Module 5: Managing Rights

By David Scott, Emily Cox, Melanie Dulong de Rosnay and William Fisher

Learning objective

This module describes how copyrights are managed through individual licenses and collecting societies.

Case study

In the previous module, Angela identified some ways in which the materials she hopes to include in her coursepack may be used without permission. Now she needs to get permission for other activities. She discusses the following questions with Nadia, the librarian who is assisting her:

- What activities may be covered by licenses the library has already obtained from publishers or collecting societies? - For the activities that require a separate contract, what clauses should I negotiate? - How should I handled those materials whose authors cannot be identified or located?

Individual management

What is a copyright license?

The various rights enjoyed by a copyright owner may be transferred by the owner to other people and organizations in many different ways. Assignments, licenses, contracts and authorizations are legally binding agreements between two parties: the initial right holder, and the person or entity wishing to exercise some or all of the exclusive rights owned by the initial right holder.

Transfer of these sorts often precisely define the rights at issue according to many criteria: · the scope of the authorized use (e.g., reproduction, the preparation of derivative works, public performances); · the duration of the authorization (e.g. one year); · the nature of the authorization (e.g. exclusive or non-exclusive); · the fee related to the transaction (e.g. a flat fee or a fee proportional to the number of copies or of uses); · the format or media type (e.g. print only or also digital; text only or also in another media, such as a recording or a film); · the audience and location (e.g. a country, the premises of the library, the classroom, a distance learning cours).

Sometimes such a transfer grows out of negotiations between the licensor and licensee, and/or lawyers representing both parties. At other times, a license may be offered by the copyright owner in a standard form. In such circumstances, there may be little or no possibility for modification of the terms.

Some licenses are exclusive. In other words, the licensor agrees not to permit any other party to engage in the activities in question. Others are non-exclusive, meaning that the licensor remains free to permit other parties to engage in the same activities.

An assignment occurs when a copyright owner permanently and exclusively gives up his rights to another party, authorizing the recipient of the transferred rights to exercise the rights, and further authorize others to exercise these rights after a subsequent transfer or license. Assignments of all rights are sometimes required in publishing contracts. This type of agreement can be compared to the sale of physical property, because the assignor permanently surrenders the ability to exercise any of the rights at issue himself or herself.

Negotiating a license

Copyright owners are generally permitted to divide and license uses of their work as they please, provided that the rights contained in a new license do not overlap with rights the owner has already transferred exclusively to others. But the copyright laws in some countries limit the freedom of contracting for copyrighted works or contain specific provisions regulating transactions involving copyrighted works. For instance, transfers that are not in writing or that do not enumerate precisely elements such as rights, format, location and duration may be deemed void and invalid.

The degree to which the terms of a license are negotiable depends on the type of work at issue and the bargaining power of the licensor and licensee. Potential licensee can sometimes increase their bargaining power by acting collectively. For example, a consortium such as eIFL.net has more power than its individual members.

Click here to learn more about Model licenses.

Content of a standard licensing agreement: the example of an online database

Clauses addressing the following categories of information will be found in a standard licensing agreement and should be considered before engaging in licensing negotiations:

Identification of the parties to the agreement

While this might seem obvious, it is important not only to identify the parties to an agreement, but also to make sure that the persons negotiating actually have the legal authority to make agreements on behalf of their organization. If a library is part of an educational institution or is funded by the local government, for example, it might not be the case that every librarian has this authority. A licensor might want proof that the person claiming to negotiate on behalf of the licensee is in fact permitted to bind the licensee by contract. The library might want to make sure the same is true of the person negotiating on behalf of the licensor, and that the licensor is entitled to exercise the rights of the original copyright owner. This should be clearly addressed and included in the agreement.

