers. If the Directive was extended, only major platforms would benefit. Producers would have even less

opportunity to derive future financing from a successful film. This factor is even more relevant as the revenues

from theatrical exhibition have decreased relatively over the last 10 – 15 years, particularly with regards to

films that are not considered immediate “must see”, as consumers are aware that the content will eventually,

and rather quickly, be available online.

27

Pages 105 and 106 which repeat this point more generally. See also more generally page 108, where it is noted that “[i]n practice, we have found no such conflicts in the cases reported in the Member States under consideration. This suggests that the disparity of national rules on authorship and ownership is not insurmountable”. Although there may be issues with transaction costs, a previous EU commissioned study found no need to harmonise rules on authorship at EU level. This finding was repeated in E. Derclaye, Research Handbook on Future of EU copyright, 526. See also, Luksan v Van Der Let, Case C-277/10, Judgment of the Court (Third Chamber) of 9 February 2012.


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15.2. Online services ancillary to initial broadcasts (e.g. simulcasting, catch-up TV)

Any extension of the country of origin principle to online services, whether ancillary or otherwise, offered by

broadcasters, would severely undermine the ability of rightholders to license these new services directly –

which is crucial to ensure return on investment as well as the ability to source funding for new productions.

Indeed, given the nature of these services, any move to subject impose country of origin is likely cause serious

confusion in the market place. Any parallel moves to subject the relevant rights to mandatory collective

management or Extended Collective Licensing (ECL) structure will also exacerbate the situation and

disincentivise the production of new content.

We note, again, that consumer demand for content varies on a territorial basis, and consumers tend to favour

national services, as borne out by the European Commission's Cross-Border Access to Online Content Report,

published in August 2015 (see above). In most markets, the main platforms are focused on building services

that offer the particular content demanded by the audience in the territory in which they operate. These

platforms do not often seek to offer services on a multi-territorial basis as this would require them to acquire

rights in content that may have a very limited potential audience.

15.3. Any online services provided by broadcasters (e.g. video on demand services).

See above. We note further that extending the country or origin principle to any online services offered by

broadcasters is particularly troubling. Extending it to this aspect of the making available right would interfere

with rightholders' normal exploitation of content, thus constituting an unjustifiable limitation on the right

which does not meet the three-step test.

15.4. Any online content services provided by any service provider, including broadcasters.

This would be particularly worrying and have a seriously disruptive effect on new digital platforms and the

audio-visual sector as a whole, including authors and neighbouring rightholders, as well as potentially

contravene the EU’s and its Member States’ international obligations. As noted in our introduction, we query

who the ultimate beneficiary of such an initiative would be – it is likely that the only players able to afford the

pan-EU licence fees are large multinational platforms, with little interest in preserving cultural diversity across

the EU.

Extending the country of origin principle to the Article 3 making available right in this way would, in effect,

constitute a partial elimination of the Article 3 right and it would deprive rightholders from an essential

element of their exclusive making available right. What was less problematic for satellite broadcasting,

particularly due to its limited impact at the time of introduction of SatCab Directive would override basic

principles of copyright protection when it comes to online transmissions as they already are, and will continue

to be, an increasingly important means of exploitation of copyright content.

16. Would such an extension of the "country of origin" principle result in more cross border accessibility of

online services for consumers?

No. Given that it would disincentivise the financing and production of new content, and especially co-

productions between companies in different EU Member States where financing heavily relies on exclusive

rights (see above), we believe that this approach would ultimately harm consumers by reducing choice and

diminishing cultural diversity. Moreover, we note that the track record of country of origin for satellite was

abysmal, demonstrating that the lack of a country of origin principle is not the reason for any perceived lack of

cross-border activity, but rather, limited demand. Indeed, it appears that the view that legislative action to

facilitate cross-border access will benefit consumers is misguided and runs contrary to the Commission’s legal

obligations to promote cultural diversity (cite).

16.1. If not, what other measures would be necessary to achieve this?

Any demand for cross-border accessibility can, and is, being met, within the existing copyright framework,

which allows for both territorial or multi-territorial licensing, and allows for nationally organized broadcasters


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and EEA-wide suppliers to meet specific demand from expats or visitors for foreign (or foreign-language)

content, as a potentially unlimited number of channels is available online. If an extension of the country of

origin principle were adopted, it is likely that a small number of large international platforms would be the

only ones who could afford the pan-EU licences such a policy would inevitably bring about. There would be

more cross-border access to some content. However, on the flipside, as the funding for audio-visual content

would dry up (as set out above), and local broadcasters are pushed out of the market as they cannot afford to

purchase EEA-wide rights there would likely be less culturally diverse, independent and non-commercial

content produced and, as such, there would be less access to such content, cross-border or otherwise.

