364 Bulletin, Copyright Society of the U.S.A. countries they also exercise some of the functions of a labour union. It has always been essential to copyright owners that these societies should be highly efficient. It will be vital in the 1980s that they should also be the standard bearers of the ideals of authorship. Barbara Ringer has outlined the problems of individual authorship admirably in her Donald Brace lecture in 1976. I would like to echo her feeling that the discussion of this problem should not be confined to lawyers or to businessmen such as publishers or film or record producers or the representatives of the information industry—it should be carried on with the active participation of the creators themselves. We should remember that the first society of writers was inspired by Victor Hugo and the first important society of composers by Richard Strauss. Perhaps the most important practical means by which copyright owners can maintain or regain control of their rights is a radical improvement of enforcement procedures. The main areas which will need attention are summary procedures and penalties. Taking penalties first: A 10% inflation rate per annum which, alas, is not uncommon in the 1980s, reduces a penalty provided by law to about half in just over four years and to a quarter in just over six years. This is, of course, a problem affecting all fines imposed as sentences for crime, but it is particularly serious in the copyright field for two reasons. The first is that in the democracies, Parliaments only found time for copyright revision on average every fifty years, and by then these penalties become derisory. Italian law provides a good example. The copyright law was passed in 1941 and certain penalties were revised in 1980. During the intervening years the value of the lira had dropped to a small fraction. The problem is shown in its acutest form in countries with a 50% inflation rate like some Latin American countries or even in excess of 100% like Israel, when penalties cease being effective after a few years. The second reason that penalties are a grave problem in the copyright area is that for copyright infringements, as opposed to other offences, fines have until recently been the only penalty imposed. This is because the courts in most countries are very reluctant to impose prison sentences for offences which the man in the street and in some cases the judges do not regard as “real crimes." To choose a recent example from Hong Kong: A record pirate employing five or six operators and up to a hundred tape recording machines in a four- or fiveroom flat could, a few years ago, have made a million dollars in a year. 13 Ringer, Copyright in the 1980s - The Sixth Donald C. Brace Memorial Lecture, 23 BULL. COPR. Soc'Y 299 (June, 1976). Stewart. International Copyright in the 80's. 365 If he were caught, he would pay the highest fines the courts could impose out of the petty cash. Judges in serious infringement cases are thus faced with Hobson's choice. They can either impose fines which they know to be no deterrent and sometimes derisory or pass prison sentences which for a variety of reasons they are reluctant to do, certainly in the case of first offenders. I need not tell this audience that to persuade the law enforcement agencies and the courts that copyright piracy is a commercial crime of a major order which can only be curbed by the imposing of prison sentences in serious cases is a major task of education and advocacy which may take many years. Yet these major efforts of education will have to be made by many copyright owners in many countries in the 1980s if their copyrights are not to be seriously eroded. The other area where enforcement procedures need strengthening is the area of interlocutory relief, particularly injunctions and orders for search and seizure. Whereas penalties can only be increased by Parliaments and prison sentences only imposed by judges, the vigilance of copyright owners and the ingenuity of copyright lawyers can often bring about the desired results in this field without statutory law reform. Two examples from Europe will illustrate my point: It is often essential to the Plaintiff's case against an infringer who is believed to have infringing articles in his possession to inspect such articles. Inspection has the double purpose of preparing the Plaintiff's case and of restraining the Defendant from making or distributing further infringing copies. If the Defendant is given notice in the usual way of an application to the court for an inspection order, he is likely to dispose of the articles or of the relevant documents. In fact, in cases against record or tape pirates, whether brought by the author or by the phonogram producer, this was almost invariably the case. However in England, in the case of Anton Piller K.G. v Manufacturing Processes,'' the Plaintiff obtained an order for inspection including the photocopying of all relevant documents and delivery up of all relevant articles. The application, which is now standard practice, is made ex parte and in camera. The first the defendant hears of the order is when it is served on him by the Plaintiff's solicitors at the premises to be inspected. The Plaintiff's representatives cannot force the Defendant to let them enter for the inspection but the Defendant may be in contempt of court if he refuses entry. This is explained to him and in fact entry is hardly ever refused. The order is only granted when the Plaintiff has a very strong prima facie case and where there is “a grave danger that vital evidence will be destroyed. . . . and so the ends of justice be defeated.” In the large majority of cases the Defendant submits to judgment with costs, thus saving "1976 Ch 55. 366 Bulletin, Copyright Society of the U.S.A. a great deal of judicial time and expense. The effect is probably as close as one can get to a search warrant in a civil case. The scope of the order goes beyond piracy of phonograms and of copyright cases generally and has been obtained regularly since 1976 both in the U.K. and in other Anglo-Saxon jurisdictions. It is an example of how copyrights can be protected by making case law and without having to ask for special legislation. In several countries, courts have been sympathetic to procedures of a similar kind if it can be shown that there is imminent danger the infringing articles will taken out of the jurisdiction. Another case of imaginative use of existing remedies by copyright lawyers comes from Italy. In the last year there have been four reported cases in the Italian courts, including one in the Appellate Court, in which shopkeepers who sold infringing articles were convicted as receivers of stolen property. If a court can be persuaded that intellectual property is 'property' and that therefore infringing copies are "stolen goods," the copyright owners have gained two decisive advantages. The first is that penalties are far heavier since courts show as a rule less reluctance to impose prison sentences on receivers if the amounts involved are large. The second advantage is that the burden of proving guilty intent, i.e. that the defendant knew that he was handling infringing copies, is less heavy in most countries. In many countries, the burden of proof is reversed, i.e. once it is proved that the property was stolen property, the defendant has to show that he did not know it was stolen property. That means in copyright cases that he must prove that he did not know that the copies he was handling were infringing copies. 