Honey to the Bee

Money

Honey

In the famous song "Money Honey", written and composed by Jesse Stone, Elvis Presley laments different kinds of money troubles, from demanding landlords to stingy girlfriends and heartless gold diggers, culminating in the demand "I want money, honey!" Elvis Presley Enterprises, LLC, which holds the economic rights in Elvis's estate, shares that sentiment and has been trying to get at the honeypots of Elvis Presley's German record company, Arista Music.

On 23 November, Landgericht München I (Regional Court of Munich I - yes, for whatever reason Munich has two of those, but copyright enthusiasts need not bother with the second one) handed down its judgment in the case. The claim was struck out, but apparently for different reasons than the ones I suspected in my previous post on the matter (see here). According to the suitably entertaining press release (as always, the written judgment will be some time coming), entitled "I want Money, Honey!" and available here, the claimant mainly relied on two arguments:

Additional Remuneration due to Extended Term of Protection

First, the German term of protection for sound recordings (protected under a neighbouring right, not copyright) was extended in 1990 from 25 to 50 years after first publication. Accordingly, the term during which money could be made (and presumably used to buy, among other things, honey...) suddenly doubled. The claimant argued that nobody had seen this development coming in 1973 and that in hindsight the remuneration Elvis received was therefore much too low. The claimant also pointed out that the new provisions explicitly introduced a right to additional remuneration because of the extension of the term of protection.

This claim refers to § 137f (4) UrhG, a transitional provision I admittedly overlooked in my previous post. The provision reads:

"If prior to 1 July 1995 an exploitation right concerning the subject matter of a neighbouring right that continues to be protected under this Act has been granted or assigned to another, in the event of doubt such grant or assignment shall be deemed to cover the period by which the term of protection has been extended. ²The application of sentence 1 shall be subject to payment of equitable remuneration.

It seems like rather a good idea to invoke § 137f (4) UrhG, but the court disagreed. It held that the 1973 buy-out contract between Elvis and the record company was valid. The wording of the contract explicitly covered any claims for additional payments arising out of any extensions of the duration of protection. The claim for additional remuneration that was introduced at the same time as the term extension did not lead to a different result. According to the court, the claim for additional remuneration is not mandatory and unwaivable. Contractual agreements that derogate from the provision are possible, and the contract between Elvis and his record company was such a contract.

Fairness Compensation

Secondly, the claimant argued that since 2002 there has been a legal obligation to pay additional "fairness compensation" if the consideration the artist received is strikingly disproportionate to the profits made from exploiting the work or performance, and that the requirements were met in the case at hand. That claim was based on §§ 32a, 79 (2) UrhG (also see previous posts here and here).

According to the view of the court, however, the provision governing the effects of term extension (§ 137f (4) UrhG) is lex specialis to the general duty of those who exploit the work to remunerate the artist adequately (§§ 32a, 79 (2) UrhG). In other words, §§ 32a, 79 (2) UrhG are not applicable.

Comment

The court's solution as apparent from the press release is certainly elegant, but I think there is a chance the OLG (court of appeal) or the BGH (Federal Supreme Court) might see things differently. I am not entirely sure that the right to equitable remuneration pursuant to § 137f (4) UrhG really could be waived in advance. In my opinion, there are good arguments for both sides, though, so I wouldn't bet any money (or honey) on claimant's chances.

However, I have difficulty seeing § 137f (4) UrhG as lex specialis to §§ 32a, 79 (2) UrhG. In any event, the claim should in my view still fail for he reasons given in my previous post. I would also be interested in some judicial insight as to whether the claimant actually had legal standing in the § 137f (4) UrhG claim - i.e. whether like the § 32a UrhG right the right to equitable remuneration pursuant to § 137f (4) UrhG is incapable of being waived or transferred in advance - because in that case Elvis's daughter would be the right holder, and not Elvis Presley Enterprises, LLC.

The good news is that we may actually receive answers to any or all of these questions because counsel for claimant have already announced that they will appeal the judgment and take the case all the way to the BGH if necessary.


Honey Money here
Honey and the Money here
Honey to the Bee here
Pooh's Hunny Hunt here

How fair is fair?

A couple of days ago, Birgit Clark from the IPKat team posted a piece on proceedings brought by Marcus Off, a German actor who dubbed Johnny Depp's Jack Sparrow character in the first three "Pirates of the Caribbean" films. Mr Off claims additional compensation for his performance under §§ 32a, 79 (2) (2) UrhG (German Copyright Act). You can read Birgit's post here. § 32a proceedings seem to be all the rage – in February, the OLG München (Higher Regional Court of Munich) had to decide a case concerning the title sequence of Germany's longest-running and most popular TV crime series "Tatort" (see Birgit's IPKat post here), and later this year the Bundesgerichtshof (Federal Court of Justice, BGH) is going to pass judgment on claims for additional compensation brought by the cameraman of famous German submarine thriller "Das Boot" (you can read Jeremy’s IPKat report on the early stages of the proceedings at first instance here).