As noted above, it is not clear that there is meaningful demand from consumers to access cross-border

content. Even where such demand exists, the country of origin principle is not a necessary means of clearing

rights. There is no obstacle in copyright law currently to negotiating and granting multi-territorial licences for

content; the producer and the platform can engage in commercial negotiations with the rightholder to acquire

the necessary rights for exploitation in one or more than one territories.

17. What would be the impact of extending the "country of origin" principle on the collective management

of rights of authors and neighbouring right holders (including any practical arrangements in place or under

preparation to facilitate multi territorial licensing of online rights)?

The impact for the audiovisual sector is limited. In the audiovisual sector, the collective management of rights

does not play an important role in the licensing of content as the necessary rights are consolidated in the

producer. While the role of collective management in the audiovisual sector is extremely limited, we would

expect that country of origin would reduce further the opportunities for other rightholders to secure

additional payments through CMOs in other Member States.

18. How would the "country of origin" be determined in case of an online transmission? Please explain.

This is exactly one of the problems with this notion. While neither of the 1996 WIPO Treaties nor Directive

2001/29/EC explicitly addresses the localisation of the making available right, it is generally accepted that it

takes place both in the country where the communication originates and the country in which the

communication is accessed or accessible to an Internet user, irrespective of whether s/he avails him- or herself

of that opportunity. This is typically the position reflected in commercial content licenses and one which has

been accepted inter alia by the Courts in the United Kingdom.

The Copyright Directive defines the communication to the public and making available to the public right as “covering all [communication or acts of making available] to the public not present at the place where the communication originates”.

29 Thus, by definition, the value of the right is

realized when the work is accessed or accessible, and accessing requires the rightholder’s authorization.

30 MPA strongly believes this should remain so.

29

Copyright Directive, Articles 3(1) and 3(2) and Recitals 23 and 24. See also Cases C-403/08 etc., Football Association Premier League and Others v Commission (Murphy) [2011] ECR I-9083, paras. 200-202. 30

Consistent with this, national courts have found that the act of making available does not occur when content is merely uploaded to a cloud service, but only when it is accessible in the cloud to a public. See Court of Appeal of Hamburg (Rapidshare), judgment of 14 March 2012, Case 5 U 87/09, paras. 90-91 and 214 (“The district court has correctly found that the disputed works have been made publicly available under § 19a UrhG (at least) at the moment when they were unconditionally made available to third parties via the relevant Rapidshare links contained in collections of download-links. The appellate court agrees with this conclusion. The appellate court does not wish to adhere to its earlier holdings anymore, according to which the upload of a copyright-infringing work to Rapidshare could already be considered making a work publicly available under § 19a UrhG.”); confirmed by German Federal Court of Justice, judgment of 15 August 2013, Case I ZR 80/12. See also District Court of Amsterdam (GeenStijl), judgment of September 12, 2012, ECLI:NL:RBAMS:2012:BX7043, para. 4.11; confirmed by the Court of Appeal of Amsterdam, judgment of November 19, 2013, ECLI:NL:GHAMS:2013:4019, para. 2.4.7 (“If … the files that were put by the user on Filefactory actually would remain private, the mere act of placement cannot be considered the act of making available to the public”), on appeal before the Dutch Supreme Court, judgment of April 3, 2015, ECLI:NL:HR:2015:841, which has referred questions to the ECJ for preliminary ruling.


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Article 3(3) of the Copyright Directive confirms this, where it explicitly stipulates that the communication to the public and making available right are not subject to exhaustion. The legislature thus recognized that intangible subject matter delivered in the form of a service conveys value each time it is accessed and consumed, and that mere uploading or accessing does not exhaust the exclusive rights. In its Simulcasting decision, the Commission held that “the act of communication to the public of a copyright protected work takes place not only in the country of origin (emission state) but also in all states where the signals can be received (reception-states)”

31(emphasis added). In deciding to close its iTunes investigation, the Commission

accepted that the making available right was engaged by the act of downloading by the customer, in the country where his computer is located, and thus Apple was not licensed to distribute music to customers outside its licensed territories.

