Court of Appeal of Amsterdam Ruled On Sound Producers' Neighboring Rights Claims
Judgment of the Court of Appeal of Amsterdam of 4 May 2010
(Koelewijn c.s./SENA)
Source picture: www.sena.nl
The Neighboring Rights Act (NRA) inter alia grants
rights to performing artists and phonogram producers (for instance
record companies) with regard to the exploitation - in brief:
publication and reproduction - of their performances and
phonograms, respectively (read: the first recording of
sounds/music). With regard to a publication of a phonogram that has
been released for commercial purposes, or a reproduction thereof,
for instance playing a Madonna CD in a bar, this right concerns a
right to payment. This means that (the reproduction of) the
phonogram may be played without the rightholder's consent,
provided that a reasonable compensation is paid. This compensation
is collected collectively and paid to the rightholders by the
collective management organization SENA.
The production of a music phonogram, on the basis of which music
can be further reproduced and exploited by means of sound carriers
(mostly CDs), is in practice as follows: a record company has
artists perform the piece of music in the studio. Recordings are
made of this performance, which occurs under the direction of a
sound producer engaged by the record company.
The Dispute
This matter concerned various famous Dutch sound
producers like Peter Koelewijn, Hans van Hemert, Jochem Fluitsma,
Eric van Tijn, John Ewbank and others ("Koelewijn et
al."). Koelewijn et al. are of the view that they, being sound
producers, can be regarded as phonogram producers, or as performing
artists within the meaning of the NRA. In this capacity they argue
that they can claim compensation from SENA. SENA, however, rejected
this claim, which was a reason for Koelewijn et al. to summon SENA
to appear before the Court of Amsterdam in 2008. The Court ruled
that Koelewijn et al. did not qualify as phonogram producers and
therefore rejected their claims in an interlocutory judgment. With
respect to the question of whether sound producers are deemed to be
performing artists, the Court considered in the (interlocutory)
judgment that it wished to ask preliminary questions in this
respect to the European Court of Justice. Koelewijn et al. have
lodged an appeal against this - apparently appealable -
interlocutory judgment. Unfortunately for them, they were also
turned down by the Court of Appeal.
The Judgment of the Court of Appeal
Firstly, the Court of Appeal ruled that Koelewijn et al. did not
qualify as phonogram producers, in the sense that a phonogram
cannot be regarded as a product of the sound producer. This is not
altered by the fact that the sound producer is the actual
"creator" of the recording, as Koelewijn et al. have
argued. What matters is who carries the investment risk that is
connected to the recording of a record. This is exactly where the
phonogram producers derive there neighboring rights from, which
must enable them to earn back the considerable costs required for
the production of the phonogram.
According to the Court of Appeal, the investment risk referred
to lies with the clients of the sound producers. After all, all
costs for the production of the phonogram are borne by such
clients. The record company pays the artists and makes a budget
available to the sound producer, with which the recordings can be
realized. Sound producers perform their work in this respect
"only" by order of the record company, in return for
which they receive a royalty over the record proceeds. The fact
that with this remuneration structure the sound producers also take
some financial risk, because in the event of disappointing record
proceeds their investment of time can possibly not be 'earned
back' entirely, is, according to the Court of Appeal, not
sufficient to regard them as phonogram producers.
Where Koelewijn et al. operate purely as sound producers, in
other words, separate from the activities that the sound producers
may possibly perform as musicians or orchestral conductors,
according to the Court of Appeal they are not performing artists
either within the meaning of the NRA. The Court of Appeal pointed
in this respect to the distinction that the NRA makes between the
performance of a work and the recording of this performance. For
instance, Article 2 (1) (a) of the NRA stipulates that the
performing artist has the exclusive right to grant permission for
the recording of his performance. This assumes that a performance
does not coincide with the recording thereof, but is separate
thereto and is also possible without these recordings, according to
the Court of Appeal. The Court of Appeal therefore did not see how
the sound producer, who is carrying out the recordings, can have
the entitlement to the above-mentioned right of the performing
artist. After all, there is no question of any performance the
sound producer could give permission for being recorded.
According to the Court of Appeal, it is not relevant that sound
producers, as Koelewijn et al. put forward, make a considerable
artistic contribution to the sound that is eventually recorded. The
Court of Appeal has assumed that this artistic contribution is
already included in the protection that the NRA offers the
phonogram producer. After all, at the time of the recognition of
neighboring rights for, inter alia, phonogram producers in
the 1961 Rome Convention, the phonogram producer normally carried
out the sound producer's work himself. According to the Court
of Appeal, this above-mentioned system is not altered by the fact
that nowadays phonogram producers mostly outsource this work to
external sound producers.
Koelewijn et al. have also pointed out to the Court of Appeal
that their work as sound producers is comparable to that of the
(stage) director, of whom it is assumed that he can actually derive
protection from the NRA as a performing artist. The Court of Appeal
did agree to this comparison, but this did not change its judgment.
In this connection the Court of Appeal once again referred to the
above-discussed distinction: the performance of a stage play is
separated from the recording thereof.
Furthermore, the fact that the NRA did not give separate
attention to the sound producer, supports the Court of Appeal in
its opinion that the sound producer cannot derive any neighboring
rights from this law.
Conclusion
After a battle for years and years for the recognition as
rightholder under the Neighboring Rights Act, the sound producers
fall between two stools: they are neither regarded as phonogram
producers, nor as performing artists. Therefore, the sound
producers will have to (continue to) make do with the remuneration
they receive from their clients.
With the judgment of the Court of Appeal of Amsterdam, for the
time being the European Court of Justice does not have to examine
the question, like the Court of Amsterdam intended to request, of
whether sound producers as performing artists, let alone as
phonogram producers, have neighboring rights. It is a pity that
this chance to get a definite answer in this respect at a European
level has now passed. However, Koelewijn et al. can still appeal to
the Supreme Court.