REPORT OF THE LAWYERS WORKING GROUP ON CROSS BORDER PAYMENTS, as adopted by the Special General Meeting of IFRRO, May 1992 and as amended by the IFRRO Board of Directors on 1 June 2006
These principles were adopted by a Special General Meeting of IFRRO on May 11, 1992 and amended by the IFRRO Board of Directors on 1 June 2006
According to the Statutes of IFRRO, these principles are not mandatory nor binding on individual members. The incorporation or use of any of these Principles is also subject to conditions of national law.
These Principles deal only with photocopying, since this is the main form of reproduction of works which IFRRO members licence. Whilst other types of uses of works - principally electrocopying - are becoming important, the Lawyers Working Group considers it is premature to include a reference to such uses in these principles.
In addition to these Principles, the Lawyers Working Group recommends the following:
1. The Principles should bear the heading "PRINCIPLES FOR BILATERAL AGREEMENTS". This recognises the possibility that agreements between RROs might not necessarily provide for payments across borders. There are two types of possible agreements between RROs, one providing for the distribution of moneys across borders and the other providing - by one means or another - for funds to remain in the territory in which they are derived. Typically - as is referred to in Principle 3 - an agreement may provide for what is known as a repertoire swap. This is recognised by the Working Group on Cross Border Payments in its commentary on Clause 9 of the Model Agreement.
2. The internal distribution of fees is a matter for each RRO. Accordingly, these Principles should not deal with distributions by RROs to their domestic rightsholders; that must be covered by the rules of the receiving RRO.
3. These Principles should not provide for exclusive arrangements. It is a matter for each RRO to promulgate the rules by which it is mandated by rightsholders. Similarly, it is a matter for each RRO to determine the basis on which rights will be given in another territory. Principle 3 deals with this.
4. Any bilateral agreement between RROs should include the usual introductory and concluding provisions; such as, requirements for the giving of a notice, proper law, relevant schedules and interpretation provisions. The Lawyers Working Group also recommends the inclusion of an arbitration provision, such as is used in many commercial transactions, although not (as suggested by the Working Group on Cross Border Payments) one requiring the participation of the IFRRO Executive or Secretariat
principal 1 NATIONAL TREATMENT
The principle of national treatment which provides that foreign rightsholders must be treated at least as well as national rightsholders is the central premise of any inter-RRO agreement, subject to any provisions in bilateral agreements under Principle 8.
(The expression "rightsholder" will, according to the context, mean individual creators and publishers, or bodies to whom individual creators and/or publishers have mandated in full or in part the exercise of their reprographic reproduction rights.)
This Principle refers to "rightsholders", rather than "creators" or "authors" so as to cover the potentially wide class of subject-matter which might be included in any bilateral agreement. For example, rightsholders might include photographers, publishers (whether owners of copyright or neighbouring rights), or owners of the right in a published edition of a work. As defined, "rightsholder" covers both the originator of the subject-matter, and the publisher.
In these Principles, the "mandate" of a publisher refers to the instrument by which the publisher is appointed to act on behalf of the rightsholder in relation to the exercise of the right of reprographic reproduction.
A reference to the "mandate of an RRO" thus refers to the appointment of the RRO to act on behalf of rightsholders. The RRO makes use of the mandates by licensing mandated rights to users.
Principle 2 TERRITORY OF APPLICATION
Text: The territory in which the agreement applies must be specified in the agreement.
This Principle does not specify the manner in which a territory must be described. That is a matter for the participating RROs to determine. The territory of an agreement can be set by reference to national or regional boundaries. In general, however, the territory of an agreement will usually be the territory of operation of the RROs concerned. Usually, that will be a country; but the territory may extend beyond the borders of the countries in which the participating RROs reside.
Principle 3 RIGHTS AND WORKS TRANSFERRED FROM ONE RRO TO ANOTHER RRO
Each RRO must specify the kind of rights and the categories of works which it is transferring to the other RRO. Any right or category of work not specifically mentioned in the agreement is excluded. Unless otherwise specifically agreed by the parties, the agreement does not include any authorisation for adaptation or translation.
In this Principle the term "transfer" refers to a permission given by one RRO to the other RRO to exploit the mandates of the first RRO. Thus, one RRO transfers its mandates to the other RRO and this enables the second RRO to exploit the rights of the rightsholders of the first RRO. Typically, there would be an arrangement between the participating RROs, arrived at before the agreement is executed. As stated in the Commentary to Principle 1, the rights transferred are those which each RRO has had "mandated" to it by its rightsholders.