32

The Court has consistently emphasized that the copyright holder’s exclusive right must be interpreted broadly.

33 This is because the Directive’s principal objective is to establish a high level

of protection for authors and to allow them to obtain an appropriate reward for the use of their works.

34 It follows that the exclusive right of communication and making available to the public

must be engaged whenever, and wherever, the work is accessible – and certainly where it is accessed – to ensure that the rightholder receives effective protection and adequate remuneration. Unless the act of making available is deemed to take place at the point of accessibility, the protection embodied in the exclusive right would be empty, because rightholders could not enforce their right in relation to each act that conveys economic value to the consumer.

In its Terms of Reference for a major 2013 study on the making available right, the Commission stated: “The main right applicable to on-line transmissions – the so-called “making available right” provided under Article 3 of the InfoSoc Directive – remains territorial in the sense that the act of making available is in all likelihood an act relevant in each of the Member States where the content is accessed (plus, probably, the country in which the content is uploaded)”

35 (emphasis

added). In its Green Paper on the Online Distribution of Audiovisual Works, the Commission noted that “where broadcasters distribute their online services beyond the territory of the initial broadcast, they need to clear the rights for each additional territory.”

36

In its Reflection Document on Creative Content in a European Digital Single Market, the Commission explained, that “in addition, while the distribution right is subject to the exhaustion principle, the digital transmission of protected works and other subject matter is not covered by the distribution right. Electronic delivery of works or other subject matter is therefore not akin to the supply or delivery of a good.”

37

Thus, under the current regime, the protected act is the act where the value of the work is realised, thus

offering rightholders a high degree of protection and significant flexibility in modifying the scope of their

licenses to cater to demand.

31

Case COMP/C2/38.014 - IFPI “Simulcasting”, Commission decision of April 30, 2003,OJ. L107, involving the licensing of record companies’ “communication to the public” rights for the simulcasting of music over the Internet. 32

Press release IP/08/22, ‘Antitrust: European Commission welcomes Apple's announcement to equalise prices for music downloads from iTunes in Europe’, January 9, 2008 (“The Commission’s antitrust proceedings further allowed the Commission to clarify that there is no agreement between Apple and the major record companies regarding how the iTunes store is organised in Europe. Rather, the structure of the iTunes store is chosen by Apple to take into account the country-specific aspects of copyright laws.”). 33

Case C-607/11 ITV Broadcasting e.a. v TVCatchup, CJEU 7 March 2013 (TVCatchup), para. 20 and the cases cited therein. 34

Ibid. 35

2013 Copyright Study, p. 23. 36

Green Paper on the online distribution of audiovisual works in the European Union: opportunities and challenges towards a digital single market, June 13, 2011 (COM(2011) 427 final) (the “Green Paper”), p.8. 37

Creative Content in a European Digital Single Market: Challenges for the Future – A Reflection Document of DG INFSO and DG MARKT, October 22, 2009, p. 11.


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Because of the technology underlying online transmissions, any other definition of the protected act risks

being significantly removed from the act, which carries value. Thus, any “country of origin”, however defined,

risks offering inadequate protection to rightholders. Furthermore, and as the De Wolf 1 report concluded, it is

not clear that a definition can be found which satisfactorily addresses the risks of circumvention and location

shopping. We should consider that the methods of uploading and storing content available on the Internet are

already manifold and will continue to multiply as the Internet expands and consumers increasing widely adopt

mobile platforms. Even setting aside these concerns, a definition framed in terms general enough to remain

relevant as technology develops, for instance,, the place where servers on which the works are hosted are

located, is likely to present difficulties in practice e.g. it might not be easy to determine where the relevant

servers are located, and they may be located in any number of countries or moved in the relevant period.

There is also a difficult question of how to deal with content originating from outside the EU.

These concerns are reflected in the De Wolf 1 report. The De Wolf 1 study considered three possible

localisation criteria for the “country of origin”: (i) the location of the servers on which the works are hosted; (ii)

where the uploader has her centre of interests and (iii) where the material act of upload has taken place. It

found that each of these criteria had a number of drawbacks. Under the first and the third criteria, there

would be difficulty establishing the relevant location e.g. of the servers or the act of upload. The second

criterion is vulnerable to location shopping, and would also “confer extensive extra-territorial effects”, such

that “the rights holders in the country of exploitation [here – used to refer to the country where the work is

accessible] could see their economic rights hollowed out by a legitimate service located in the country of

establishment of the service provider/uploader”.38

The De Wolf Report suggested that it might be less difficult

to determine the “centre of interest” of the uploader, but this, too is fraught with practical problems (including

the need for fact finding) and could result in different outcomes for the same activity, especially where the

uploader is a conglomerate, depending on whether there are other related and unrelated activities that affect

he “centre of interest” of the uploader.

