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The Battle for Fair Remuneration: A Slovenian Drama with International Consequences

Odklop

Odklop

By Edgar Tijhuis.

Sometimes it seems like time stood still in Slovenia. In 2009 Variety magazine reported about a “royalty battle” in central and eastern Europe. Television producers and other rights-holders of audiovisual material, were allegedly losing up to 10 million euros a year in royalties, as the international collecting agency AGICOA[1] was kept out of these markets. In Slovenia, where AGICOA had been working for almost ten years through a local partner (SAZAS), it collected $1.8 million for producers in 2008 alone. However, AGICOA feared that it would be forced out of the country. What was still in the air in 2009 happened soon afterwards. AGICOA was no longer able to collect royalties from Slovenia.[2]

Seven years later, the most remarkable conclusion is that, in fact, hardly anything changed, or at least it has not gotten any better. Perhaps even more surprising, this story never attracted attention abroad, where the biggest affected rights-holders are located – this may have taken place in one small EU country, but the effects are international, and the example may just be the tip of the iceberg. To be sure, inside Slovenia the collection of royalties for cable retransmission of AV material has regularly led to heated discussions.[3] Both the previous Collective Management Organization (CMO), SAZAS, as well as the new one, AIPA, have been accused of failing to administer the collection and payment of royalties in an adequate way. The most astounding, however, is the enormous drop in collection of royalties since AIPA took over from SAZAS. Where SAZAS collected around 8 million euros yearly, this dropped to just over 2 million when AIPA took over. Given differences between the consecutive licenses, it is difficult to draw definitive conclusions based on these numbers alone. Nevertheless, the sheer size of the difference cannot be explained by these changes alone. Also worth examining is why AIPA stated in the licensing procedure that they were expecting to collect 3.5 million euros, whereas in practice they managed only 2 million in the first year, only increasing years later.

To understand more of the situation, one needs to go back to the licensing procedure that led to the change in CMO, as well as developments since then. Documents from this procedure were gathered by the author, as well as other documents about the CMOs and SIPO (the Slovenian Intellectual Property Office). Furthermore, the author questioned many insiders from all different sides, including AIPA, SAZAS, SIPO and a number of individual rights-holders inside and outside Slovenia. The following paragraphs describe the experiences of some of the biggest rights-holders in Slovenia. Furthermore, it describes the licensing procedure, including the role of SIPO, which issues the license and should regulate the market. Finally, the last part discusses a rather remarkable story that has so far been kept out of the news: a struggle inside AIPA to replace the current management.

Confused Rights-holders

Several rights-holders complained that they either did not receive remuneration from AIPA, or received remuneration but not based on monitoring of actual use, and mainly based on advance fees for the future. One of them is Andrej Kregar (VPK Studio) one of the best-known Slovenian producers, responsible for several TV-series and movies. Kregar signed up his work with AGICOA and has both received royalties through AGICOA in the past, as well as currently from AIPA. Nonetheless, Kregar was confused by letters he received from AIPA. As he expressed in an interview for this article, AGICOA’s distribution of royalties was very transparent, but when AIPA took over, I did receive some payments, but without specifications and mainly advance payments for years to come.”

Kregar showed me the statements he received from AGICOA. They include every relevant detail, like the exact date and time when each program was aired, the duration and the exact amount of royalties. One look at the statements from AIPA shows a quite different picture. A brief statement that is almost completely made up of advance payments for next year, and has no details as to actual use. The latter is necessary to calculate the actual right to royalties, as is also clear from AIPA’s own rules for the distribution of royalties, which are available on their website. Though these rules seem complete and clear, they are only relevant if they are actually applied to the use of works from rights-holders who can check them over. According to the standard letter that accompanies the royalty statement, more information can be obtained by accessing the online system of AIPA. Kregar tried this, but did not get any more relevant information, except for the amount that was paid to him – which was already mentioned in the letter.

Besides the lack of clarity, Kregar argues that “cable operators should pay a reasonable amount per subscriber, at least 2 euros per month.” The cable operators, however, currently only have to pay 0.83 euro per active subscriber plus 0.01 euro for each channel above 50 channels. Through a specific clause, the total amount appears to have been lowered to 0.56 euro for a maximum of 100 channels and 0.59 euro for more than 100 channels, if cable operators and AIPA sign the relevant contract within sixty days.[4] Why the operators receive such a huge discount is not clear from the contract.

