The role and challenges of collective management organizations in copyright protection

Introduction

Copyright applies to a work that exists in an objective form, meaning the object protected by copyright is created in reality [1]. The author acquires copyright upon the creation of the work. An author is a natural person whose intellectual and creative activity results in the creation of a work. In some cases, the use of a copyrighted work requires appropriate permission. From the moment a copyright-protected object is created, the possibility of its use arises, thus posing a threat to the rights of its owner.

To prevent copyright infringement, it is essential to have legal mechanisms in place within the state for its protection. In Georgia, there are various mechanisms for combating copyright infringement. Concerning the protection of copyright property rights, there are two ways to protect them in Georgia: individually and collectively. Each of these methods has its advantages and disadvantages.

For the author, a work represents an object of property, similar to how any other person might regard a personal car or any other item they own. The management of copyright over a work, due to its abstract nature, is doubly complex compared to movable objects. For many authors, the work and the right to receive royalties when used by third parties are their only source of income.

Given the above, the relevance of copyright protection itself generates immense interest in studying the activities of collective management organizations. This is especially true in the current internet era when copyright infringement has become a very simple action. Ultimately, we reach the conclusion that studying and analyzing the role of collective management organizations in managing copyright property rights is a crucial and contemporary issue.

The importance of effectively operating collective management organizations for copyright protection and property rights management in Georgia is growing daily. On June 27, 2013, an Association Agreement was signed with the European Union. This agreement explicitly states that the signatory parties should cooperate with collective management organizations. It is noted in the agreement that the parties should strive for dialogue and cooperation with relevant societies for collective management to facilitate the accessibility of works and other protected objects within the territories of the parties and to transfer royalties for the use of such works and other protected objects [2].

After understanding the essence of the problem and thoroughly studying the normative and theoretical material, it is challenging to assert that there are no works and regulations on the given topic. However, it is also difficult to claim that the problem has been studied comprehensively, as evidenced by the level of legal awareness in society and the level of copyright protection. The issue of copyright property rights protection by collective management organizations is currently explored in a fragmented manner and requires a much deeper approach, especially in Georgia.

When discussing the activities of collective management organizations, particularly in Georgia, it is necessary to use a comparative research method. As already mentioned, copyright law is a relatively new field of law for Georgia, and it is important to consider the practice and experience of foreign countries. It is also important to use the historical research method to understand the preconditions and reasons for the establishment of collective management organizations, to comprehend the steps taken in the past, and to ensure more effective protection of copyright.

The use of the dogmatic research method is also necessary. The issue has been studied fragmentarily, and to discover something new, it is necessary to review what has already been comprehended and written by researchers. To better understand the solutions to the problem discussed in the work, it would also be appropriate to use a sociological method. The essence of the problem lies in the public's lack of information. Understanding the attitude of society, even through interviews or surveys, will significantly contribute to finding solutions to the mentioned problems.

The research is based on the analysis of the activities of the collective management organization in Georgia, highlighting legislative and practical gaps and processing the information obtained in this way to achieve the set goal.

The purpose of this work is to present the legislative and practical gaps related to the activities of collective management organizations and to propose ways to address these gaps. For this purpose, the activities of the collective management organization will be analyzed–this will help highlight the problems in the activities of the collective management organization in Georgia and propose ways to solve them; ambiguous norms in the legislation will be analyzed, and suggestions for their improvement will be made, which, in turn, is important for improving copyright protection in the country.

I. The history of the establishment of collective management organizations

1. Preconditions for the Establishment of Collective Management Organizations

Intellectual property is a form of property that, although not absolute, is a constitutionally guaranteed right [3]. The right to intellectual property is inviolable. "Every person has the right to the protection of their moral and material interests as a result of any scientific, literary, or artistic works of which they are the author" [4].

Property rights over intellectual property are equated with property rights over physical objects. Thus, copyright property rights are special rights that have an absolute character [5, p. 56].

The fundamental principle of copyright law is that the author should share in the economic benefits that their work brings [6, p. 68]. Collective management organizations of property rights play a central role in upholding this fundamental principle of copyright law. While an author/copyright holder is authorized to protect their property rights independently, in practice, it can be said that it is nearly impossible for an author/copyright holder to fully protect these rights independently.

The legislation grants the copyright holder the right to manage their copyright individually. According to some scholars, although managing copyright on a collective basis expands the circle of users, it raises doubts about the actual income of the authors [7, p. 81]. However, when managing copyright property rights on a collective basis, the benefits received by the author are much greater than the risk of their income being mismanaged.

By its nature, a collective management organization serves as the best bridge between copyright holders and users of copyrighted objects (hereinafter referred to as "users") because it most effectively ensures the collection and subsequent distribution of royalties for the use of copyrighted objects for copyright holders.

All of the above has naturally led to the necessity of establishing collective management organizations. The effective management of property rights and the complexities arising from the abstract nature of these rights are the main preconditions for the creation of collective management organizations.

