Article Story: RENTAL AND LENDING - AND A WAILING AND GNASHING OF TEETH - PART I

Date: 15/4/1997

Antony Gostyn embarks on a 3-month voyage into the unfathomable waters of S.I. 1996 No. 2967 (legal-speak for the Copyright and Related Rights Regulations). This month he looks at the new rental and lending rights provisions. Next month he will consider what the Regulations mean for performers.

The first of a series of three articles on THE COPYRIGHT AND RELATED RIGHTS REGULATIONS 1996

Long in gestation but short in Parliamentary debate, these regulations burst or, rather, stumbled forth in December 1996. The Regulations came into effect on 1 December 1996, almost before the final version had been printed, and amend and extend the Copyright, Designs and Patents Act 1988 ('the CDPA'). The Regulations implement, belatedly, the provisions of three European Council directives dealing with rental and lending rights, satellite broadcasting and cable retransmission and the harmonisation of the term of copyright protection (to the extent such harmonisation was not dealt with in the Duration of Copyright and Rights in Performances Regulations 1995).

This article summarises the changes in UK law relating to the rental and lending of copyright works. It should be treated as a guide to the topic and not as detailed advice.

Rental and lending rights

On 1 December 1996 a new restricted act of renting or lending to the public was introduced in respect of literary, dramatic and musical works, artistic works (other than works of architecture in the form of buildings or models for buildings, or works of applied art), films and sound recordings.

'Rental' means making a copy of a work or the original available for use, on terms that it will or may be returned, for direct or indirect economic or commercial advantage. 'Lending' means making a copy of a work or the original available for use, on terms that it will or may be returned, otherwise than for direct or indirect economic or commercial advantage through an establishment which is accessible to the public. (Where such an establishment makes a charge which does not go above what is necessary to cover the operating costs of the establishment, the charge is not deemed to be an economic or commercial advantage).

'Rental' and 'lending' do not include making available for the purpose of public performance or exhibition, playing or showing in public, broadcasting or inclusion in a cable programme service or making available for on-the-spot reference use. In the feature film exhibition business, prints of films are 'rented' to cinemas. Without this exception, the supply of feature films to exhibitors would fall within the definition of rental. 'Lending' does not include making available between establishments which are accessible to the public.

The lending of copies of a work by an educational institution is not an infringement of copyright; nor is the lending of a book by a public library if the book is within the public lending right scheme or the lending of copies of a work by a prescribed library or archive (other than a public library) which is not conducted for profit.

The Secretary of State has the power, where there is no certified licence scheme under the CDPA, to provide that the lending of copies of literary, dramatic and musical works, artistic works, sound recordings or films are treated as licensed by the copyright owner subject only to the payment of such reasonable royalty or other payment as may be agreed or determined, in default of agreement, by the Copyright Tribunal.

Film production

Where an agreement concerning film production is concluded between an author or prospective author of a literary, dramatic, musical or artistic work and a film producer (and 'film' for copyright purposes includes television programmes), the author will be presumed, unless the agreement provides to the contrary, to have transferred to the film producer any rental (but not lending) right in relation to the film arising by virtue of the inclusion of the work in the film. This presumption does not apply to the screenplay, the dialogue or any music specifically created for and used in the film.

Equitable remuneration

Where the author of a literary, dramatic, musical or artistic work or the director of a film transfers his rental right concerning a sound recording or a film to the producer of the sound recording or film, he retains the right to equitable remuneration for the rental.

The author or director cannot assign his right to equitable remuneration except to a collecting society, to enable the collecting society to enforce the right on his behalf. (The right is transmissible by testamentary disposition or by operation of law, and it may be further assigned by any person to whom the right is assigned.)

The amount payable by way of equitable remuneration is as agreed between payer and payee, or, in default of agreement, as determined by the Copyright Tribunal. It is payable by the person entitled for the time being to the rental right. If they cannot agree on the amount of equitable remuneration, the payer or the payee may apply to the Copyright Tribunal to determine the amount payable.

Remuneration will not be considered inequitable merely because it was paid by way of a single payment or at the time of the transfer of the rental right. An agreement is of no effect in so far as it purports to exclude or restrict the right to equitable remuneration or to prevent a person questioning the amount of equitable remuneration or to restrict the powers of the Copyright Tribunal.

It remains to be seen whether the introduction of the right to equitable remuneration in respect of the rental of certain copyright works will have a significant effect on the film and television industries. Although there seems to be a recovery in the video rental market, only a limited category of films (in copyright terms) is rented to the public. Few television programmes generate rental revenue. Feature films are the mainstay of the rental market, and the majority of these are produced in the United States.

From the point of view of producers, it is unfortunate that the Regulations permit authors and directors to re-open the issue of the amount of equitable remuneration to which they might be entitled. Although an agreement may provide that the author has been paid on a buy-out basis, the author can insist on revisiting the matter by applying to the Copyright Tribunal. The author may not actually succeed in getting any more money out of the producer, but the producer could be involved in considerable time and expense in fending off a claim. Until a test case is fully argued, no one can be sure what might constitute equitable remuneration. It may be a lot more, or a lot less, than anybody thinks!

Transitional provisions and savings

The regulations came into effect on 1 December 1996. Where the making of a work extends over a period, it is deemed to have been made when it was completed.

Subject to the special transitional provisions and savings set out in the Regulations, the Regulations apply to copyright works made before or after 1 December 1996 , but no act done before 1 December 1996 will be regarded as an infringement of any new right conferred by the Regulations (i.e. a right arising by virtue of the Regulations in relation to a copyright work, but excluding any right to remuneration arising under the Regulations) or as giving rise to any right to remuneration arising by virtue of the Regulations.

It is unclear whether the Regulations apply to agreements made before 19 November 1992. It certainly is not clear that they do not!

Special provisions

In the case of pre-1 December 1996 film production agreements, the presumption of transfer of the rental right applies, unless the agreement provides to the contrary, but the exception from the presumption in the case of the screenplay, the dialogue or music created specifically for the film does not apply. The right to equitable remuneration applies (subject to the exclusions referred to below).

There is no right to equitable remuneration under the Regulations in respect of (a) any rental of a sound recording or film before 1 April 1997 or (b) any rental after that date of a sound recording or film made in pursuance of an agreement entered into before 1 July 1994, unless, in the case of (b), the author notified the person by whom the remuneration would be payable before 1 January 1997 that he intends to exercise that right.

The new rights relating to copyright works do not apply to copies acquired before 1 December 1996 for the purposes of rental or lending to the public.

Antony Gostyn

<< back to articles