19. Would the extension of the "country of origin" principle affect the current level of copyright protection

in the EU?

Yes. As explained in the Preliminary Remarks and in response to Question 18, it would likely place severe

constraints on the making available right (and to some extent the reproduction right), which is the cornerstone

of offering and protecting copyright content in the digital environment. Thus, it would significantly diminish

the level of protection for rightholders, and, where such protection remained, significantly increase the

difficulty of establishing a primary infringement, due to the practical difficulties in applying the concept of the

“country of origin” and the potential for location shopping.

In terms of enforcement, the “country of origin” approach could seriously hamper the ability of rightholders to

take legal action to address structurally infringing websites, which invariably are based in other Member States

or outside of the EU itself. The operators of such sites are usually anonymous and cannot be found. They can

easily move around to avoid detection or circumvent enforcement. As a result, legal action in the form of

proceedings for injunctive relief is generally directed at intermediaries based on Article 8(3) of Directive

2001/29/EC. There are two important conditions which must be fulfilled before a court will have jurisdiction to

make an order under this provision: (1) the subject of the order is an intermediary (this is a very broad notion

which includes access providers39

); and (2) a third party uses the intermediary’s service to infringe. Once a

court has found that these criteria have been met, it will then consider issues related to proportionality,

freedom of expression and other fundamental rights before imposing any measures on the intermediary.

Article 8(3) has developed as an important tool used by rightholders to fight online copyright infringement and

which has been validated by the Court of the Justice.40

As explained, if the making available right is subject to

38

De Wolf 1, p. 137. 39

LSG-Gesellschaft zur Wahrnehmung von Leistungsschutzrechten GmbH v Tele2 Telecommunication GmbH, Case C-557/07, Order of the Court (Eighth Chamber) of 19 February 2009. 40

UPC Telekabel Wien GmbH v. Constantin Film Verleih GmbH and Wega Filmproduktionsgesellschaft GmbH, Case C-314/12, Judgment of the Court (Fourth Chamber) of 27 March 2014.


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the country of origin doctrine, it may be impossible to determine where the content originates (already

allowing the site to escape sanctions on the ground that it is not the origin even though it is used to infringe);

and, if the origin is identified as being in one country, it could be very difficult to show that the website is

infringing copyright in another country where local rightholders require protection, thereby severely limiting

the possibility of securing Article 8(3) relief against Internet intermediaries. The damage would be significant.

While the action against the intermediary could still be based on its subscribers’ infringements, rightholders

could find their options and scope for action seriously limited. The result would be that EU policy requires

rightholders to concentrate on end users' activities and to rely solely on their infringements rather than those

of structurally-infringing sites which are acting in clear violation of copyright and other laws. In effect, these

sites would be put beyond the reach of national courts and authorities.

The introduction of country of origin could thus seriously constrain this ability of rightholders to secure

injunctions against intermediaries which are “best placed” to bring infringing activities to an end. The principal

beneficiaries of such an approach would be structurally-infringing sites which tend to be based outside the EU

and usually operate anonymously. This will not only have a negative impact on rightholders but governments

and consumers. Furthermore, the operators of these sites do not pay taxes, do not respect privacy, and do not

invest in new content. While some might argue that intermediaries would derive some benefit as well, the

protections afforded by EU law (proportionality, liability privileges, etc.) are already sufficient to ensure their

interests are addressed.

Regulation 1215/2012 allows enforcement of civil and commercial judgments handed down by the courts of one Member State in all other Member States, without any special procedure or declaration of enforceability being required (Articles 36 and 39). All that is needed is a copy of the judgment and a certificate in the form of Annex 1 (Article 37). However, this is typically of no assistance in the case of Article 8(3) injunctions. The named intermediary respondents are likely only to have a presence in one Member State. Even where rightholders were successful in securing an injunction against intermediary(ies) in one Member State, the injunction would not be enforceable against unnamed intermediaries in other Member States. In other words, the judgment would apparently not be enforceable against new defendant intermediaries regardless of the fact that the same infringing site is involved. Thus, under a regime of country of origin online, even if it were possible to secure an injunction against intermediaries in one Member State because a court there had determined the making available to the public occurred there (and as noted above the sites are usually not in the same country) and therefore the intermediary’s service was being used to infringe within the jurisdiction, this judgment would not be enforceable against intermediaries in other Member States. Moreover, action in other Member States would not be possible because no making available has occurred there.