2. Collectivisation of Individual Rights and the Creation of Rights Outside the Copyright System The danger of collectivisation of individual rights arises from the loss of control of the copyright owner over his work. This danger is present both in freely negotiated situations with blanket licences and a clearing house system, and in compulsory licence situations. It will have to be seen clearly and analysed in order to be met. Some examples may elucidate my point. In any collecting society there are, after the most meticulously carried out distribution, substantial sums which cannot be allocated to a right owner and are classed as “undistributable." There are basically two ways of handling this situation, although there may be several variations on each of the two. One way is to distribute these amounts by working out the relation of the undistributable total to the grand total of income 13 State v Salvatore Molinari and Antonio Moccia, Court of Appeal of Naples No. 4239/79 of 11 April 1980. Stewart. International Copyright in the 80's. 367 and then adding a percentage as a "bonus" to the receipts of each copyright owner. The other way is not to distribute these funds but to use them for social purposes which may range from pensions for elderly members or their widows to educational support for the young. The main criticism levelled against this “social” method is precisely that it is a form of collectivisation of individual rights. The main criticism of the "bonus" method is that it is giving to the “haves" and not giving to, or possibly taking from, the “have nots." The problem gets even more acute when you have a situation where a substantial proportion or all the revenue collected cannot be individually allocated. Examples in the field of public performance revenue for musical copyrights are royalties collected from juke boxes or discotheques or from radio stations which cannot be persuaded to supply lists of the works used. An example of collectivisation that seems to be acceptable in the social and political climate of the country is the "Fund Law" of 1956 for Neighbouring Rights in Norway. All public performance users of phonograms and broadcasters are paying a royalty into the Fund for the use of these phonograms. The committee of the Fund decides first on the share which goes to the different right owners, in this case record producers and performers. The share of the record producers is paid to their organisation and distributed as far as possible according to copyright rules. The share of the performers, on the other hand, is distributed to individual musicians and their families, not according to playing time or any other copyright principles, but according to the musicians' financial need. The problem has existed in the fields of both copyright and “neighbouring rights" for over a quarter of a century and has sometimes been hotly debated. But it will loom much larger in the 1980s as funds will be flowing into collecting societies through blanket licencing and international clearinghouse systems from sources which make them almost by definition difficult to distribute according to copyright rules. The royalty on blank tape for the "home taping" of phonograms is an example. Royalties for the copying of literary and scientific works in public libraries may be another. The problem does not become any easier to solve by the fact that any solution has social and political, as well as legal, implications. All one can say within the framework of this paper is that from a copyright point of view, either the "social" or the "bonus" system sketched out above or a combination of both or indeed any other method of distribution would be acceptable, provided most right owners are members of the collecting society and the decision is democratically arrived at within the membership of the society. However, this only highlights the problem, as can be readily appreciated by anyone who knows how difficult it is to ascertain the collective will of a large membership 368 Bulletin, Copyright Society of the U.S.A. with very diverse interests. Another side of this problem is posed by the new rights arising from technological change: they can be conceived as copyrights, but need not necessarily be introduced as copyrights at all. The "public lending right" or the royalty on recording equipment or on blank tapes for "home taping" may serve as examples. The impost on recording equipment or blank tapes is a copyright royalty in the sense that it remunerates copyright owners for the use of their works. However, it is, as I pointed out earlier, unorthodox in the sense that the royalty is not paid by the user, i.e. the private person copying a work, but by a third party, the manufacturer or importer of the equipment or the tape. Both the impost on the equipment under German law and the impost on blank tape under Austrian law are conceived as copyright royalties and distributed as such. But it is quite possible to conceive such payments as a kind of levy or tax imposed by the government and distributed in accordance with social or cultural principles for the benefit of the profession adversely affected, a method the French government at one stage wanted to adopt, but was persuaded to abandon. The public lending right in the United Kingdom is contained in a separate Act of Parliament, the Public Lending Right Act 1978, and is not conceived strictly as a copyright royalty. The payments to authors are not made by the user, i.e. the borrowers of books from public libraries. These provide a free public service, the cost of which is funded out of taxation. The payments to authors are made out of a special government fund voted by Parliament. The fund will however be distributed on the basis of copyright principles, i.e. based on the frequency of the use of the work, by the lending of books. On the other hand, in Sweden and in Germany the public lending right (PLR) is conceived as a copyright, it is dealt with in the copyright law and the funds are distributed according to copyright rules. One of the consequences of this distinction is that if PLR is conceived as a copyright, the revenue is subject to the international copyright conventions. Thus, foreign right owners will participate according to the principle of national treatment. However, if the right is not conceived as a copyright, the revenue can be shared among nationals only. This is politically defensible if the funds come, as in the United Kingdom case, out of tax-payers' money and not from the users of copyrighted works. When the PLR scheme in the United Kingdom comes into operation, it appears to be intended that there will be agreements with foreign collecting societies on the basis of reciprocity. This means that foreign authors will be paid out of the United Kingdom fund if the author is a national of a country where PLR exists and where United Kingdom |