Olswang Media Newsletter: latest legal developments in Germany and Europe - March 2014 edition

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

This is the first edition of our monthly Media Newsletter. Produced by our German office, it covers the latest legal and regulatory developments in the media sector across both Germany and Europe. This month, we look at:

• EU investigates major US studio pay TV deals
• European Court of Justice (ECJ) rules on scope of communication to the public: Hyperlinks are generally lawful under European copyright law
• ECJ ruling on collecting societies and EU antitrust law
• EU commission study: Europe`s film industry is allegedly missing out on online revenues
• German Federal Constitutional Court rules that legal foundation for public broadcaster ZDF does not comply with fundamental freedom of broadcasting
• Munich Supreme Court rules that PVR Save.TV infriges copyright Axel Springer AG permitted to acquire N24 / Take-over of Axel Springer titles by Funke Mediengruppe on hold

EU investigates major US studio pay TV deals

The European Commission announced on January 13 that it has opened formal antitrust proceedings to examine certain provisions in licensing agreements between several major US film studios and the largest European pay TV broadcasters. The European Court of Justice (ECJ)'s 2011 Murphy ruling has addressed marketing restrictions relating to BSkyB's exclusive live broadcasting rights for Premier League matches on a territorial basis. A fact-finding investigation has been carried out in 2013. Now the Commission will specifically investigate whether the provisions in the licensing agreements prevent broadcasters from providing their services across borders, for example by refusing potential subscribers from other Member States or blocking cross-border access to their services.

ECJ rules on scope of communication to the public: hyperlinks are generally lawful under European copyright law

On February 13, the ECJ has ruled in the Svensson Case that providing clickable links on a website to works freely available on another website is not understood as a communication to the public (under Article 3(1) of the Copyright Directive (2001/29/EC)). This is because the provision of the link is not being communicated to a new public. Member states are not allowed to specify that a communication to the public included a wider range of activities than those referred to in the provision. Also, the Court indicated that it would rule similarly on embedded or framing links where the user is under the impression that the work is available from the linking website. If, however, such link circumvents any barriers, like paywalls, to access the linked work, hyperlinking is no longer admissible without the consent of the right owner.

The Svensson ruling looked at links to works that were legally included in the source site. The ECJ leaves open whether its decision would be the same if the linked works were illegally included in the source site (such as an illegal YouTube video). This will hopefully be clarified in the Court's ruling in the case "Die Realität", which was referred to the ECJ by the German Federal Supreme Court in May 2013 and raises the issue of copyright infringement in relation to embedding a YouTube video.

ECJ ruling on collecting societies and EU antitrust law

The ECJ has also ruled on February 27 that the territorial monopoly granted to copyright collecting societies (such as GEMA) is not contrary to the freedom to provide services. Only the territorial monopoly granted to Czech collecting society OSA is a restriction on the freedom to provide services as it does not allow users of protected works to choose the services of a collecting society established in another Member State. Such restriction is justified since the system is appropriate and necessary for an effective management of intellectual property rights. As EU law currently stands, there is no other method allowing the same level of copyright protection. The Court notes that the imposition of fees (higher than those charged in other Member States) or of prices (being excessive in relation to the economic value of the service provided) by a national collecting society indicates an abuse of a dominant position.

European Commission study: Europe's film industry is allegedly missing out on online revenues

The European Commission has published a study on audience behaviour suggesting that Europe's film industry could increase revenues by exploiting different types of profit-making online platforms. According to the study, demand is driven mainly by the lack of choice, with nearly 70% of Europeans downloading or streaming films for free (legally or illegally). Hence, the study concludes that the European film industry is not making the most of its potential to reach new audiences or capitalising on cross-border partnerships and could increase revenues by improving the availability of films.

The audience behaviour study is based on research, analysis and interviews with audiences in 10 Member States: the UK, France, Italy, Spain, Germany, Poland, Croatia, Romania, Lithuania and Denmark. From the population of these countries, 5,000 people aged from four to 50 were asked about their film habits and preferences. The study appears to aim at supporting the Commission's digital agenda and politics.

German Federal Constitutional Court rules that legal foundation for public broadcaster ZDF does not comply with fundamental freedom of broadcasting

In its judgment of March 25, the German Federal Constitutional Court (Bundesverfassungsgericht, BVerfG) held that the legal foundations for public broadcaster ZDF, the ZDF Interstate Treaty, do not meet the constitutional standards of limiting state authority influence on public broadcasters. In Germany, public broadcasters are financed by a mandatory levy payable by every household, and their institutional set-up must ensure diversity as well as a strict independence from the State. This includes a limitation of members of the supervisory board who are part of, or close to, state authority. The Court obliged the German federal states to enact new, constitutional legislation by June 30, 2015.

Munich Supreme Court rules that PVR Save.TV infringes copyright

The Munich Supreme Court (OLG München) has handed down its appeal ruling in the Save.TV case and upheld the first instance's judgment in favour of plaintiff ProSiebenSat.1, which may claim damages from online private video recorder (PVR) service Save.TV. The Munich Supreme Court held that Save.TV violated the exclusive neighbouring right of ProSiebenSat.1 in their broadcast by copying the broadcast programmes and saving them onto their file server, as well as by making them publicly available to Save.TV's users.

The court stressed that even though it is the individual user of Save.TV who initiates the copying, the copy is still attributable to Save.TV because the user has no control of the copy on the server. The exception for private use is therefore not applicable. Also, the copy is permanent and not temproary, as it remains available for the respective user(s) long after they have ordered Save.TV to make the recording.

The court further differentiated this case from two previous judgments involving Save.TV by the Dresden Supreme Court and the German Federal Supreme Court, both of which had assumed that Save.TV makes individual copies for any user requesting the programme. Based on Save.TV's own submission, the court found that Save.TV does not make individual copies, but rather keeps a "master copy" of the programme that is available to all relevant users, thus making the programme available to the public.

Axel Springer AG permitted to acquire N24 - Take-over of Axel Springer titles by Funke Mediengruppe on hold

On February 10, the German Federal Cartel Office (FCO) permitted the acquisition of News Broadcaster N24 by Axel Springer AG, a deal which was announced last year. According to the FCO, the purchase does not raise any antitrust concerns as N24 is a specialised broadcaster with a small market share. The acquisition now requires the final approval from the Commission on Concentration in the Media (KEK).

Another deal involving Axel Springer was, however, stalled by the FCO in a preliminary antitrust assessment of February 24. Funke Mediengruppe agreed with Axel Springer AG last year to take over Springer's regional publications as well as TV programme guides and women's magazines. While the sale of regional and women's magazines was given the green light by the FCO in late 2013, the FCO was not satisfied with the conditions offered in context with the sale of the TV guide publications. The sale is planned as a joint deal and will be close once all approvals are given, which is expected for the first half of 2014.

This newsletter contains general legal information only and, although we endeavor to ensure that the content is accurate and up to date, users should seek appropriate legal advice before taking or refraining from taking any action. The contents of this newsletter should not be construed as legal advice and we disclaim any liability in relation to its use.