19.1. If so, would the level of EU copyright harmonisation need to be increased and if so in which areas?

The best strategy would be to retain a strong making available right based on the principles set forth in the

Copyright Directive (and the WIPO Treaties) as clarified by the Court of Justice of the EU in several leading

cases.41

We refer again to the findings in the De Wolf Studies, which noted that subjecting the making available

right to country of origin might require harmonisation of the concepts of authorship and ownership of

copyright works.

2. The extension of the system of management of cable retransmission rights

As a preliminary matter, we provide some general remarks the extension of the EU regime for cable retransmission to other forms of retransmission. Often proponents of such extensions seek justify them on the

41

See, by way of illustration, Case C-279/13 C More Entertainment AB v Linus Sandberg, judgment of March 26, 2015; Case C-607/11, ITV Broadcasting Ltd and Others v TV Catch Up Ltd, judgment of, 7 March 2013; and Case C-306/05, Sociedad General de Autores y Editores de España (SGAE) v Rafael Hoteles SA, judgment of 7 December 2006


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basis of the doctrine of technological neutrality.

Under international and EU copyright law, exceptions to and limitations on the exercise of exclusive rights must comply with the three-step test

42, i.e., they are (i) confined to certain special cases; (ii) which do not

conflict with the normal exploitation of copyright works; and (iii) do not unreasonably prejudice the legitimate interests of the rightholders. The reading of exceptions and limitations in a technologically neutral manner has the potential to broaden their scope considerably. By its very nature such an approach raises issues with the first step which confines the realm of exceptions and limitations to ‘certain special cases.’ We take the view that “technologically neutral” exceptions and limitations are unlikely to pass the three-step test. Even where such an approach does manage to pass the first step, it would not be able to reckon with the rest of test which proscribes exceptions and limitations which enter into economic competition with the ways that rightholders normally derive value from their content. This failure is equally, in our view, applicable to services offered to subscribers by cable and similar platforms, such as catch-up and nPVR services.

With regard to the realm of retransmission, a generalised regime of mandatory collective licensing based on technological neutrality that extends beyond traditional cable would not pass this important test which is designed to ensure an appropriate balance between exclusive rights and limitations to those rights.

The following questions posit the extension of the regime in the SatCab Directive for cable retransmission (mandatory collective exercise of rights) into new areas, such as the online delivery of AV content which is currently based on direct licensing and contractual freedom.

In the AV sector, mandatory, and indeed even voluntary, collective exercise of rights is the exception rather than the rule. Indeed, the principal example is cable retransmission where producers can choose to either license these rights directly to the initial broadcaster or exercise them through a collective management organisation.

Mandatory collective licensing is a “one size fits all” system, which takes a “lowest common denominator” approach to all works, licensing use of works at the same rate, regardless of intrinsic value. By removing the possibility of recognising the true value of a work, a mandatory approach limits the ability of rightholders to secure the revenues necessary to finance, provide and distribute new works. As a result, in the long term it is not in the interest of consumers, rightholders or content providers.

It does need to be recognised that many independent producers may wish to submit their audiovisual works to collective licensing for certain forms of secondary use including retransmission. They can do that if they wish. We take the view that collective management of rights should be voluntary – it is not meant to foreclose on the opportunity of rightholders to take collective licensing approaches in full compliance with applicable laws.

43 Digital technologies provide a means for more flexible approaches to licensing, offering greater

freedom for rightholders.

In December 2013, in parallel with its Public Consultation on the Review of the EU Copyright Rules, the European Commission released on the Study on the Application of Directive 2001/29/EC on Copyright and Related Rights in the Information Society (De Wolf 1 – see above). This Study contains a chapter dedicated to the issue of cable retransmission entitled “The re-transmission of copyright-protected content in digital networks -- The right of retransmission by cable” which is a useful document meant to respond to the Commission’s terms of reference and based on frequent consultation with the Commission.

In essence, the question is whether ‘“retransmission by cable” should be understood in a technology-specific or technology-neutral way.”’ According to the Commission’s terms of reference for the Study:

42

As noted above, see Berne Convention Article 9 as well as TRIPs Article 13 and WCT Article 10; and, Copyright Directive Article 5(5) - respectively. 43

The concept of rightholder choice was recently reaffirmed at the EU level in Directive 2014/26/EU of 26 February 2014 on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market. See Recitals 2 and 19.