Definition of terms that will be used in the agreement

Because libraries often obtain licenses from copyright owners from other countries and from various industries, similar terms can have different meanings to the negotiating parties. One contractual term that is often ambiguous, yet central, to licensing agreements is “material breach.” A material breach is an action by one of the parties to a licensing agreement that permits the other party to terminate the contractual relationship. Because of the importance and ambiguity of this term, the library staff might want to determine and specify in the agreement what actions by a licensor would be significant enough that it would be in the library’s interest to end the relationship. Where a license to access materials for an online database is involved, for example, a material breach might occur where the database is unavailable to library patrons for significant period of time. The staff also might want to consider what potential failures by the library to live up to its end of a licensing agreement might legitimately be considered material breaches.

Subject of Agreement

Parties to an agreement should be thorough in identifying the copyright work that is being licensed. If it’s an online research database, for example, a licensee should make sure that the license entitles patrons to view the full text of articles rather than just abstracts or summaries. If the resource is something that should contain a table of contents, index or images, one should ensure that this is included in the license as well. If there are images, one might even want to determine whether they will be viewable and/or printable in grayscale or color.

Use rights in the agreement

This is one of the most important clauses in an agreement. Licensing agreements often contain clauses that reserve to the licensor the exclusive right to all uses of copyrighted works that are not specifically mentioned. A licensee should therefore think of all possible uses that it might want to make of a copyrighted work before it engages in negotiation. Where an electronic resource is concerned, some basic rights might include: searching or browsing the database, viewing and downloading material, forwarding articles to others, printing materials, and including a listing of the works and possibly their abstracts in the library’s own catalogue. A library that is affiliated with an educational institution may also want to make sure that a license allows faculty and staff to place materials in electronic reserves, include them in course packs, and distribute and/or display portions of the materials in lectures or other speaking engagements. Further, while the practice of loaning materials to other libraries or sharing a reasonable amount of materials with colleagues for scholarly purposes is implied in some jurisdictions by law, a licensee cannot normally share copyrighted materials for commercial purposes. If a licensee wishes to do so, it will have to negotiate for the right and included it in the agreement. If modifying a work in order to abide by local norms is necessary, a library should make sure that the modification does not conflict with the author’s moral rights.

Other conditions on licensed uses

Even after all types of desired uses have been discussed and included in a contract, a licensor might want to limit certain uses by location or frequency of access. In return for the right to unlimited printing of the copyrighted material, for example, a licensor might want additional compensation. In this event, a licensee can negotiate for the right to charge its patrons fees to recover copying or printing costs. A library should also determine who its users are going to be and where they will be able to access a given resource. For example, it may wish its users to be able to access the copyrighted material from any computer or only from computers located in the library. It should also decided whether access to the copyrighted material or certain uses of it will require a password or will be open to any member of the public.

Licensor Obligations

This clause is particularly important for electronic resources. It is reasonable for a subscriber to an online journal, database or other resource to expect that the material will be accessible very close to 24 hours a day, every day. Where a library has a software license, it might want to negotiate for the right to include a back-up copy of the program on location. In either case, licensing agreements for electronic materials typically include some obligation on the part of the licensor to provide the licensee with technical support. Because a licensor and its technical support staff might be located in another country, a licensee should make sure that technical support will be available during the library’s peak hours. On a related note, most online resources have periods of downtime during which the licensor’s technical staff will update the online materials. A licensee might want to ensure that this is not normally done during the library’s peak hours. When an online service or other electronic resource is unavailable for a significant period of time, licensing agreements typically include a penalty clause that requires the licensor to partially refund the licensee’s subscription fee. Another licensor obligation that is frequently included in licensing agreements for online materials is periodically to provide the licensee with an audit of use, or a report that gives the licensee details about how its patrons are using the licensor’s program or database. Such use audits can help library staff members in future licensing negotiations, enabling them to determine better which features and uses of licensed materials are most valuable to the library patrons. Where use audits are performed, the parties might also want to include refunds to the licensee for periods of underuse and additional fees to the licensor for periods of overuse. Lastly, a licensee should make sure that there is an indemnity clause, through which a licensor guarantees that it owns the copyright in all the works it is licensing and accepts liability for any conflicting claims of copyright ownership of those works.