2. The Purpose of Establishing Collective Management Organizations

The use of a copyrighted work sometimes requires appropriate permission and the payment of royalties. Receiving compensation for one’s intellectual and creative work and effectively protecting one's own creation is a natural demand of the author, as the creator of the work. As previously noted, there are two ways to collect copyright royalties: the author may take on this responsibility themselves, or, in other cases, a copyright association or collective management organization may handle it. Collective management organizations provide the most effective and comprehensive way to ensure this, and they are created specifically for this purpose.

"Collective management" involves the collective performance of specific tasks, which inherently has a "collective" subjective aspect. This requires an organizational structure, the will to manage, and a pursuit of a name (recognition) [8, p. 423].

The primary purpose of establishing a collective management organization is the collective management of copyright and related rights. To achieve this, the organization:

• Represents and protects the interests of copyright and/or related rights holders;
• Monitors the use (exploitation) of copyright and related rights;
• Fights against the illegal use of copyright and related rights;
• Issues permissions (licenses) for the use of copyright and related rights objects within the territory of Georgia;
• Collects and distributes royalties due to copyright and related rights holders based on reciprocal representation agreements with similar organizations in foreign countries;
• Manages the property rights of foreign authors and related rights holders on a collective basis within Georgia;
• Develops legislative proposals aimed at improving the legal mechanisms for regulating copyright and related rights by the legislative and executive authorities.

We can conclude that the purpose of establishing collective management organizations is closely tied to their functions. This synthesis aims to ensure the most comprehensive protection of the author’s rights, based on the realities they face.

3. The Formation of the First Collective Management Organization

In general, the collective management of copyright is almost as old as copyright itself. The foundation for the collective management of copyright was laid in 1777 in France for the management of dramatic and literary works created for theater.

On July 3, 1777, the well-known author Beaumarchais gathered a group of 22 other authors to respond to the Théâtre-Français for the unauthorized use of their works (International Confederation of Societies of Authors and Composers – The History of Collective Management). Thanks to Beaumarchais’s tireless efforts, the 14-year-long struggle of the authors concluded with the enactment of the first copyright law in France in 1791, which was ratified by Louis XVI on January 19, 1791. This was the first time in history that authors' rights were officially recognized.

Initially, collective management organizations were formally established for managing music copyrights. The first such organization was SACEM (France's collective management organization (Société des Auteurs, Compositeurs et Editeurs de Musique – Society of Authors, Composers, and Music Publishers)), founded in 1851. This date is significant as it laid the groundwork for the adoption of the Berne Convention in 1886, which established the protection of literary and artistic works.

For a long time, music copyright management was carried out individually by music publishers. Composers and lyricists later realized that, given the increasing and widespread use of music, the protection of performance rights granted by new copyright laws could not be effectively managed solely by publishers, as they lacked the necessary control and enforcement capabilities. Additionally, it would be a considerable effort for copyright users to negotiate a license agreement with every rights holder individually. The transaction costs incurred in such a scenario would be so high that it would render the use of the works impractical.

In this context, the collective management of property rights offers the possibility of fairly accommodating the interests of both parties–authors and users of the works [9, p. 83].

II. Problems related to the activities of collective management organizations

1. Specifics of the Activities of Organizations Managing Copyright Property Rights on a Collective Basis

Collective management organizations (CMOs) are not state structural units; instead, they are private legal entities in all countries worldwide. Georgian legislation explicitly defines the legal form of a CMO. Specifically, Article 63, paragraph 2 of the Law of Georgia on Copyright and Related Rights establishes that a CMO is created voluntarily, directly by copyright and related rights holders, i.e., by interested parties. The law also clarifies that it is not a creative union, which, by its nature, is an independent and functionally different institution. CMOs are established as non-commercial (non-profit) legal entities. They are membership-based organizations, as their operation is impossible without members. They are created directly by copyright and related rights holders and serve their purpose of collecting royalties on their behalf and subsequently distributing them to the members.

Due to their specific nature, CMOs are unique entities, characterized by their specific approach in relations with members and users. Consequently, certain legislative gaps exist due to this specificity, which has emerged through the practice of CMO activities.

CMOs are non-commercial, non-profit organizations founded for the collective administration and management of economic rights. They have cultural and social functions, but their most significant function is economic. It is impossible for an author to be both an artist and a good manager and financier simultaneously. Therefore, CMOs carry out these functions, assisting authors in the administration of their earnings. Without CMOs, many authors and performers would struggle to make a living, as they would find it difficult to continue their creative process while also managing royalties from their works.

Using Armenia as an example, the object of collective administration may include: public performance rights, public broadcasting, audio-video reproduction, broadcasting and retransmission, cable transmission rights, and retransmission. Armenia’s example is significant because the CMO operating there, similar to Georgia, is unique and the only organization of its kind in its jurisdiction, simultaneously protecting all types of copyright.