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“The question arises as to whether the technology-specific provisions of Chapter III of the Satellite and Cable Directive need to be reviewed to develop a framework for retransmission of content that is technology neutral with regard to the delivery platform. In that context, stakeholders have pointed to differences and confusion in terms of the categorisation of rights and applicable rights clearance mechanisms, and a need for more clarity and legal certainty. A relevant question is the extent to which one can assimilate the act of retransmission by digital networks with the traditional act of retransmission by cable e.g. in terms of business model and breadth of access (the compulsory collective management of cable retransmissions rights established in the SatCab Directive is limited to retransmission of a broadcast – coming from another Member State - within the territory of a Member State; this is not likely to be the case in an Internet-based retransmission scenario).” [our emphasis]

The Study notes that, before considering cable retransmission as defined in the SatCab Directive, one should consider the “the relation between the cable retransmission right and the right of communication the public” particularly given CJEU case law

44 in this area. Under the TVCatchup and earlier decisions, the CJEU tends to

analyse these issues on the basis of the Copyright Directive rather than the SatCab Directive. Of course, cable retransmission is actually a form of communication to the public.

The SatCab Directive also does not per se establish an obligation for the Member States to provide a right of cable retransmission – in fact, it establishes copyright protection for cable retransmissions of initial broadcasts from another Member State (though many Member States extend the same regime for domestic channels). This is logical, since the EU has no authority to harmonize purely intra-Member State activities. Introducing a dualist legal and collection regime for online distribution (assimilated with cable retransmission when the signal crosses borders via wires, which may be difficult to determine, and subject to the national regime when it doesn't cross borders or is wireless) is inefficient and bound to cause confusion.

As the Directive applies only to retransmissions, initial communications to the public, including in particular making available (e.g., on-demand platforms such as download and streaming services) are not subject to the mandatory collective exercise of rights regime. The SatCab Directive stipulates that retransmission of the initial transmission must be simultaneous, unaltered and unabridged. As a result, for example, services deployed over the open internet that are based on ad-swapping or the inclusion of new ads including in banner form around the broadcast channels are not eligible for the cable privilege. They are certainly not technically neutral and should be subject to individual authorisation. Even if an initial transmission remains “simultaneous, unaltered and unabridged”, there are issues that are specific to the nature of Internet distribution which make it wholly inappropriate to translate a cable specific regime to that method of distribution. Equally the case law to date (e.g. see question 21 below) cannot simply be transposed to this different technology and therefore any change to a “technology-neutral” framework would also have to necessitate a complex re-evaluation of the retransmission concept and framework.

Such an evaluation should also re-examine the question of whether a mandatory approach to collective management remains necessary and viable for retransmission licensing of any kind. The market for alternative retransmission services such as satellite has not been obstructed by the absence of mandatory collective licensing; quite the contrary.

A generalised technological neutrality approach which resulted in an extension of the current cable regime to a broad range of new services would fall afoul of the first criterion of the three-step test. This first condition of the test provides that an exception to or limitation of an exclusive right is only permissible in certain special cases. This means that:

"the scope of application of an exception or limitation must be duly limited; it must not result in a general open-ended exemption from the obligation to protect the right concerned. The adjective “certain” is interpreted in different ways; it seems, however, that the most appropriate interpretation is to consider it

44

SGAE v. Rafael Hoteles (Spanish Hotels) Case c-306/05, Judgment of the Court of 7 December 2006; Organismos Sillogikis v Divani Akropolis Anonimi Xenodocheiaki kai Touristiki Etaireai (Greek Hotels), Case c--136/09, Order of the Court of 18 March 2010; ITV and Others v TV Catch Up (TVCatchup), Case c-607/11, Judgment of the Court of 7 March 2013.


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as a synonym of “some” without any separate substantial meaning (such as that the conditions under which an exception of limitation may be applied would have to be fixed in a very detailed manner). The really substantial criterion determining the special nature of the test is that there should be a sound legal-political justification for the application of an exception or limitation. Thus, the criterion of “special case” is both of a quantitative and of a qualitative-normative nature."