Term, termination and renewal of a license

Negotiating parties should be explicit concerning how long they intend the license to last. As discussed earlier, the parties should also list all of the conditions that would lead to a termination of the licensing relationship. This might require the parties to create an end-of-term agreement, which specifies the procedures that will be followed in the event of termination, including the costs that may be recovered by either party. If an agreement is terminated because of the licensor’s failure to make the licensed material available to the licensee, for example, the parties will want to create a formula to compensate the licensee. While most licensing agreements contain a provision that provides for automatic renewal of the licensing relationship, many do not guarantee that the same terms will be available for the following subscription period. A licensee should make sure that, if the terms of previous subscription periods are subject to change, the renewal clause includes an obligation on the part of the licensor to notify the licensee of these changes in advance of the new subscription period.

Fees

Fees for subscriptions to journal, online databases or other resources are typically paid on an annual or monthly basis. When works are being licensed to libraries or other large educational institutions, licensors typically take the size of the institution, number of users and number of pages that are downloaded into account when determining the appropriate subscription fee. Licensors of online journals and electronic databases vary widely in their flexibility regarding fee arrangements. Some licensors are willing to negotiate fees, others offer various packages, and others offer only one arrangement. A subscription fee could include unlimited use of the licensor’s materials, limited use for particular uses, a pay-per-use arrangement, or a combination of these. Pay-per-use arrangements might set a fee for each log-on access, each time a user searches for content, or might allow unlimited access but charge users or subscribing institutions for each download. Universities often purchase what is called a site license, which gives all the members of the university community access for a set fee.

Licenses in the digital environment

Many online and electronic resources are now subject to electronic licenses. One common form of electronic license is called a unilateral or a shrinkwrap license because it comes with prescribed terms and is rarely subject to modification. Unilateral licenses are most often used by licensors of software products.

Another common form is called an end-user license agreement (EULA) or browsewrap license. These are frequently used by licensors of online content. EULAs allow prospective licensees to read the prescribed terms of the license on the licensor’s website. If they decide they want to use the licensor’s product or service, they can enter into the license by clicking on a button stating “I Agree.” Some licenses do not even require a “click” (the electronic manifestation of a signature), but are based on the behavior of a licensee, deemed sufficient to demonstrate a tacit acceptance and thus form a license. While many legal systems have not fully addressed the effect of these types of licenses, courts in some countries have ruled that a valid consent, giving rise to a binding contracts, can be formed in these fashions.

Collective Management

Purpose and Functions of Collective Management Organizations

The structure of individual licensing described in the previous section is fairly simple: A copyright owner authorizes the use of the work by a licensee under specified conditions. Because copyright licensing often involves widely distributed works, individual licensing can become both very difficult and prohibitively expensive. It would not be practical, for example, for an owner of rights in a popular song to attempt to respond to thousands of licensing requests from radio stations all over the world. As a result, copyright owners frequently allow collective management organizations (also known as collecting societies or collection agencies) to grant licenses, monitor uses of copyrighted material, and collect and share remuneration from licensees on their behalf. This allows copyright owners to exercise their rights as efficiently as possible, as they can grant many more licenses than they would be able to under an individual licensing system. They also benefit from the bargaining power of an institution that negotiates remuneration on their behalf and can bring infringement suits against persons or organizations that use their works without permission.

Licensees also benefit from the use of collective management, as collection societies provide users with easy access to rights that they need to acquire though a single, yearly contract. A radio station wanting to broadcast music from around the world on a daily basis would not be able to do so if it had to seek out and acquire rights from the copyright and neighboring rights owners of each song.

A copyright owner that uses a collective management organization for some, but not all, of her rights is engaged in partial collective management. As discussed in the previous section of this module, a copyright owner’s exclusive right in a work means that he or she alone is able to decide whether to authorize or prohibit any use covered by that copyright. This gives copyright owners flexibility in deciding, if they choose to use collective management at all, exactly which functions a collective management organization will perform for them.