Kregar is not the only one confused by his royalty statement from AIPA. Others point to the same issue with royalty statements that mention “Prejudem 2015” or “Avans” (advance), which makes up more than 90% of all royalties. So no monitoring nor specification of actual use in the cable system, but advance payments, while it is unclear what the royalties actually should be. Though there may be a reason for an advance fee at some point, it is unclear why the actual use in the given year is not monitored, despite the fact that this was done in the past and seems to be even easier today, given the increased technical means available.

The Licensing Procedure

In Slovenia, the Slovenian Intellectual Property Office (SIPO) issues licenses to CMOs for the collective management of rights of co-authors or audiovisual works. As there initially was no specific CMO for audiovisual works, a temporary license was issued to SAZAS, a CMO dealing with musical rights. In 2008, an application for a license was sent to SIPO by AIPA, a new organization that was established specifically for the rights for audiovisual works.

The licenses that SIPO finally issued in 2010 and 2012 include lengthy summaries of the whole application procedure. According to the license from SIPO, the licensing procedure started in July 2008, when AIPA filed the application for the collective management of rights of authors, performers and film producers of audiovisual works. The application enclosed their Statute, Rules on distribution and a list of persons who authorized the collecting society to act on their behalf. According to SIPO, however, the documents that AIPA attached to the application were insufficient. A September 25th 2008 letter from SIPO, based on Slovenian Copyright Law, asked for a statement on the number of persons who had authorized the CMO to manage their rights, an evaluation of the economic significance of rights for the efficiency of management, evidence of the CMO’s material base and a clarification on how they intend to insure the continuous management of cable retransmission rights. According to the Copyright Act (art 146), all these documents and information needed to be sent to SIPO with the application, in this case no later than with the July 2008 application.

On November 6th 2008, AIPA replied that they had not obtained the authorization from the rights-holders because they did not yet exist as a collecting society, but they nevertheless had the support of the entire Slovenian audiovisual community and were representing 97% of all works.

When asked about the claims of wide support, Tomislav Cegnar, founder and director of the Association of Audiovisual Authors (AVA), shook his head. “The repertoire that was assigned to VG Media, EBU and AGICOA alone, which did not authorize AIPA, already represents over 50% of all audiovisual content aired in Slovenia, so it’s hard to imagine how they end up at 97%. Furthermore, it was suggested they were authorized by big foreign parties, like Universal, but we never saw any proof of that.”

On October 23rd 2008, SAZAS filed an application to be awarded the status of a by-participant in the procedure that was in motion. With its resolution of March 17th 2009, SIPO rejected this application, because SAZAS had no legal interest to enter in the procedure, according to SIPO. On July 22nd 2010, SAZAS filed another request and again SIPO dismissed it on the grounds of lack of legal interest.[5]

On October 30th 2008, Cegnar, director of AVA, objected to the permit being issued to the applicant. SIPO asked AVA to describe the legal interest and subsequently dismissed the request on January 19th 2009, because the answer came too late and AVA had been registered too late, according to SIPO, though it was registered earlier, on November 26th 2008. On April 19th 2010, AVA filed a new request to become a by-participant in the procedure, but SIPO decided AVA had no legal interest.

Finally, AGICOA also intervened in the procedure in May 2009. They sought a permit for themselves, as well as to be accepted as by-participant in the already running application procedure. SIPO also dismissed this application, and argued it would not be efficient to merge the procedures and, furthermore, that AGICOA lacked legal interest.

Meanwhile, in January 2009, for the second time, SIPO demanded from AIPA a list of persons who had authorized the applicant (as well as their repertoire). In April 2009, SIPO requested an explicit statement of the rights AIPA intended to manage collectively. Later, in June 2009, SIPO summoned AIPA once again to produce an explicit statement on the rights it intended to manage. Besides these statements, new versions of the Statute of AIPA, as well as the Rules of remuneration, were made and sent to SIPO after its repeated requests, in September 2009, and again in November 2009, and March 2010. In April 2010, SIPO gave AIPA yet another chance to clarify its Statute and Rules on remuneration. After receiving the response in May 2010, SIPO once again found that certain provisions in the Statute and Rules on distribution were still not in accordance with the law and, once again, AIPA was given the chance to change them. After yet another amendment of both documents, SIPO was finally satisfied, and issued a permit on the 11th of October 2010, almost two years after the application was submitted.

After the permit was issued, the Administrative Court of Slovenia repealed the decision by which AGICOA’s request had been dismissed. The court referred to the Copyright Law (art 149) that explicitly holds that when a second party submits an application, while no decision has been taken yet on the first one, both applications should be decided on in one procedure. So without any legal base, SIPO had dismissed the application by AGICOA, and the procedure had to be done again.