CMOs are founded directly by authors or the respective rights holders. They administer economic rights within the scope of authority granted by written agreements. The collective administration of the same category of rights should be assigned to only one CMO. The right to remuneration within the framework of collective administration is possible in the following cases: a) Remuneration for the distribution, redistribution, cable transmission, or retransmission of a phonogram created for commercial purposes; b) Remuneration for the distribution, redistribution, cable transmission, or retransmission of a display contained in a phonogram created for commercial purposes; c) Remuneration for the resale of a display; d) Remuneration for the rental of the original or copies of a work, as well as for the reproduction of performance recordings or audio-video recordings; e) Remuneration for the use of a work, live performance, or performance stored in a phonogram (except those created for commercial purposes), as well as for the retransmission of audiovisual recordings and phonograms by cable.

According to the contracts with copyright and related rights holders, CMOs and similar foreign organizations grant users the right to use works and related rights objects under a licensing contract. They also have the right to calculate and collect fees paid by users. The terms of use for any user within this category are similar. An organization cannot refuse to enter into a contract with a user without a reasonable cause.

According to Article 64 of the Law of Armenia on Copyright and Related Rights, CMOs have the following functions: a) Conclude licensing agreements with users regarding the use of copyright and related rights objects; b) Agree with users on the amount of remuneration and other terms of the contract; c) Agree with users on the amount of remuneration in cases provided by law where the CMO collects fees without a contract (e.g., rental, use of phonograms for commercial purposes); d) Collect copyright and related fees and distribute them to the copyright and related rights holders they represent; e) Deposit the subject of copyright and related rights and issue the relevant document at the rights holder’s request; f) Conclude reciprocal agreements with similar international organizations; g) Deduct commission fees from the collected amounts to cover collection, distribution, and tax expenses; h) In the simultaneous use of protected and unprotected objects/works, transfer the appropriate amount for the use of the unprotected object to the relevant fund established by it, with the consent and benefit of the rights holders; i) Use the collected amount for the benefit of other copyright and related rights holders and the organization itself if the copyright and related rights holder cannot be identified within the period stipulated by law; j) Perform other functions with the permission of the copyright and related rights holders; k) Implement any legal act necessary for the realization of rights; l) Provide a report on the completed work to the rights holders if requested.

CMOs are responsible for any failure to fulfill or improper fulfillment of legal obligations. However, many issues related to collective administration remain outside the scope of legal regulation. Therefore, appropriate amendments are necessary to improve the control system.

2. Issues Related to the Use of Copyright Property Rights Managed by Collective Management Organizations in Georgia

It is practically impossible for authors to manage their copyright property rights individually when it comes to the use of their works in certain ways. For example, an author cannot independently contact every radio station or television channel to negotiate a licensing agreement and receive the appropriate royalties for the use of their works. Similarly, it is not practical for television and radio stations to seek individual permission from each author for the use of every copyrighted work [10].

The impracticality of individual management of copyright property rights, both for the rights holders and the users of the works, necessitates the functioning of collective management organizations (CMOs) [11, p. 8].

Collective management organizations generally manage the following copyright property rights:

• Performing Right: The live or mechanical performance of musical works in nightclubs, restaurants, and other public places, as well as the public performance of dramatic works;
• The Right of Broadcasting: The public transmission of works through radio/television, either live or recorded;
• The Mechanical Reproduction Right: Reproduction of musical works on compact discs, cassettes, mini-discs, or other similar formats;
• The Right of Reprographic Reproduction: Reprographic reproduction (copying) of literary and musical works.
• There are various types of CMOs that collectively manage different property rights depending on the category of the works they cover [11, p. 8].

Currently, in Georgia, there is only one CMO, the Copyright Association of Georgia (hereinafter referred to as the Association). The Association has the exclusive right, transferred by the author/copyright holder, to collectively manage the following property rights [11, p. 8]:

• The right to publicly perform works;
• The right to broadcast works to the public via radio or television;
• The right to transmit works to the public via cable;
• The right to retransmit works when broadcasting via cable and/or radio;
• The right to reproduce works (recording into computer memory) and make them accessible to the public (right of access);
• The right to reproduce and distribute copies of works through mechanical (digital) recording on any material carrier (audio, video cassettes, compact discs, microchips, etc., including karaoke format) and to distribute, rent, or reproduce such works (excluding reproduction through book publishing);
• The right to reproduce, distribute, publicly perform, publicly display, broadcast to the public via television, cable, or any other means audiovisual works that include published musical works, with or without text, either in part or in full;
• The right to reprographic reproduction (copying) of works;
• The right to collect royalties for the author’s benefit for the use of works without issuing licenses (permits) in cases stipulated by law or by contracts with third parties;
• The right to issue licenses and receive royalties for other types of uses as prescribed by law [12].

Summary

Collective management organizations (CMOs) are vital for the efficient management and protection of copyright property rights, particularly in cases where individual management is impractical. Originating in the 18th century, CMOs facilitate fair compensation for creators by acting as intermediaries between copyright holders and users, issuing licenses, and distributing royalties. In Georgia, the Copyright Association of Georgia is the primary CMO, managing various rights such as public performance, broadcasting, and mechanical reproduction. Despite their crucial role, challenges and legislative gaps exist, necessitating ongoing improvements to enhance copyright protection and ensure fair administration of rights.