A transfer of rights between RROs can take several forms.
One form of rights transfer is that commonly called a "repertoire swap". This is where each RRO gives permission to the other RRO to include in its domestic licences the works of the rightsholders that the first RRO represents. Typically, there are no cross-border payments of remuneration in such transfers.
Other forms of licensing do provide for cross-border payments.
This Principle distinguishes between "the kind of rights" and "the categories of works" transferred.
"Kind of rights" refers to the rights controlled by one RRO which it is able to transfer to another RRO to exploit; such as rights of reprographic reproduction, publication, storage and retrieval.
"Categories of works" refers to the different types of works in respect of which rights might be transferred; literary works - such as poems, newspaper articles, novels, scientific and technical articles - artistic works - including photographs, maps, charts - musical works - including sheet music; computer programs and so on.
Paragraph 2 of this Principle requires participating RROs to specify the rights transferred. One RRO may choose to transfer rights not usually exercised by the other RRO - as a means of encouraging the other RRO to broaden its scope of activities. However, where that is done, a provision should be included enabling the reversion of such rights in the event of continued non-use.
Rights not specified are reserved to the RRO which controls the right.
Paragraph 3 of this Principle prohibits unauthorised adaptations or translations of works. It is based on the assumption that the mandate of RROs will normally not include the right to adapt works. In such cases, it will usually be necessary for any request for adaptations and translations to be referred to the rightsholder concerned. Where the RRO has (and grants to the other RRO) the right to authorise adaptation and translation, it will be necessary for inter-RRO agreements to include certain procedural provisions (notification, etc.).
Principle 4 INDEMNIFICATION
Each contracting RRO assumes responsibility for the integrity and the substance of the rights and works which are the subject matter of the agreement. Each RRO agrees to hold the other RRO harmless against any individual claims regarding remuneration for reprographic reproduction presented by any rightsholder of its (that is, the first RRO's) territory of application.
Bilateral agreements must be based on a warranty by each participating RRO, to the other, that it is able to enter into the rights transfer arrangement. Accordingly, paragraph I of this Principle requires each RRO to be able to guarantee that it has the necessary rights to transfer to the other RRO. The phrase "rights and works" is used, instead of "repertoire", in order to be consistent with Principle 3.
Paragraph 2 of this Principle requires an indemnity for the warranty of rights. There are practical as well as legal reasons for this. The RRO transferring the rights must absolve the other RRO from any liability for claims on economic remuneration against it by individual rightsholders in the territory of the first RRO. Subject always to national laws, the RRO taking the rights should not exercise any rights for which it might be liable to competing claims from rightsholders in the territory of the first RRO. RROs should be encouraged to negotiate with any person making a claim against them, in consultation with the RRO giving the warranty.
Principle 5 NON-ASSIGNABILITY
Text: Except for the purposes of the management of collection, and for of central licensing, any assignment by one RRO of rights or obligations under an agreement must have the consent of the other RRO.
While prohibiting the assignment of rights generally, this Principle allows either RRO to assign its rights to a central licensing body, for the purpose of facilitating user licensing in its territory, or for the purpose of centrally managing the collection of fees for reprographic reproduction. In this Principle, "central licensing" refers to the practice adopted in some countries whereby one body licences users on behalf of several societies or groups of rightsholders. Where this system operates, the central licensing body obtains mandates from all the other bodies it represents. This could include an RRO participating in bilateral agreements with RROs.
Assignments of rights given to one RRO by another for any other purpose require the express consent of the licensing RRO.
Principle 6 DEDUCTIONS FOR ADMINISTRATION
The deduction by the collecting RRO for administrative purposes from the fees due to foreign rightsholders must not be greater than deductions from the fees due to domestic rightsholders.
This Principle deals only with deductions by the RRO collecting fees from users; that is by the RRO receiving the rights. Deductions by distributing RROs from fees due to domestic rightsholders should not be the subject of bilateral agreements. It is a matter for each RRO to make its own deductions, consistent with its own constitution, from any moneys received by that RRO either from domestic licensing or from overseas sources.
