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German Media Newsletter, January 2017

January 2017

Reform of German Copyright Act Passed 

On December 16, the new German Copyright Act (in German only) was adopted by the German parliament. The reform aims to strengthen authors' and performers' rights to an adequate remuneration, and facilitate the enforcement of such rights.
In particular, the existing so-called “bestseller provision” is being extended. Pursuant to this provision, authors and performers of copyright protected works may claim additional compensation from exploiters of the work if there is an "evident disproportion" between the initially contractually agreed remuneration and the subsequent commercial success and revenues generated from the work by the exploiter. Under the updated rule, any author or performer is entitled to be informed annually about the scope of, and revenues derived from, the exploitation of their work, both vis-à-vis their contracting partner/licensee and any third party distributor who is materially involved in the exploitation. Also, in the event of a buy-out (without any profit participation), the author (but not performers) will generally be allowed to re-license the work ten years after the initial grant of rights or delivery of the work. Thus, the licensee will be left only with non-exclusive rights to the work for the remaining term of the distribution rights (even if an exclusive license was originally granted in perpetuity). However, there are some exceptions to this latter provision with regard to material used in audio-visual works.
The new German Copyright Act will be applicable from March 2017.

Update: German Film Subsidy Act: Netflix Files Action for Annulment of German Film Levy Rule with the ECJ 

On November 22, VOD provider Netflix filed an action for annulment against the European Commission before the European Court of Justice (ECJ), seeking to overturn a provision in the German Film Subsidy Act (Filmförderungsgesetz, FFG). The Commission had approved the respective provision, which also imposes the German film levy on VOD providers that are located outside of Germany (see our September 2016 Newsletter for details). Netflix is now challenging this decision by the Commission, claiming that European media law forbids the measure. 

German Federal Supreme Court Rebukes Third-Party Liability for Password Protected Wireless Networks

On November 24, the German Federal Supreme Court (Bundesgerichtshof, BGH) held (in German only) that the owner of a wireless network that is password protected by market standards is not liable for copyright violations committed by unauthorized third party users.
The underlying case was brought before the Hamburg District Court (Amtsgericht) by the owner of the exploitation rights to the film "The Expendables 2". The film was made publicly available and offered for download via the defendant’s internet access by an unknown third party, who had obtained unauthorized access to the defendant’s wireless network. The BGH denied the defendant's third party liability (Störerhaftung) for these acts since he had not violated any duty of care. Owners of internet access equipped with a wireless network are obliged to verify whether the router complies with market standard security measures for private consumers at the time of installation. The defendant’s router was secured by a pre-set, individual 16-digit WPA2 password, which was recognized as a current and sufficiently secure encryption standard at the time of purchase. The court also thought it irrelevant that the defendant had left the pre-set password unchanged since purchasing the router. Therefore, the court ruled that the defendant was not liable for copyright violations committed by third parties via his wireless network.​  

ECJ Facilitates the Lending of E-Books by way of the "One-Copy-One-User" Model   

On November 10, the European Court of Justice (ECJ) held that the lending of e-books may, under certain conditions, be treated in the same way as the lending of traditional books.
The underlying case was brought before a District Court in the Netherlands by the association of Dutch public libraries against a Dutch collecting society, which collects public lending right payments due to authors from libraries. The plaintiff sought confirmation that the regime for traditional books applies equally to digital lending if the "one copy, one user" model is implemented, i.e. if an e-book is lent by placing that copy on the server of a public library, allowing the user to download only this one copy during the lending period, and preventing them from using the downloaded copy after the lending period has expired.
In its judgment, the ECJ found that the lending of digital copies is not generally excluded from the scope of the "Directive on rental right and lending right and on certain rights related to copyright in the field of intellectual property" (Directive 2006/115/EC). The Directive provides that the author shall have the exclusive right to authorize or prohibit rentals and loans of their books. However, member states may derogate from that exclusive right in respect of public lending, provided that authors obtain fair remuneration. The Court further found that the lending of e-books under the "one-copy, one user" model is essentially similar to the lending of printed books, and that it therefore is within the scope of the Directive and its public lending exception. The Court stressed, however, that the public lending exception does not apply to a public library making available a digital copy of a book that was obtained from an unlawful source.