Competition & IP Law in EU Music: Copyright, DRM, Consolidation, Territorial Boundaries, Slides of Competition Law and Policy

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A survey of the competition and IP law issues raised by the music industry in the EU Docsity.com Overview - “Selected Issues” • Copyright protection of music • Digital rights management, formats and interoperability • Industry consolidation • Fading territorial boundaries in the Internet age 1 Docsity.com Copyright protection of music • In the courts – Illegal file sharing cases remain topical • E.g., French judgment December 2005 suggests uploading and downloading in the context of file sharing for non-commercial purposes not unlawful - Ministère public and SCPP / Anthony G. – Kazaa user transferred over 1,000 files – Court found user not guilty of knowingly infringing copyright » Any Kazaa user can copy music files from any other Kazaa user without the knowledge of that other user » User could not be expected to know that the files he downloaded were copyrighted, as Kazaa did not provide notice of their copyright status – Outcome in contradiction with earlier decision of different court month earlier in Ministère public and SCPP / Didier T – Kazaa in the meantime found to have infringed copyright law by Australian court, and was forced to remove all copyrighted music files 4 Docsity.com DRM, formats and interoperability • Why importance of DRM, formats? • EC sensitive to significance of DRM – Microsoft media player case related to formats, DRM – Intertrust, Contentguard investigations • Interoperability so far elusive – Cases in Europe and the U.S. against Apple iTunes • VirginMega (FR), QueChoisir (FR), Slattery (US) cases – Impact of Microsoft interoperability case, Article 82 reforms? – Industry initiatives to achieve greater interoperability • E.g., Marlin Joint Development Association (MJDA) to develop a universal DRM scheme for consumer electronic devices, such as future video and audio players – Companies behind the MJDA initiative include Sony, Philips, Samsung, Matsushita and Intertrust 5 Docsity.com Industry Consolidation • Mergers affecting the music industry have been numerous in the past decade – E.g., Seagram/Polygram, Vivendi/Seagram, AOL/Time Warner, Warner/EMI, Bertelsmann/Zomba, Sony/BMG,… • Evolving on-line music markets have been a particular focus – Music players and formats (e.g., AOL/Time Warner) – On-line content distribution (e.g., Vivendi/Seagram) – Collective dominance of the labels (Warner/EMI, Sony BMG) – Market developments have proven tricky to predict in this context 6 Docsity.com Territorial boundaries in the Internet age • Licensing of rights – IFPI Simulcasting Agreement • IFPI notified to the Commission the agreement in 2000 – an agreement between record producers’ collecting societies designed to facilitate the granting of cross-border licences to radio and tv broadcasters wishing to engage in simulcasting • A network of reciprocal bilateral agreements among collecting societies world-wide • The Commission cleared the agreement after amendment – No country-of-establishment rule within the EEA: licence can be requested in any Member State 9 Docsity.com Territorial boundaries in the Internet age • Licensing of rights – Santiago Agreement / performance rights • A group of collecting societies notified to the Commission a template reciprocal agreement (“Santiago”), designed to allow for one-stop shopping for online exploitation of performance rights • However, a licensee can obtain Santiago agreement only from the collecting society in its country of establishment • Eliminates potential competition between collecting societies • Commission issued Statement of Objections and held hearing – Possible alternatives to territorial exploitation • Model Agreement has expired – Barcelona Agreement / mechanical rights 10 Docsity.com Territorial boundaries in the Internet age • Licensing of rights – RTL/Music Choice complaint against CISAC • Model reciprocal representation agreement originating in 1936 – Basis for bilateral representation agreements – Network of agreements provide for worldwide repertoire and grants of licenses for domestic territory of collecting society – CISAC model creates territorial protection from other collecting societies – Consequence: transnational operators required to obtain licenses from all the national collecting societies • SO 31 January 2006; hearing 11 Docsity.com Territorial boundaries in the Internet age • Pricing of music recordings – UK consumer organisation complaint before Office of Fair Trading – December 2004 referral to Commission – Apple charges 79 pence ($1.53) per song in the United Kingdom compared with 99 euro cents ($1.33) in its other European stores + said to prevent cross-border sales • Apple points to different cost structures in different member states 14 Docsity.com Territorial boundaries in the Internet age • Membership of collecting societies – Daft Punk complaint • Refusal of SACEM to admit Daft Punk on the basis that Sacem statutes do not allow members to exclude rights from management by Sacem unless they prove that they have conferred the management of these rights to another society • Commission appears to have considered this likely to be abusive as regards on-line exploitation • Sacem modified statutes, after which Commission rejected complaint (2002) – Reservation of rights possible by EEA-based members if approved by SACEM board following a reasoned request – CISAC complaint • Collecting society cannot accept members of other collecting societies or rightholders having the nationality of another collecting society without consent of the other collecting society 15 Docsity.com Conclusion • Technology is continuing to shake up the music industry • In comparison with the early days of music peer to peer file sharing, stronger enforcement tools -- and more effective responses to consumer demand • Licensing models will need to adapt – and are already adapting • More competition law enforcement likely as industry consolidates, the need for interoperability increases and territorial borders are put under pressure by market demand 16 Docsity.com