Collective management organizations may also provide social welfare benefits to their members in addition to their royalty payments, such as medical insurance and retirement packages. They may also use part of the royalties they collect to fund drama festivals, music competitions, or the production or export of national works.

Non-Voluntary Collective Management (you can learn more about Compulsory Licenses in Module 4: Rights, Exceptions, and Limitations).

Compulsory collective management ensures that the benefits of collective management are actually realized. If a collective management organization does not have the rights to a significant number of works within its particular field, then it no longer serves the important purpose of being able to license a large repertoire in a short amount of time. As a result, some countries choose to make collective management mandatory to enforce certain categories of rights, particularly where a use serves an important public purpose or where works of that type are used primarily for non-commercial purposes. In such situations, royalties are often gathered either through a levy on copying equipment, or through an annual fee paid by users (companies, libraries, universities) to the collecting society. Those royalties are then shared among the copyright owners according to usage statistics. Collective management is sometimes criticized for the complexity and lack of transparency of its calculation rules to collect and share royalties when they do not exactly correspond to actual uses.

Areas in which compulsory collective management is fairly common are: · public lending rights for works available in public libraries in countries such as Canada and Australia, and in some European countries, but not all of them, despite a European Directive of 2002 on rental right and lending right. (Many authors and organizations, including IFLA, are opposed to this practice.) · reprographic rights for literary works, a right which is sometimes interpreted to include not only photocopying but also printouts from digital databases. · neighboring rights for public performance, broadcasting, and cable transmission of sound recordings.

Some reformers have proposed extending this model to the distribution of works on the Internet, arguing that such a system would benefit both users (by legalizing file-sharing) and creators (by providing them a reliable source of revenue).

Alternative compensation systems

One of a copyright owner’s most basic rights is to control personally the conditions under which her works may be used. Arguably, any national law that forces an owner to let a collective management organization to make these decisions for him or her is a limitation of this basic right. Articles 11bis(2) and Article 13(1) of the Berne Convention, however, provide that a country may determine the conditions under which rights can be exercised. Because compulsory licensing can reasonably be called a “condition” of exercising one’s rights, it is consistent with the Berne Convention where the right being managed is not an exclusive right included in Article 9.

Even where exclusive rights are involved, other non-voluntary forms of collective management, such as extended collective management, may be permissible under the Berne Convention. Extended collective management provides that once a collective society represents a large number of the copyright owners in a particular sector, its authority to license is extended to permit it to license the works of all of the copyright owners in that sector. This generally includes foreign and non-member copyright owners.

Collective societies often enter into agreements with their sister societies in other countries in order to represent their repertoires. Sometimes such societies are also organized into international networks. Examples include the International Confederation of Societies of Authors and Composers (CISAC) and the International Federation of Reprographic Reproduction Organisations (IFRRO). These networks typically participate actively in negotiation of new copyright legislations at the international and national levels.

Technological Protection Measures

Some copyright owners, particularly owners of copyrights in digital works, build into copies of their works certain features that hinder or control the ways in which users can access or employ them. These features are called Technological Protection Measures, or TPMs. This technique is also sometimes called (misleadingly) digital rights management (DRM). TPMs typically prevent the copying of an electronic file, or restrict the number of copies that can be made or the number of devices that can access the file. Right holders or distributors use such devices to enforce their licensing terms and to prevent unauthorized copying. A single work may thus be subjected to copyright, neighboring rights, a license, and a technical protection measure.