With the dismissal of AGICOA’s intervention in the application procedure, it seems from the SIPO summary of the procedure that AIPA, SAZAS and AVA had failed to send in applications (or interventions) fulfilling the criteria of Slovenian law. However, whereas the repeated applications of SAZAS and AVA were quickly thrown out on formal grounds, AIPA was given chance after chance to complete and correct its application that did not fulfill the explicit criteria of the Slovenian Copyright Law. And as for AGICOA, the Slovenian court in fact ruled that their application should not have been dismissed at all.

Cinnamon Stephens, a specialist in copyright and a lawyer and consultant in this field, comments on the kind of procedures between state agencies and CMOs.[6]

“Obviously a desirable quality in any licensing system is an expedient process that offers applicants clear guidelines for submission requirements, consistent criteria, and an efficient appeals process. Ideally, of course, the process of granting the license/permit would establish a baseline of information the CMO is required to provide its clients and the records necessary to maintain the permit.” In the procedure described here, the way SIPO handled all the different applications seems rather far away from the preferred route.

During the licensing procedure and the following period, SIPO’s management was changed many times. At least six different (acting) directors headed the office, and most of the time left after a short while.[7] One director was fired by the Ministry of Economic Development and Technology because of allegations of mobbing five of his employees.

Finally, on May 26th 2015, SIPO announced it was in the process of revoking the license of AIPA, because of a number of alleged violations of the copyright law. SIPO published an announcement on their website on this decision, and it was later discussed on a TV show. For unknown reasons, however, SIPO did not follow up on this action, and no decision was taken. In the meantime, the announcement on the SIPO website disappeared. Following this, the Slovenian organization of independent audiovisual producers (GIZ SNAPV) filed an official request for access to information regarding the intention to revoke the license for the collective management, on September 17th 2015. GIZ SNAPV has been fighting for their rights for years, and had a clear interest in getting the relevant information and documents from SIPO. SIPO, however, did not respond within the term (not more than 20 days), that is laid down in Slovenian law. GIZ SNAVP thus called for a decision on the request on October 28th 2015. The request was finally refused by SIPO, on November 26th 2015. It stated that GIZ SNAVP is not a party in the procedure and thus not entitled to the information.

Internal Legal Battles inside AIPA

Nova dvajseta

Nova dvajseta

After the license went from SAZAS to AIPA, Tomaz Grubar went to AIPA to see how they handled the rights of rights-holders to audiovisual material. Grubar is a producer of a substantial repertoire spanning over twenty years, with TV series like Odklop (“Turned-Off”), Zmenkarije (“Rendezvous”), the sport series Adrenalina, the comedy series TV dober dan (“TV Good Afternoon”), and the currently running Nova dvajseta (“The New Twenties”), as well as the most popular currently running Slovenian daily format, Ena žlahtna štorija (“A Sad Story”). In 20 years, over 800 episodes were produced of the most popular TV products in Slovenia.

What Grubar saw at the office of the new CMO was a big surprise. “When we went to AIPA to check the catalogue of works they protect we found some of our own works as well, though we had entrusted all our works with AGICOA, and not with the new CMO! And the repertoire was very illogically archived. This means they are collecting, or at least can collect, for all our works without being authorized to do so, and we never received any remuneration in the five years since then.”

Given the experience of Grubar, and worries of other rights-holders, the founders of AIPA decided unanimously they had to change the functioning of AIPA, to make sure it performs its tasks well for the people that it should service: the rights-holders to audiovisual works.

The rights-holders/founders came together in 2014 and drafted new articles of incorporation for AIPA, and legalized them in a notary act. Most significantly, they decided to fire its director and appoint three new persons to its board. Matjaz Zbontar was appointed as director.

