The rollout of Pan-European collection societies has run into a bit of a problem in Germany. In a case brought by the German video website MyVideo, the District Court of Munich has ruled that the pan-European collection society CELAS cannot prohibit the reproduction of the EMI MP Anglo-American repertoire it manages for the music publisher. This means that CELAS, and other pan-European collection societies are invalid in Germany due to the fact that the withdrawal of the digital mechanical rights from collecting societies contravenes German copyright law. Not just that, but instead of requesting licenses from each of the pan-European societies, services can obtain the necessary licenses to use content in Germany from the local collection society GEMA. The case, which didn’t receive much in the way of publicity, was concluded in June. CELAS is expected to appeal the ruling.

The case, which was concluded in June in the District Court of Munich, involved the local online video service MyVideo, which operates in the same way to the massively popular Google-owned service YouTube in that it allows registered users to upload videos for streaming. At the end of 2008 MyVideo agreed a licensing deal with GEMA for the period between April 2006 and end-March 2009 for use of GEMA-managed repertoire. The deal excluded content managed by CELAS. Previously, MyVideo had been negotiating with CELAS to license EMI MP repertoire but the parties did not reach agreement.

As CELAS-managed repertoire had been used by MyVideo, legal proceedings were instigated. Fearing an injunction, MyVideo filed a declaratory judgment action in the District Court of Munich (Landgericht München) against CELAS, seeking a declaration that CELAS had no injunction claim against MyVideo concerning reproduction of copyrighted works for online-uses. In response, CELAS filed a cross-action against MyVideo for injunctive relief regarding the making available on MyVideo’s website of 14 individual songs.

As part of its defense, MyVideo stated that the control of mechanical rights in Germany rested with GEMA and that CELAS could not act as a collection society according to the German copyright legislation. This claim stemmed from the rejection by the German supervising authority the Patent and Trademark Office (DPMA) of CELAS’s application to act as a collection society in Germany under the German law for copyright management (UrhWG). CELAS was permitted by the DPMA to operate in Germany as during its application it stated that it only managed the Anglo-American artist mechanical rights for EMI MP. MyVideo stated that CELAS’s claim to be managing just the digital mechanical rights was unlawful in Germany. This is because the process of making available audiovisual content online required not just mechanical reproduction rights, but also the right to make available. Under German copyright law the splitting of the two rights is not permitted.

CELAS asked the court to dismiss the declaratory judgment action and at the same time filed action for injunctive relief. CELAS based its case on the fact that it has previously agreed an exclusive deal with EMI MP to administer the pan-European licensing of certain repertoire as well as the management of its rights. In addition CELAS claimed that it was not a collection society according to the DPMA. CELAS further claimed that according to common law, copyright publishers in common law countries obtained not just derivative rights from the authors and composers but their full copyrights. As such, the making available of 14 songs by MyVideo infringed its mechanical reproduction rights.

In reaching its decision to grant a declaratory judgment to MyVideo, while at the same time denying CELAS its cross-motion for injunctive relief, the court said that even though CELAS managed the pan-European licensing of EMI MP’s Anglo-American repertoire, German copyright legislation applied in this case because its focus was on the question of infringements of copyrights in Germany.

According to the court “the splitting of rights for online-uses, as claimed by Defendant [CELAS], in respect to Anglo-American artists contracting with EMI into mechanical reproduction rights and rights of making available is inadmissible because mechanical reproduction rights (Section 16 of the UrhG) for online uses without the right of making available (Section 19a of the UrhG) does not exist as individual kind of use. This is why EMI Music Publishing Europe Ltd. could not transfer to Defendant the rights which Defendant now claims. This is why Defendant cannot claim injunctive relief against Plaintiff [MyVideo].”

The court stated that a specific kind of use could be licensed according to Section 31 (1) of the UrhG only if the kind of use qualified as sufficiently clearly separable, economically and technically autonomous and unitary use according to prevailing public understanding. Citing German jurisprudence, the court held that reproductions were inherent to the making available of copyrighted works online. If the splitting was admissible and rights would reside with different right holders, users would face substantial legal uncertainty and the risk of double claims regarding a uniform technical process.

Although the court acknowledged that there was a good argument for CELAS to become recognized as a collection society in Germany, the denial of its status as plaintiff meant that this did not need to be decided during these proceedings. The court also did not need to clarify issues such as sufficient proof of chain of rights as well as aspects of antitrust law.

As the case dealt with just the alleged copyright infringement by MyVideo, all other licenses issued by CELAS for use of EMI MP Anglo-American content are, for now, unaffected. Moreover, CELAS’s position with regards to MyVideo remains unchanged in that it believes the video service is operating without the necessary license to use any content forming part of its exclusive licensing deal with EMI MP. CELAS suggests that the decision by the District Court of Munich is restrictive for rights holders, particularly as the management of mechanical rights on behalf of a publisher or group of publishers is an internationally recognized practice. Because of this, the court’s decision is almost certainly to be appealed.

Although the outcome of any appeal will clarify the necessary licensing requirements for MyVideo as well as other German services, it will also impact on all of the publisher models that have operated on the basis of withdrawing their mechanical online rights from the relevant collection societies.

Music & Copyright is a fortnightly research service published by Informa Telecoms & Media.