Olswang Germany Media Newsletter January 2015

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

• Litigation on distribution of royalties between publishers and authors stayed by German Federal Supreme Court
• New EU Commission study: the right to make available vs. the right to reproduce
• Draft IT Security Act debated by German Parliament
• EFM, Berlinale Co-Production Market to include TV content during the 2015 film festival
• Bavaria's regional film fund increases budget for 2015 and 2016
• Industry group Bitkom predicts 42% growth of VOD market in Germany

Litigation on distribution of royalties between publishers and authors stayed by German Federal Supreme Court

The German Federal Supreme Court announced on 18 December 2014 that it will currently not decide the question whether publishers may participate in the royalties of authors and journalists which are distributed by collection society VG Wort. The proceedings, which are closely followed by the industry and the outcome of which is highly anticipated, were stayed until the European Court of Justice has ruled in a similar case brought by the Appellate Court in Brussels, Belgium. The Belgian request for a preliminary ruling, brought in 2013, revolves around the fair compensation for authors and publishers in connection with the lump-sum remunerative payments made by the manufacturers and importers of devices enabling protected works to be copied.

In the first instance of the German proceedings, the Superior Court of Munich had ruled mainly in favour of the plaintiff, stating that VG Wort was generally not allowed to deduct part of the author's royalties and distribute it to publishers, since publishers are not awarded a neighbouring right of their own under German copyright law. This would fundamentally alter the distribution practice of VG Wort, which currently distributes 50% of authors' and 30% of journalists' royalties to the publishers.

New EU Commission study: the right to make available vs. the right to reproduce

On 19 December 2014 the EU Commission published a study on the making available right and its relationship with the reproduction right in cross-border digital transmissions. The study, which was commissioned from the Belgian law firm de Wolf & Partners, seeks to distinguish between the right to make available and the right to reproduce copyrighted works (in Germany, Sec. 19a and Sec. 16 Copyright Act) in the context of online licensing.

The study finds that in order to avoid problems with the distinction of the two rights, the definitions of the right to make available and of the right to reproduce need to be more differentiating. Such problems are apparent, e.g., in the German CELAS ./. MyVideo litigation, where Munich courts have held that the reproduction has no independent economic meaning in comparison to the making available to the public in the context of online use of music works, and have suggested that the making available right and the reproduction right should be maintained together. Alternatively, right owners could be obliged to only license rights as bundles, or the respective rights could be restricted in a way that only collecting societies can enforce them. Another possibility the authors saw was the introduction of a respective limitation or fair use right.

Draft IT Security Act debated by German Parliament

Draft federal legislation to improve the security of information technology systems, the IT Security Act, was proposed by Federal Minister of the Interior Thomas de Maizière, and will now be debated in parliament.

The act defines requirements and minimum standards for IT security of critical infrastructure systems such as electricity, as well as reporting obligations to the Federal Office for Information Security (BSI). To improve IT security on the Internet, the proposed legislation contains stricter requirements for providers of telecommunications and telemedia services, which would have to offer state-of-the-art security and to warn customers when their connection is being misused (e.g. by a botnet). The new legislation would also expand the authority of the Federal Criminal Police Office to investigate computer-related crime, in particular hacker attacks on federal IT systems.

According to the BSI's 2014 report on IT security in Germany, cyber-attacks occur daily and are increasingly professional and targeted. Federal Minister de Maizière stated that "this legislation is a first and can serve as a model for Europe. It will help make the Internet safer and ensure that Germany's digital infrastructures are among the most secure in the world."

EFM, Berlinale Co-Production Market to include TV content during the 2015 film festival

As of February 2015, Berlin Film Festival's industry platform - the European Film Market (EFM) with its Berlinale Co-Production Market division - will provide creators and producers of television series with the opportunity to present, sell and buy new television content. On February 9 and 10, 2015, EFM will hold special market screenings and a business lounge for buyers and sellers of television content. The Berlinale Co-Production Market will extend its programme for one day to include February 10, and in addition will present a selection of new projects for television series.

Matthijs Wouter Knol, Director of the EFM, said "these new initiatives at the EFM acknowledge the fact that serial stories have become an integral part of audio-visual culture. Moreover, we want to improve how we accommodate the needs of our visitors for such projects in the next years."

The 2015 EFM will primarily present TV series from North American and European countries, including the latest productions from a number of Scandinavian, British and German channels.

Bavaria's regional film fund increases budget for 2015 and 2016

The German state of Bavaria's regional film fund (FFF Bayern) announced on 12 January that it has increased its film funding budget for 2015 and 2016 by 1 million Euro per year. Previously, the annual budget amounted to appr. 33 million Euro. In 2014, a record total of 32.64 million Euro were made available by FFF Bayern for the support of theatrical and television films, screenplays, project development, sales and distribution, as well as games and film theatres. The additional funds in 2015 and 2016 will primarily be invested in the support of new talent, visual efffects and film festivals.

The increase was widely welcomed by the industry. The German Producers Alliance (Film & Television) particularly applauded the fund's economic foresight, stating that the increase would help raise Bavaria's profile within the film industry. In light of past budget decreases, and plans to reduce funds in other states as well as on a federal level, the Alliance's Chairman of the Board, Alexander Thies, praised the increase as a clear sign of Bavaria's commitment to the German film industry.

Industry group Bitkom predicts 42% growth of VOD market in Germany

Based on forecasts by analyst company IHS, German industry group Bitkom (for the information and communication technology industry) has predicted that the German digital video market will enjoy extensive growth rates in 2015. Bitkom expects the turnover for internet based Video-on-Demand (VOD) services and electronic sell-through (EST) to increase to a total of 458 million Euro, representing an increase by 42% in comparison to 2014 (322 million Euro). In Bitkom's prognosis, there is roughly equal customer demand for TV series and films, with digital distribution of TV series expected to reach a turnover of 243 million Euro, and that of films expected to reach a turnover of 215 million Euro in 2015.

The prognosis corresponds to a recent Bitkom survey of 1,000 people aged 14 and over, according to which 19% of Germans (appr. 13 million people) frequently use online VOD platforms to watch films and TV series.

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