"Administrative purposes" is not defined. This is because the practice of RROs varies greatly. Some RROs make deductions of the actual amounts incurred in collecting and distributing particular fees. Other RROs deduct a fixed amount for administration, which applies to all the activities of the RRO, including non-reprographic reproduction licensing. The essence of this Principle is that foreign rightsholders should be treated no less favourably than domestic rightsholders.
Principle 7 EXERCISE AND ENFORCEMENT OF RIGHTS
Each RRO agrees to be active in exercising and then in enforcing the rights of the rightsholders of the other RRO to the same extent and in the same ways as it exercises and enforces the rights of its own rightsholders.
This Principle requires the RRO receiving the transfer of rights to endeavour to exploit the rights transferred. This could mean adjusting sampling procedures (where appropriate) or instituting legal proceedings.
Where legal proceedings become necessary, the participating RROs should negotiate with each other on the manner in which the proceedings are to be conducted and the funding of the cost of proceedings.
Principle 8 DEDUCTION FOR SOCIAL AND/OR CULTURAL PURPOSES
Social and/or cultural purpose deductions are allowable within reasonable limits, according to national legal, cultural or political environments, and by negotiation between the two RROs involved.
This Principle recognises that deductions are allowable, but only according to the prevailing circumstances in the country of operation of the RRO concerned. There is no set percentage of allowable deduction. This will vary according to political, legal and other circumstances. In some jurisdictions, legislation provides for a percentage deduction, or a ceiling of maximum allowable deductions. It is inappropriate to include such references in a statement of principle. It should be noted that the deductions referred to in this Principle are a first call on collections; in other words, the deductions are made before a fund is established for distribution purposes.
Principle 9 EXCHANGE OF INFORMATION
Each of the general newsletters, information bulletins etc. which the RRO sends to its own rightsholders would be sent to the other RRO. Each RRO will also make available to the other, on request, and subject to the agreement of the parties on issues such as confidentiality, any document, information and records which may be of assistance to the other RRO in exercising its obligations under the agreement.
Paragraph 1 of this Principle specifies the material which must be exchanged between RROs. This exchange does not require a request from one RRO to the other. Paragraph 2 of this Principle specifies the additional materials and documents which may be requested by one RRO from another. It is a matter for the RRO receiving the material to arrange for the translation of documents, where that is required. Additional documents which may be requested include lists of members, reservations of rights of rightsholders, and detailed information on the collection and distribution of fees.
Principle 10 ACCOUNT ON DISTRIBUTION
Any distribution of remuneration by one RRO to another RRO should be made not less than once per year. Each RRO shall inform the other RRO of the types of information in its possession relevant to the distribution of the remuneration.
According to this Principle, distribution should occur at least once a year; but distribution may occur more frequently, where the information collected by the licensing RRO enables more frequent distribution. Where, for example, one RRO makes distributions to its own members more than once a year, then distributions to foreign RROs also may be made more than once a year. This is a matter for negotiation between participating RROs.
It is not obligatory for cross-border distributions to be made at the same time as distributions to domestic rightsholders.
There are two matters relevant to distribution that are not dealt with in these principles:
the question of what should happen with the interest earned on moneys held for foreign rightsholders.
the setting off of moneys due across borders from one RRO to another.
These are matters relating to the process of distribution, rather than to the principle of what should be distributed.
Principle 11 TERMINATION OF THE CONTRACT
If in agreements with users, one RRO has licensed the rights of another RRO, those agreements are deemed to include those rights for the term of the licence, notwithstanding termination of the bilateral agreement.
This Principle deals with the limits of sublicensing arrangements. It requires RROs receiving a transfer of rights to limit the operation of sublicences (or users of the reprographic right) to the period for which the agreement is in effect.
It may be appropriate in certain circumstances to provide for a period after the expiry of the agreement during which existing sublicences can remain in force, such that termination does not affect agreements between RROs receiving a transfer of rights and user organisations. It is a matter for each of the contracting RROs to negotiate an initial term of the agreement. The period and process of any extensions and/or termination should also be negotiated. Whilst the Principle does not specify a term, an initial period of one year may be appropriate in most cases.
Principle 12 CHANGES IN GOVERNING LAW
In the event that changes in governing law bring about new rights or restrictions or extensions of rights or the exercise thereof, the RROs shall strive to revise the agreement in order to cover these events.
This Principle calls for the agreement to be revised to take account of changes in legislation affecting one or other of the RROs party to the agreement.
Members of the Lawyers Working Group:
Peter Banki, Chairman
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