These measures are problematic from several perspectives for users: they often do not permit interoperability, and they are incapable of taking into account exceptions to copyright law. It is often not determined whether exceptions to copyright protection (of the sorts discussed in Module 4: Rights, Exceptions, and Limitations should override technical protections. The reason that this issue is important is that it is sometimes possible to disable TPMs, thereby enabling the reproduction of the copyrighted work. Most countries have enacted anti-circumvention statutes, which prohibit such disabling of TPMs. However, some of these statutes include exceptions for libraries. Out of the 184 WIPO countries included in the WIPO Study on Copyright Exceptions and Limitations for Libraries and Archives, 79 had statutes that prohibited circumvention of TPMs, and 26 of these provided explicit exemptions for libraries. The majority of countries that have enacted these explicit exemptions are members of the European Union. Countries outside the European Union that provide explicit library exemptions for anti-circumvention statues include Australia, Croatia, Norway, Singapore, and the United States.

Orphan Works

When the owner of a copyrighted work cannot be located by reasonable efforts, that work becomes known as an orphan work. This may be because the work does not have the author’s name attached to it (or it was published anonymously or pseudonymously), or in the case of older works, because it is unclear who inherited the copyright from the original author. Orphan works are problematic because a prospective user has no way of contacting the author to ask for permission to use the work and to negotiate payment for that use.

Although most countries do not have statutory provisions for dealing with orphan works, some countries have implemented systems to deal with these works. In the context of international copyright agreements, these systems are justified by the three step test of Article 9(2) of the Berne Convention, that was discussed in Module 2: The international framework.

For example, Canada has enacted copyright legislation that provides a method for authorizing the use of orphan works. Those who wish to use such works must apply to the Copyright Board of Canada for a license. Such applicants must first show that a reasonable effort to locate the copyright owner has been fruitless. If the work had previously been published, the Copyright Board will then grant the applicant a non-exclusive license (effective only within Canada) to use the work. The license is limited to particular types of uses, and requires the applicant to pay a designated royalty fee. This royalty can be collected by the copyright owner for up to five years after the transaction, in the event that she later comes forth.

The Nordic countries of Denmark, Finland, Iceland, Norway and Sweden have also enacted statutory regimes governing the licensing of orphan works. In Denmark, for example, the licensing of orphan works is arranged through a collective management organization. The Danish Copyright Act provides that an individual interested in using an orphan work may arrange to pay a rights management organization for that use, provided that the organization represents a “substantial number” of Danish copyright owners. The royalties paid to these organizations may be claimed by a copyright owner for up to five years, and unclaimed royalties for orphan works are donated to public works programs.

Another country that implements a licensing regime for the use of orphan works is Japan, whose compulsory licensing system for orphan works is codified in Section 8, Article 67 of its copyright laws. Japan requires that a prospective user perform “due diligence” in attempting to locate the copyright owner, but does not explain what qualifies as “due diligence.” Like Canada, Japan requires that the work have been published previously, and allows the government to grant a license to the user upon payment of a royalty. Royalties are placed in a fund from which copyright owners may receive compensation if they later discover and object to the use of their works. Notably, the owner may petition the government for an increase in the royalty rate within three months of the issuance of the license if she learns of the use and believes the initial rate to be unsatisfactory.

Other countries do not currently have statutory provisions dealing with orphan works, but may enact such provisions in the near future. A piece of legislation dealing with orphan works is currently being considered by the United States House of Representatives (a report on the progress of the Shawn Bentley Orphan Works Act of 2008 is available here). The proposal would limit remedies in civil suits over the use of copyrighted works, as long as: (1) the user had made reasonable, but unsuccessful, efforts to locate and identify the owner, and (2) the work was attributed to the owner (if identified but not located). The proposal has been criticized by Lawrence Lessig, among others (see Lessig’s criticism here), and is unlikely to be adopted.

In April 2008, the European Commission’s High Level Expert Group published a report on Digital Preservation, Orphan Works, and Out-of-Print Works, which recommended courses of action for Member States of the European Union to establish licensing systems that would deal with the problem of orphan works. At the same time, numerous rights holders and representatives of libraries and archives signed a Memorandum of

Understanding on orphan works, available here, which expressed the commitment of these organizations to facilitate and encourage the licensing of orphan works for certain purposes. Although the Memorandum of Understanding and the European Commission’s report are not law and are therefore not binding, both encourage member nations of the European Union to enact statutory provisions to deal with the licensing of orphan works, so there is a good chance that new legislation in this area will be enacted soon in these nations.