45

A generalised regime of mandatory collective licensing based on technological neutrality that extends beyond the "special case" of cable would create an open-ended and broadly-defined exemption. In practice, it would operate as an unjustifiable limitation of the exercise of the exclusive right of communication to the public by means of retransmission over the internet or other technologies.

Even if it were to advance to the second step, it should be noted that mandatory collective licensing of the use of protected content in this space would conflict with the normal exploitation of the work. By imposing a limitation on the ability of content producers to license new platforms directly in the manner they deem most conducive to recouping their investment and effective exploitation of their works, a broad expansion of the cable regime would enter into direct economic competition with the ways that these rightholders could extract economic value from their exclusive communication to the public rights and thereby deprive them of significant commercial gains.

46 There are many examples, which illustrate this point. Rightholders are licensing

their content to a range of services by means of direct negotiations that permit the parties to fully appreciate the value and nature of the content. Where other platforms can circumvent arms-length negotiations for the necessary rights by obtaining "blanket" licenses from CMOs, their offers will unfairly compete with and undercut the directly licensed platforms.

It is questionable that blanket licence fees, which are de minimus payments at the same tariff regardless of the quality and duration of the licensed works, could ever rise to the level of satisfying the requirement in the third step by curing the resulting unreasonable prejudice of the legitimate interests of the rightholder.

The issue of whether internet retransmission should be assimilated to cable is currently before the CJEU in Case C-275/15 TVCatchup 2, a reference from the United Kingdom (Court of Appeal).

20. According to your knowledge or experience, how are the rights of authors and neighbouring right

holders relevant for the simultaneous retransmissions of TV and radio programmes by players other than

cable operators currently licensed (e.g. simulcasting or satellite retransmissions)?

In practice, in the audio-visual sector, the relevant rights are consolidated in the producer who is responsible

for licensing such platforms. Moreover, the MPA member companies pay residuals (royalties) for all forms of

communication to the public wherever they occur around the world. In our view, the best way of ensuring

sufficient protection for authors and neighbouring rightholders is to protect their exclusive rights, which can

then be licensed/ assigned on the basis on commercial negotiations with producers. A voluntary collective

licensing approach could address remuneration for those authors and performers and other right holders who

are not remunerated by producers.

20.1. Are there any particular problems when licensing or clearing rights for such services?

No.

21. How are the rights of authors and neighbouring right holders relevant for the transmission of

broadcasters’ services via direct injection in cable network currently licensed?

45

See Ficsor, Dr. Mihály J., Short Paper on the Three-Step Test for the Application of Exceptions and Limitations in the Field of Copyright, 19 November 2012. 46

WTO Panel Report of 15 June 2000, United States - Section 110 (5) of US Copyright Act, WT/DS160/R specifies (§ 6.181) that "exceptions or limitations would be presumed not to conflict with a normal exploitation of works if they are confined to a scope or degree that does not enter into economic competition with non-exempted uses".


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The matter of direct injection, understood to mean the situation where the broadcaster connects directly to

the network of the cable operator without the programme first being broadcast (via air, ether or satellite) and

then retransmitted via cable, is currently before the CJEU in Case C-325/14, SBS Belgium. The question before

the CJEU is whether the act of communication to the public is undertaken by the broadcaster, the cable

operator or both. We are of the view that rightholders should retain the possibility to license both

broadcasters and third party platforms such as cable for the act of communication to the public. There should

be no presumption that a license to a channel that might be “directly injected” to a platform has included the

right to communication to the public by a third party platform. This is something that would in practice need

to be specifically so stated and is a matter for the individual parties to address.


The answer to this question will depend greatly on the CJEU decision in SBS Belgium.

22. How are the rights of authors and neighbouring right holders relevant for non-interactive broadcasters’

services over the internet (simulcasting/ linear webcasting) currently licensed?

See above introduction to Section 2 and answer to 20.


Please refer to above remarks generally and the above answer for 20. Our member companies and the

audiovisual sector are licensing and clearing rights for an ever expanding number of new services. The current

system based on contractual freedom and exclusive rights works very effectively as illustrated by the more

than 3000 services offered to consumers across Europe.

23. How are the rights of authors and neighbouring right holders relevant for interactive broadcasters’

services currently licensed (e.g. catch-up TV, video on demand services)?




24. What would be the impact of extending the copyright clearance system applicable for cable

retransmission (mandatory collective licensing regime) to:

24.1. The simultaneous retransmission [3] of TV and radio programmes on platforms other than cable (e.g.

satellite, IPTV, internet)?[3] Understood as the simultaneous transmission of the broadcast by a different

entity than the broadcaster (see footnote 2).


