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Constitutional complaints against the right to remuneration adjustments in copyright law unsuccessful
Press Release No. 71/2013 of 28 November 2013
Order of 23 October 2013
1 BvR 1842/11
In a decision that was published today, the First Senate of the Federal Constitutional Court rejected two constitutional complaints against decisions of the Federal Court of Justice on the adequacy of translators' fees in publishing. Neither the contested decisions nor the relevant provisions of the Copyright Act violate the Constitution. To counteract social and economic imbalances, the legislature may limit by mandatory statutory law the freedom to agree on the payment for professional services in individual contracts, a freedom protected by Article 12 sec. 1 of the Basic Law (Grundgesetz - GG). Thus, a copyright provision that grants the right to have the adequacy of contractually agreed remuneration for the exploitation of a work reviewed by a court is compatible with the Basic Law.
Facts of the Case and Course of the Proceedings:
1. The constitutional complaints are directed against a provision in the Copyright Act that was amended in 2002, as well as against two decisions of the Federal Court of Justice (Bundesgerichtshof) on the adequacy of translators' fees in publishing, which are based on this provision. The complainant is a hardcover publisher.
2. § 32 of the Act on Copyright and Related Rights (Urheberrechtsgesetz - UrhG) gives authors the opportunity to ask the courts for a review of the adequacy of their remuneration for contracts on the granting of exploitation rights and permission for the exploitation of their work. If the agreed compensation is not equitable, the author may require the other party to consent to a modification of the agreement so that the author is granted equitable remuneration. This provision entered into force on 1 July 2002. In addition to this, § 132 sec. 3 sentence 3 UrhG stipulated that the provision also applies to contracts concluded between 1 June 2001 and 30 June 2002, provided that the right or permission granted is used after 30 June 2002.
With the new regulation, the legislature meant to strengthen the legal position of the authors, who tend to be in a weaker bargaining position than the companies exploiting their works. According to the legislature, copyright law is based on the general principle that authors are to share equitably in the economic success of their labour and their works. While this principle had been implemented to some degree, this was not the case where freelance authors, such as literary translators, were facing structurally superior exploiters of their works.
3. Under a contract with the complainant, the plaintiff in the initial proceedings 1BvR 1843/11 translated the non-fiction book "Destructive Emotions: A Dialogue with the Dalai Lama". The agreement included a page fee of 19 € per standard page, a percentage-based sales fee for sales of more than 15,000 copies, and an interest in licensing revenues from the exploitation of ancillary rights. The complainant paid the plaintiff about € 13,500. The plaintiff's motion for an adjustment of the contract was unsuccessful before both the Regional Court (Landgericht) and the Higher Regional Court (Oberlandesgericht). The Federal Court of Justice reversed the judgments in part and ordered the complainant to consent to an increase of the plaintiff's share in sales fees and ancillary rights, to provide certain information, and to pay an additional € 6,841.22 (judgment of 20 January 2011 - I ZR 19/ 09 -).
4. Under a contract with the complainant of February/March 2002, the plaintiff in the initial proceedings 1BvR 1842/11 translated the novel "Drop City" by T.C. Boyle. They agreed on a fee of 18.50 € per standard page, a percentage-based sales fee for sales of more than 20,000 copies, and an interest in licensing revenues. The plaintiff received approximately € 18,000 from the complainant. Also in these proceedings, the Federal Court of Justice partially reversed the judgments of the Regional Court and the Higher Regional Court, which had rejected the plaintiff's motions (judgment of 20 January 2011 - I ZR 20/ 09 -). It ordered the complainant to consent to an increase of the plaintiff's share in sales fees and ancillary rights, to provide certain information, and to pay an additional € 13,073.04.
Key Considerations of the Senate:
1. § 32 UrhG is compatible with the freedom of occupation (Art. 12 sec. 1 GG).
a) This fundamental right also encompasses the freedom to bindingly negotiate remuneration for professional services. The legislature may limit this freedom by mandatory statutory law to counteract social and economic imbalances. In doing so, it has to recognise the conflicting fundamental rights and - taking account of its mandate to ensure a social state - balance them according to the principle of practical concordance in such a way that they are as effective as possible for all parties. The legislature has a broad margin of appreciation for creating such a balance. It is the legislature's political responsibility to assess the economic and social factors relevant to the conflict, as well as to forecast future developments and effects of its regulations.
b) The legislature comprehensibly assumed that the authors' equitable participation in the economic success of their labour and their works was only partially guaranteed. § 32 UrhG is intended to help in particular low-income authors who are in a weak negotiating position to also put their copyright to economic use. The judicial review of the adequacy of an author's remuneration adequately balances the fundamental rights of the different parties. Copyright law is based on the general principle that authors are to share equitably in the economic success of their works, which is laid down in the participation principle of § 11 sentence 2 UrhG. The author's right to equitable remuneration is also subject to international and European guarantees.
However, the provision considerably impairs the exploiters' freedom to practice an occupation. The freedom to negotiate the content of the remuneration agreements with the authors is an essential part of their professional practice. The agreement on a price for a service is also an essential part of private autonomy (Privatautonomie), and it is usually left to the market. Furthermore, § 32 UrhG limits the function of a contract to provide security for both parties with regard to legal questions and planning.
However, an overall assessment shows that the impairment of the exploiters' freedom to practice an occupation is not disproportionate to the protection of the authors' interest in an equitable share in the economic success of their works. § 32 UrhG does not completely eliminate the exploiters' options to negotiate the amount and conditions of the authors' remuneration, but merely excludes agreements on inadequately low remuneration. The provision thus requires a comprehensive consideration of all relevant circumstances. The fact that it is upon the author to raise and prove the conditions for an adjustment of the contract means that there is a procedural safeguard against unreasonable alteration requests. The interests of the exploiters are also taken into account by the option to establish, together with the authors, joint remuneration agreements pursuant to § 36 UrhG, the adequacy of which shall be irrefutably presumed in proceedings before the courts. The legislature was free to react in a generalising way to what it considered a structural imbalance between authors and the exploiters of their works; and it was not obliged to also provide price controls for the benefit of the exploiters.
2. That the transitional provisions of § 132 sec. 3 sentence 3 UrhG require § 32 UrhG to also apply to contracts concluded before the new regulation's entry into force does not violate the principle of non-retroactivity pursuant to Art. 20 sec. 3 GG. The legislature sought to prevent via the retroactive effect that works for which contracts had already been signed, and for which thus no additional compensation would have to be paid, compete with works whose exploitation rights were transferred according to the new regulation. This is sufficient to justify the new regulation's retroactive effect during the short period of 13 months.
3. The Federal Court of Justice's determination of an adequate compensation does not violate the complainants' right under Art. 3 sec. 1 GG as an arbitrary application of the law. This particularly applies to calculating the translator's share of the proceeds from ancillary rights on the basis of the share of the foreign author ("author's share"). It will be the task of the regular courts to determine the author's share in more detail, in particular with respect to the shares of the foreign publisher and any agents involved, while taking account of the Federal Court of Justice's orders on the appeal for the right to be heard (Anhörungsrügebeschlüsse).