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Mexico: Remuneration rights for Reproduction

By Luis C. Schmidt
Partner
Computer Law International CRi, Issue 4, 15 August 2006

On April 27, 2006, the Chamber of Deputies approved a bill to insert an article 26 ter dealing with remuneration rights for reproduction of works-of-authorship. The bill was sent for review to the Chamber of Senators and the outcome is pending.
 "Article 26 Bis. —The author and its assignee shall have the right to receive a royalty for the public communication or transmission of its work through any media. The author's rights can not be renounced. This royalty shall be paid directly by the person/entity who perform, the public communication or transmission of the works, directly to the author, or to the collecting society that represent it, submitted to what is foreseen by the articles 200 and 202 sections V and VI of the law".

 1. Background

The history of article 26 ter goes back three years ago, with the discussion and approval of article 26 bis. At that time, Congress passed a bill adopting a remuneration right for the public communication of works, in line with a proposal by the "Sociedad de Autores y Compositores de Música" (SACM), the collective society that has representation of composers of musical works. SACM has a longstanding dispute with music publishers as to the publishing agreements and that these latter do not respect, allegedly as they pay to the composers royalties in amounts below of what it is stated in the agreements. SACM considered that the problem arising out of the agreements would be resolved by modifying the Copyright Law, with the purpose that the author can claim a compensation from the user of the works, in a direct form. However, SACM did not consider the impact that their proposal would produce and most certainly, Congress did not stop to meditate about said impact, as it just passed the bill without to analyze the subject in detail.

 2. Supreme Court Decision on Bill

As a response to the bill, groups of affected users filed actions against the bill that even reached the Supreme Court. The main argument of the plaintiffs was that article 26 bis had imposed remuneration rights in a level or degree that would only trigger higher duties for the use of works. Surprisingly enough, the second chamber of the Supreme Court went beyond the reclaims of the users, in order to state that article 26 refers to a remuneration right, that is different from the patrimonial right of public performance.
The sentence distinguishes between patrimonial rights — exclusive rights to authorize or prevent the exploitation of a work- and remuneration rights — rights of authors "and" assignees to get compensation for the exploitation of works and that cannot be renounced —. In virtue of a remuneration right, anybody using a work-of-authorship, can make a free utilization of the same, without having to obtain consent from the copyright holder, as long as the user compensates the author "and" the assignee.

 a) Deficiency of Supreme Court Initiative

It can be observed from the above that the interpretation that the Supreme Court has given to article 26 bis, is completely different from what SACM had proposed initially.
But in particular, it was most surprising to see that the Supreme Court's own initiative was deficient as well, as it overlooked that the remuneration or "royalty" system that it had created would coexist with the patrimonial rights system, without defining when each would apply. It is evident that the two systems cannot control at the same time, due to the fact that the owner of the patrimonial right, that may be the author as origin owner thereof, may execute its exclusive right, authorizing or prohibiting the public communication of the work at the same time that the author "and" its assignee execute its own remuneration right, evidently there is an affectation to the user of the work, who may be demanded a double, triple or multiple payment.

b) Limits of the Bill's Wording

Upon the utilization of the conjunction "and" that includes the author "and" the assignee as subjects of the presumed rights of "royalties" or remuneration, the Court itself got lost in an absurd discussion, by interpreting the notion of assignee beyond the wording. Some Ministries sustained that the author and the assignee may not coincide as owners of the same right, at the same time (they deny the sense of the conjunction that is used in the article 26 bis, saying that the "and" is actually an "or"), while other Ministers appointed that as assignee it shall only be understood as the individual who receives the rights by transmission mortis causa (admitting the conjunction sense of the 26 bis, restricting the legal meaning of assignee). The wrong interpretations of the Supreme Court of Justice have produced such discussion, that the case is in thesis contradiction. The aforementioned in virtue of a legislative work that was deficient from origin.

 c) Chamber of Deputies Approach

Not approving the above, the Chamber of Deputies currently is analyzing the possible adoption of the article 26 ter, in order to extend the "system" of remuneration of the reproduction of works. The consideration that sustains this initiative is that:
"The authors and composers of music, may collect directly and independently, through an attorney or by means of a collecting society to which they are members, the royalties that correspond to (sic) for the reproduction of its works, without affecting in any way, the royalties belonging to the publishers of music, who execute a derived right..." (Decision of the Commission of Culture of the Chamber of Deputies, Page 2)
As may be observed, the initiative is supported over a new proposal form SACM, considered to solve a problem which affects only the music industry. Moreover, SACM employs expressions such as "composers" or "publishers", allusive terms in the musical media. However, the initiative turns out to be deficient on the technical ground and its methodology. What is worse is that in virtue of the article 26 bis, there is a whole experience that apparently has not given a benefit. It is important to insist on the harmful effects of the article 26 bis, that transferred to an article 26 ter, shall produce serious damages to the users of the works — in many cases the general public, who is the final user of the copies-, before the possibility of the "royalties" that the owners may demand of the patrimonial rights, besides the authors "and" its assignees, as beneficiaries of the remuneration right or the article 26 ter. The assumption of the decision is unacceptable, besides it result an acknowledgement of SACM for demanding a direct "royalty" of the user, that adds to the one obtained indirectly, the user also and for the same act of exploitation-reproduction and distribution of a work-, as a result of the assignment agreements that enter with the publishers or other assignee of rights, independently of the existing disputes among the parties of such agreements. The only actual effect of this bill is to involve the users of the works in the disputes among authors and rights assignees.

 3. Outlook

Finally, it is concerning the adoption of a "system" of remuneration applied to the public communication, even more concerning is if it is concentrated on the rights of reproduction and distribution. The reproduction is way of exploitation of works that the owner of the patrimonial right controls, through its authorization. Derived from the patrimonial right of exploitation, the owner may impede that any third party do copies of the works and therefore, may take criminal actions or complaints against the infringers of the reproduction right.
If a remuneration "system" is adopted for the reproduction right, there is a risk of slanting the relevant patrimonial rights, making invalid every chance of compliance through the criminal actions or complaints, that precisely demand the no authorization. Paradoxically, the aforementioned shall harm mainly the authors and the owners of the copyrights, original or derived, due to the fact, that under an interpretation such as the one that the Court has provided to the article 26 bis, transferred to the 26 ter, any third party may do copies or reproductions of its works, without any authorization, under the only obligation of making a payment or "royalty", as it is set forth in the referred precepts. It is important to mention that a situation like this shall generate a greater index of counterfeiting, in this "legal" case and in general, shall provoke a situation of out of control.