One reason why orphan works are problematic is that copyright law does not require that works be registered to be protected. This is the system set up by the Berne Convention. Although it has many merits, one downside is that all works are protected by copyright, even orphan works and works whose creators may have wished to make them available to the public. Arguments in some recent cases, notably Kahle v. Gonzalez in the United States, have attempted to challenge this system to make copyright an “opt-in” system (in which copyright protection is only obtained by fulfilling certain formalities) rather than an “opt-out” system (in which copyright exists upon the creation of a work). The United States 9th Circuit Court of Appeals in Kahle, relying on the United States Supreme Court’s decision in Eldred v. Ashcroft, rejected the suggestion that the creation of an opt-in section implicated First Amendment rights to freedom of speech. The rejection of an opt-in copyright scheme may be necessary in light of the requirements of Article 5(2) of the Berne Convention, which prohibits member states from attaching formalities to the receipt of copyright benefits.

Back to the case study: getting permission

Nadia and Angela have identified works that are copyrightable and not in the public domain. They need to get permission from rightholders for uses that are not covered by exceptions and limitations.

First, they have to identify the copyright owners. Original authors may have licensed or transferred rights to a publisher or a collective society, or the creation may be a work-for-hire. For the reasons explored in module 3, other persons may also be involved, such as music performers, or persons depicted in photographs, in addition to the photographer or entity who owns copyright. When the contact information for the copyright owner is not available on the work, it might be possible to locate the owner though national copyright offices or clearance centers.

Once they have identified and located the owners, Nadia and Angela will request permission. While a first contact by email or phone can be useful to explain the use they are considering, they will likely be obliged to follow up with a request in writing that describes accurately the work (title, author, copyright owner, URL), the purpose of the use (a description of the use in the coursepack), and the conditions of the permission that have been discussed (for a small fee, for free, etc.) Commencement and expiration dates as well as complete contact and signatures of both parties will complete the document.

Assignment and discussion questions

Round 1 questions

1. Understand a license

Select a license governing access to electronic resources in your library or find online standard terms of a publisher. Read the use rights described in the license, and explain whether, to which extent, and under which conditions it covers the following actions: · reprography by the patrons · reprography by the librarians · downloading by the patrons · interlibrary loan of a printed copy · interlibrary loan of a digital version · publication in an electronic reserve or a coursepack · rights when reusing resources: translation, compilation, indexing, abstract, data-mining, etc. · other uses that you may define.

2. Collecting societies

What collecting societies, copyright offices, one-stop shops or other entities collectively managing rights are operating in your country? For each of them, provide the name of the society, the website if any, and the type of media or repertoire covered. Read the statutes or bylaws. Explain what rights are managed, if members must be transferring all of their rights or may only license some of them, and if it is a voluntary or a compulsory system,

Round 2 questions

Comment on the answers of your colleagues to question 1, and select the most favorable terms and licenses among those which have been analyzed.

Sources

Belzos, Salvador M. “International Approaches to the Orphan Works Problem”

Collective Management of Copyright and Related Rights, 2-47 (Dr. Daniel Gervais ed., 2006)

“Collective Management of Copyrights and Related Rights” → publication from WIPO’s website; http://www.wipo.int/freepublications/en/copyright/450/wipo_pub_l450cm.pdf

Ricolfi, Marco. “Individual and collective management of copyright in a digital environment”. Copyright Law: A Handbook of Contemporary Research, 283-314 (Paul Torremans, Ed. 2007)

KEA Study- Collective Management of Rights in Europe: A Quest for Efficiency (2006)

WIPO Guide on the Licensing of Copyright and Related Rights (2004)