On 22 April 2009, the First Civil Senate of the Federal Court of Justice (BGH), which is responsible, inter alia, for copyright law, ruled that the collecting society GEMA (Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte - 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 rights of use to anyone on request on reasonable terms on the basis of the rights administered by it.
In the case decided by the Federal Court of Justice, the plaintiff had applied to GEMA, which administers the rights of composers, lyricists and music publishers to musical works, to grant it the rights of use to twelve pieces of music recorded in 1993 in the USA by the plaintiff with the singer Xavier Naidoo. Xavier Naidoo was involved in the legal dispute as an intervener on GEMA's side. The plaintiff intended to produce and distribute a CD with these pieces of music. To do so, it needed not only the rights that arose in the person of Xavier Naidoo in his capacity as composer and lyricist of these music titles and that are administered by GEMA, but also the copyright neighbouring rights to which Xavier Naidoo is entitled as the singer of these music recordings. These neighbouring rights are not administered by GEMA. The plaintiff was of the opinion that it had already acquired the corresponding neighbouring rights through an exclusive artist agreement concluded with Xavier Naidoo in 1993. Xavier Naidoo and GEMA, on the other hand, argued that this contract was null and void because Xavier Naidoo had taken unfair advantage of them. GEMA therefore refused to grant the plaintiff the requested rights of use.
The Regional Court Munich I ordered GEMA to grant the plaintiff a licence for the production of the intended sound carrier against payment of a royalty in the amount of € 6,420. The Court of Appeal dismissed the action on the grounds that the obligation to conclude an agreement under Art. 11 (1) UrhWG may be waived in individual cases due to conflicting interests of the collecting society or the author. Such an exceptional case existed here because Xavier Naidoo refused to transfer to the plaintiff the neighbouring rights required for the production of the phonogram and the plaintiff had not already acquired these rights through the contract of 1993, which was void because it was immoral. The Federal Court of Justice dismissed the plaintiff's appeal.
The obligation to conclude contracts under Section 11 UrhWG was a necessary consequence of the fact that the respective collecting society - in Germany there is usually only one collecting society for one or more types of IP rights - obtains the actual monopoly for all rights belonging to its field of activity. The purpose of Section 11 UrhWG, which is to prevent abuse of the collecting society's actual monopoly position, means that, exceptionally, there is no obligation to conclude an agreement if the monopoly position cannot be abused from the outset and the collecting society can oppose the demand for the granting of exploitation rights with overriding legitimate interests. This condition was met in this case because the plaintiff was prevented from the intended production of the phonogram for legal reasons due to Xavier Naidoo's refusal to transfer to it the neighbouring rights required in this respect and the nullity of the 1993 contract assumed by the court of appeal without any error of law. Under these circumstances, it was not reasonable for GEMA, taking into account its fiduciary position resulting from the administration agreement with Xavier Naidoo, to transfer to the plaintiff rights of use that it could not lawfully use.
Judgment of the Federal Supreme Court of 22 April 2009 - I ZR 5/07 - Seeing is Believing
Lower courts:
LG Munich I - Judgment of 13 April 2006 - 7 O 20693/03
Munich Higher Regional Court - Judgment of 16 November 2006 - 29 U 3271/06
GRUR-RR 2007, 186
Source: Press release of the Federal Supreme Court No. 88/2009 of 23 April 2009.
Goldberg Attorneys at Law
Attorney at Law Michael Ullrich, LL.M. (Information Law)
Specialist lawyer for information technology law (IT law)
E-mail: info@goldberg.de