24.2. The simultaneous transmission [4] of TV and radio programmes on platforms other than cable (e.g.

satellite, IPTV, internet)?[4] Understood as the simultaneous transmission of the broadcast by the

broadcaster itself.


25. In case of such an extension, should the different treatment of rights held by broadcasting organisations

(Article 10 of the Directive) be maintained?

Yes. As noted above, Article 10 is important part of the cable retransmission mechanism, which provides

important flexibility for producers. One might need to consider some safeguards to prevent giving platforms

undue bargaining power.


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26. Would such an extension result in greater cross border accessibility of online services? Please explain.

No (see above).

27. Given the difference in the geographical reach of distribution of programmes over the internet (i.e. not

limited by geographical boundaries) in comparison to cable (limited nationally), should any extension be

limited to "closed environments" (e.g. IPTV) or also cover open simultaneous retransmissions and/or

transmissions (simulcasting) over the internet?

Yes it should be so limited. See above comments.

28. Would extending the mandatory collective licensing regime raise questions on the EU compliance with

international copyright obligations (1996 WIPO copyright treaties and TRIPS)?

Yes see above – it would in effect deprive rightholders of their exclusive making available right and reduce it to

a mere remuneration right. Under Article 8 of the WCT and international legal doctrine, the making available

cannot be subject to mandatory collective licensing or compulsory licensing regimes. Moreover, extension of

this regime would constitute an impermissible limitation on the right, contrary to the three-step test, which

must only be applied "in certain special cases which do not conflict with a normal exploitation of the work or

other subject-matter and do not unreasonably prejudice the legitimate interests of the rightholder." None of

these three criteria are satisfied in the case of extending the mandatory collective licensing regime to the

making available right. While mandatory collective licensing applies to cable retransmission, extending it

beyond that area would certainly no longer constitute a special case. Given that rightholders ordinarily extract

value from their works by licensing it directly (authors and performs to producers and producers to platforms),

subjecting their making available right to mandatory collective licensing would clearly interfere with the

normal exploitation of the work. While a right of remuneration goes a small way toward curing the ill of

depriving rightholders of their exclusive right, it clearly is not sufficient in this case – given that this is the right,

upon which the offering of digital content rests - not to unreasonably prejudice their legitimate interests.

29. What would be the impact of introducing a system of extended collective licencing for the simultaneous

retransmission and/or the simultaneous transmission of TV and radio programmes on platforms other than

cable, instead of the mandatory collective licensing regime?

While in practice ECL with a possibility to opt-out is arguably a lighter touch, the MPA has serious reservations

about the functioning of ECLs in practice. One of the key components of the day to day functioning of

national ECLs is the possibility for rightholders to opt-out of such schemes. Effective opt-out rights are crucial

for ECLs to operate in compliance with EU and international copyright norms otherwise they are de facto

compulsory licenses or a form of mandatory CRM. Right holders who choose to opt out are put into place are

sometime faced with platforms who can all too easily ignore opt outs, even when CMOs refrain from a license

on account of opt out, putting right holders in the disadvantaged position of being forced to resort to courts

for protection. In addition, while ECLs can offer flexibility, they come at a cost; a commercial dynamic that

causes confusion and chills arms-length contractual negotiations in the marketplace, effectively introducing a

benchmark value based on a “one size fits all” valuation.

30. Would such a system of extended collective licencing result in greater cross border accessibility of online

services?

See above.

3. The extension of the mediation system and the obligation to negotiate

31. Could the current mechanisms of negotiation and mediation in Articles 11 and 12 of the Directive be

used to facilitate the cross border availability of online services when no agreement is concluded regarding

the authorisation of the rights required for an online transmission?


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We have very limited experience with a negotiation/mediation based Articles 11 and 12. As a mechanism for

rights clearance, however, it would be a poor alternative to a commercial negotiation which takes account of

market factors.

32. Are there any other measures which could facilitate contractual solutions and ensure that all parties

concerned conduct negotiations in good faith and do not obstruct negotiations without justification?

No response.

IV. Other issues

33. These questions aim to provide a comprehensive consultation on the main themes relating to the

functioning and possible extension of the Directive. Please indicate if there are other issues that should be

considered. Also, please share any quantitative data reports or studies to support your views.

Please refer above to our Executive Summary and Conclusion and the Preliminary Remarks (pages 6 to 14).

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