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Bill hopes to put an end to remuneration muddle

By Luis C. Schmidt
Partner
World Copyright Law Report, June 2006
The Chamber of Deputies has approved a bill to insert Article 26ter, which deals with remuneration rights for reproduction of works of authorship, into the Copyright Act.
Three years ago Congress passed a bill adopting Article 26bis, a remuneration right for the public communication of works, in line with a proposal by the Sociedad de Autores y Compositores de Música (SACM). SACM claimed that music publishers were failing to pay authors the agreed royalties, so proposed modifying the Copyright Act to enable authors to claim compensation directly form users. Congress failed to consider the impact this would have on users and passed the bill without analyzing it in detail.
Groups of affected users filed actions against the bill, arguing that Article 26 bis imposed a unfair burden on them by triggering highter duties for the use of works. The second chambers of the Supreme Court stated that Article 26 refers to a remuneration right (ie, an irrevocable right held by authors and assignees – including publishers – to receive compensation for the exploitation of works), which is different from the patrimonial right of public performance (ie, the exlusive right to authorize or prevent the exploitation of a work). Remuneration rights allow users to use works of authorship freely without having to obtain consent from the copyright holder, provided they compensate the author and the assignee.
The Supreme Court’s interpretation of Article 26 bis is completely different from the approach proposed by SACM. It also overlooks the fact that the remuneration system which it contemplates would co-exist with the patrimonial rights system, without defining when each would apply. It is evident that the two systems cannot be applied at the same time, as the owner of the patrimonial rights (ie, the author) cannot execute his or her exclusive right to authorize or prohibit the public communication of the work at the same time as the author so his or her assignee execute their own remuneration right – such a situation could lead to us being asked to pay multiple remuneration for a work.
In an attempt to resolve the issue, the Chamber of Deputies is analyzing the possible adoption of Article 26 ter, in order to extend the system of remuneration. The idea behind the initiative is that:
“authors and composer of music may collect directly and independently, thorugh an attorney or by means of a collecting society to which they are members, the royalties that correspond to the reproduction of its works, without affecting in any way the royalties belongig to the publishers of music, who execute a derived right” (Decision of the Commission of Culture of the Chamber of Deputies, page 2)
However, critics have pointed out several technical problems in the methodology of the initiative. As it stands the harmful effects of Article 26 bis would simply be transferred to Article 26 ter. The initiative also grants SACM’s demand for a direct royalty from users, in addition to the one obtained indirectly as a result of assignment agreements that authors enter into with publishers or other assigness. The only actual effect of the bill would be to involve users in the disputes between authors and assignees.
Finally, many critics find the idea of adopting a system of remuneration for public communication alarming if it is applied to reproduction and distribution rights. Reproduction a method of exploitation controlled by the owner of the patrimonial rights: the owner may impede any use made by a third party of the work and, therefore, may take criminal actions against anyone who infringes the reproduction right. However, if reproduction rights are classed as a remuneration right then, under the Supreme Court’s interpretations, any third party may make copies of a work without authorization provided he or she pays a royalty. Critics fear that such a situation could generate a greater amount of piracy and send the situation out of control.