So I think it is time to have a closer look at the provision in the German Copyright Act that is responsible for all those cases. § 32a UrhG is rather dryly entitled "Weitere Beteiligung des Urhebers" ("Further participation of the author"), but it is usually more emotionally referred to as the "fairness clause". What the fairness clause purports to do is the following: If an author has licensed his work (no such thing as a complete transfer of copyright under German law, remember) and his work turns out to be so successful that the consideration he received for granting the licence appears strikingly disproportionate in light of the profits generated from it, he receives a further equitable share of those profits.

Fairness v Bestseller

What is important to note is that the fairness clause was only implemented in 2002 and is a rather weird mix of retroactivitiy and prospectivity. On the one hand, it applies retroactively even to contracts concluded before 1 January 1966 (the entry into force of the UrhG). On the other hand, it applies only to circumstances that have arisen after 28 March 2002. So where does that leave us?

In each case where compensation for uses before 1 April 2002 is claimed, ex-§ 36 UrhG is applicable, the so called "bestseller clause". It is similar to § 32a UrhG, but requires that the agreed consideration be "grossly disproportionate" to the profits generated from the use of the work, a higher threshold than under § 32a UrhG. In addition, ex-§ 36 UrhG is understood to apply only if the parties did/could not foresee the success of the work, something that is expressly declared to be immaterial in § 32a (1) (2) UrhG.

Only in respect of compensation claimed for exploitations of the work from 1 April 2002 onwards does the more lenient § 32a UrhG come into play. However, the legislative materials on § 32a UrhG make it clear that particularly when it comes to films or other multimedia works, contributions that are of secondary importance for the work as a whole shall not usually be the subject of further compensation (the same was established case law in respect of ex-§ 36 UrhG). While the contribution need not be the cause of the work’s success, the legislator envisaged that it should primarily be substantial contributions that would lead to successful claims for fairness compensation. This is why the “Tatort” case failed. The court argued that the title sequence had a function similar to a logo or a trade mark or the cover of a book, but was of only minor importance for the films as such. Things might have been different if the sequence were extensively used elsewhere, but while there were instances of isolated exploitation of the title sequence, no striking disproportionality between the income generated and the consideration received could be established.

Das Boot

Let’s take a look at the chances of “Das Boot” lead cameraman Jost Vacano. “Das Boot” dates from 1981, so the first 21 years of exploitation are governed by ex-§ 36 UrhG and only the last 9 by § 32a UrhG. That does not sound promising. The film is still frequently shown on television and numerous DVD editions are readily available as well. Indeed, an anniversary edition priced at 30.99 EUR is going to hit the stores on 15 September. That means the film is still being steadily exploited after 30 years. That does sound promising. The cameraman’s contribution was also considerable, that again works in his favour. I would guess it is quite probable that the BGH will affirm the judgments in favour of Mr Vacano that were handed down at first instance and on appeal. The not so good news is that he had to raise a claim for information first because the other side were not telling how much income they made from the film. So assuming he wins, his lawyers must then try to figure out how much further compensation would actually be fair and start suing all over again. Nightmare (for those fluent in German, you might also want to read this interesting article by Patrick Jacobshagen, available here).

Pirates of the Caribbean

Now, the first "Pirates of the Caribbean" film hit the cinemas in 2003, so there's a clean-cut § 32a UrhG case for you. At first instance, the Kammergericht Berlin dismissed Marcus Off's claims, though. As Birgit stated in her post, "that the court's assessment of the content of the film as consisting of mostly special effects (and rather little acting) might surprise some of the viewers" - it is important to stress, however, that we are talking about Mr Off's acting here. From what I remember of the films, Johnny Depp does an impressive bit of swaying, swaggering, smouldering and swashbuckling; but he does not do quite so much in the way of talking. In other words, there was not as much to do for Mr Off as there might have been. Also, his job was basically to speak the text given to him in a voice imitating Johnny Depp's way of portraying the Jack Sparrow character. He did that really well, no doubt about that, but I share the view that it probably is not enough in this special case, especially given that he spent only 12 days in total dubbing the three films.

Another point worth adding is that the court held that in respect of the first film, claims for further compensation were time-barred. Mr Off must have become aware of the extraordinary financial success of the first film in 2004, so he would have had to raise such claims by 31 December 2007.

Closing Remarks

§ 32a UrhG and ex-§ 36 UrhG were drafted with the main contributors to successful works in mind - the author of a book or a film script, the director, the lead actors, etc. What they were not supposed to achieve was that everyone involved in a successful work - extras, session musicians, composers of TV series theme tunes - should be able to turn up and demand an additional piece of the cake. Even where there is a valid claim inasmuch as significant contribution is concerned, though, it will be difficult to determine whether the consideration received was "strikingly disproportionate" to the profits generated, and equally difficult to calculate the further compensation the author or performer should receive.