Zbontar is well-known in Slovenia and received numerous awards for his films in Yugoslavia, and various international awards for presentations of Slovenia. Zbontar explains what happened since then: “On the 12th of August 2014, the court in Ljubljana registered the transformed founding act, as well as the appointment of the new director and headquarters. However, SIPO as well as AIPA’s managing board, appealed against the registration. The court of first instance granted the appeal of SIPO, but rejected the appeal by AIPA’s managing board, because of lack of interest. The founders appealed to the higher court, and this court annulled the decision of the court of first instance, and thus confirmed the decisions by the founders. Now both SIPO and AIPA appealed again, and the same judge changed his decision on the 16th of December 2014. Now their turn, the founders appealed again and succeeded. Meanwhile, the judge who decided in the previous instance was dismissed from this procedure and from the Registry Court. At the moment, the case is still running and no final decision has been taken.”[8]

As a result of all the procedures and the slow registration, the changes that the founders decided on have still not been implemented. Meanwhile, the role of SIPO has been notable. They intervened against the will of the founders, but when asked about this situation by the author, SIPO explicitly stated that the dispute between the founders and the AIPA board did not fall under its supervisory authority, thus suggesting that they were not involved in any way in this dispute…

Conclusion

At first sight, it seemed that time stood still. However, a closer look reveals that things have, in fact, gotten worse. In the six years that passed, many rights-holders have been deprived of the fair amount of royalties for their work. SIPO, the Slovenian Intellectual Property Office, has played a rather strange role, presiding over a seemingly biased licensing procedure in which one organization was favored over the three others that were thrown out. Recently, they have first planned to revoke the license of the same organization they took by the hand for two years to help them get the license, and then seemingly backed off, for unknown reasons. In the years in between, one director quickly followed another at the top of SIPO. For rights-holders, in Slovenia and abroad, the battle is far from over.

While this case deals with Slovenian issues and laws, the rights-holders affected are from around the world, local artists and international stars. And a story in one small EU country may be just the tip of the iceberg. After a related 2015 story on this subject published in Film International, knowledgeable members of audio-visual rights communities elsewhere in Europe made it known their suspicions that similar questionable activities were taking place in their countries, but it was less overtly questionable than the affair has been in Slovenia. Imposition against the rights of any EU citizens will be a concern throughout Europe. While Slovenia’s modest size means that the losses to rights-holders are “only” in the millions, one wonders what may be happening behind the scenes elsewhere in the world, where the larger populations, which result in many more people consuming audio-visual products, may conceal losses in the tens or hundreds of millions. A leak in the dam in any EU country, however small, should raise the eyes of interested parties and law-makers elsewhere.

Edgar Tijhuis is a criminologist and head of Katschberg Consulting in Amsterdam. He earned his PhD from Leiden University and has published widely on art-related crimes and other subjects.

[1] AGICOA represents clients worldwide. It operates under the terms of audiovisual copyright law established by the Berne Convention and the provisions of the Cable and Satellite Directive. Since 2000, it has collected and distributed over half a billion euros of royalty payments on a portfolio of more than a million audiovisual products.

[2] Currently, AGICOA also has no presence in Slovenia. See: http://www.AGICOA.org/english/about/annual_report_14_uk.pdf.

[3] See: http://www.slovenskenovice.si/novice/slovenija/ali-telemach-unicuje-kabelske-operaterje, and, also this interview with the collection organization AIPA’s director, Gregor Stibernik, as well as the response to this from SAZAS in the national newspaper Dnevnik.

[4] See: https://www.uradni-list.si/1/content?id=106712&part=u&highlight=aipa#!/Skupni-sporazum-med-Zavodom-AIPA-in-Zdruzenjem-kabelskih-operaterjev-Slovenije and http://www.uradni-list.si/1/content?id=116241.

[5] The license speaks of “legal interest” several times. The meaning in this case seems to be similar to “standing” in Anglosaxon law.

[6] Cinnamon Stephens Consulting in Amsterdam, the Netherlands (cxsesq@artantiqlaw.com).

[7] September 21st 2015: http://www.uil-sipo.si/sipo/office/about-us/announcements/news-repository/clanki/acting-director-appointed-1/; June 1st 2015: http://www.uil-sipo.si/sipo/office/about-us/announcements/news-repository/clanki/acting-director-appointed-2/; January 23rd 2014: http://www.uil-sipo.si/sipo/office/about-us/announcements/news-repository/clanki/vesna-stankovic-juricic-appointed-director-of-sipo/; October 5th 2012: http://www.uil-sipo.si/sipo/office/about-us/announcements/news-repository/clanki/luka-novak-appointed-director-of-sipo/; October 1st 2009: http://www.uil-sipo.si/sipo/office/about-us/announcements/news-repository/clanki/change-of-head-at-sipo/.

[8] See decision of August 12th 2014 (Srg 2014/34872), decision of August 22nd 2014 (Srg 2014/35998), decision of December 12th 2014 (Srg 2014/53269) and decision of December 16th 2014 (Srg 2014/55142)

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