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Territorial Principle – saved? Not quite.

It must have felt like an early Christmas present to film and TV producers on 12 December 2017 when the plenary session of the European Parliament confirmed the negotiating mandate on the so-called “SatCab Regulation” with 344 votes to 265 and 36 abstentions, and voted in favor of preserving the principle of territoriality. It would be a major disappointment if the “trilogue” negotiations – the next legislative step – turned this result upside down again… In June, the European Parliament’s Committees on Culture and Industry had already voted against far-reaching changes to the existing territorial exploitation of rights. According to the European Parliament’s press release, the new approach will allow broadcasters only to make their online news or other current online TV and radio programs available in other EU countries. To this end, the procedure for clearing copyrights shall be simplified. The members of Parliament thereby endorsed the decision of the Committee on Legal Affairs and the Internal Market to satisfy the need for a free flow of information. This also applies to distributors who offer subscription packages. The principle of territoriality, however, is to be fully upheld, especially for commissioned productions and co-productions.

Everything started when the European Commission proposed four different instruments in September 2016 as part of the so-called copyright package aimed at achieving the single digital market. One of the proposals was to apply the so-called country-of-origin principle also to “complementary online services”. So far the country-of-origin principle only applied to cable retransmission of satellite programs on European cable networks. But complementary online services would also include the media libraries of the broadcasters. To what effect? Rights would only have to be acquired once, i.e. in the country in which the broadcaster has its principal place of business, even if the broadcaster offers programs to viewers throughout Europe. Moreover, the proposal for a regulation provided for the rights to broadcast television and radio programs in Europe as a whole, not only for broadcasting of satellite programs on cable networks but also, in principle, “technologically neutral” for all forms of transmission. Such rights were to be administered only by collecting societies and thus no longer to be negotiated in individual contracts.

The vote in Strasbourg came close to “a showdown”, the German newspaper Süddeutsche Zeitung wrote. On the one hand, there were those who stood up for “consumer friendliness and a free flow of programs in Europe”, and on the other hand, those “who are concerned about the film industry and the payment of creative workers”. The German Bundesrat issued a comment stating that the territorial exploitation of rights must be preserved as an essential part of financing and refinancing of audiovisual productions.

On 15 December 2017, however, the Permanent Representatives Committee (CORIPER) agreed on the Council’s position on a proposal to facilitate digital transmissions and retransmissions of TV and radio programs in the internal market. This position serves as a mandate for the Council to enter into negotiations with the European Parliament. The European Council’s proposal goes well beyond the position of the EU Parliament as it suggests to apply the country-of-origin principle also to programs “financed and controlled” by the broadcaster. This could mean that many commissioned works will run the risk to fall under the country-of-origin regime even if they are not fully financed by the broadcaster or if the producer retains certain rights or profit participations the value of which will be seriously hampered by the application of the country-of-origin principle.

The so-called trilogue negotiations will now start in early 2018 and is to fear that the EU Commission will support an even more aggressive position on attacking territorial licensing. Hence nothing is set in stone so far. Once more one is left with excitement on a cliffhanger and just like in the movies the story is:

To be continued…


Mathias Schwarz

Prof. Dr. Mathias Schwarz

Partner (Of Counsel)

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