On April 22, 2009, the First Civil Senate of the Federal Court of Justice (BGH), which is responsible, among other things, for copyright law, ruled that the collecting society GEMA (Society for Musical Performing and Mechanical Reproduction Rights) is exempt in exceptional cases from its obligation under Section 11 (1) of the Copyright Administration Act (UrhWG) to grant usage rights to anyone upon request under reasonable conditions, based on the rights it administers.
In the case decided by the Federal Court of Justice, the plaintiff had requested GEMA, which administers the rights of composers, lyricists, and music publishers to musical works, to grant her the usage rights to twelve musical pieces recorded in the USA in 1993 by the plaintiff with singer Xavier Naidoo. Xavier Naidoo participated in the legal dispute as an intervener on GEMA's behalf. The plaintiff intended to produce and distribute a CD containing these musical pieces. To do so, she required not only the rights vested in Xavier Naidoo as the composer and lyricist of these musical titles, which are administered by GEMA, but also the related rights (Leistungsschutzrechte) held by Xavier Naidoo as the singer of these musical recordings. These related rights are not administered by GEMA. The plaintiff contended that she had already acquired the relevant related rights through an exclusive artist contract signed with Xavier Naidoo in 1993. Xavier Naidoo and GEMA, however, asserted that this contract was void due to an immoral exploitation of Xavier Naidoo. Consequently, GEMA refused to grant the plaintiff the requested usage rights.
The Regional Court of Munich I ordered GEMA to grant the plaintiff a license for the production of the intended sound recording upon payment of a license fee amounting to €6,420. The appellate court, however, dismissed the claim, reasoning that the obligation to contract under Section 11 (1) UrhWG could be suspended in individual cases due to conflicting interests of the collecting society or the author. Such an exceptional circumstance was present here because Xavier Naidoo refused to transfer the related rights required for the production of the sound recording to the plaintiff, and the plaintiff had not acquired these rights through the 1993 contract, which was deemed void due to immorality. The Federal Court of Justice subsequently rejected the plaintiff's appeal.
The obligation to contract under Section 11 UrhWG is a necessary consequence of the fact that each collecting society – in Germany, there is typically only one collecting society for one or more types of protected rights – obtains a de facto monopoly over all rights within its operational scope. The purpose of Section 11 UrhWG is to prevent the abuse of a collecting society's de facto monopoly. It follows that, exceptionally, there is no obligation to contract if an abusive exploitation of the monopoly position is precluded from the outset, and the collecting society can assert overriding legitimate interests against a request for the granting of usage rights. This condition was met in the present case because the plaintiff was legally precluded from the intended production of the sound recording due to Xavier Naidoo's refusal to transfer the requisite related rights to her, and the appellate court's legally correct determination that the 1993 contract was void. Under these circumstances, and considering its fiduciary duty stemming from the administration contract with Xavier Naidoo, it was not reasonable for GEMA to transfer usage rights to the plaintiff that she would be unable to lawfully exploit.
Judgment of the BGH dated April 22, 2009 – I ZR 5/07 – Seeing is Believing
Lower Courts:
Regional Court of Munich I – Judgment dated April 13, 2006 – 7 O 20693/03
Higher Regional Court of Munich – Judgment dated november 16, 2006 – 29 U 3271/06
GRUR-RR 2007, 186
Source: Press release of the BGH No. 88/2009 dated April 23, 2009
Goldberg Rechtsanwälte
Attorney Michael Ullrich, LL.M. (Information Law)
Specialist Lawyer for Information Technology Law (IT Law)
Email: info@goldberg.de
