Time to face the music

Introduction

Earlier this year, on 6 March 2025, the Court of Justice of the European Union (CJEU) issued its judgment C-575/23, in which it ruled against compulsory transfers of related rights to an employer. This case could have effects on the national laws in both Belgium and other EU member states, potentially causing employers, producers and governmental bodies alike to reexamine their copyright transfer mechanisms. In addition, the CJEU shed some light on the scope of application of Directive 2019/790 on copyright and related rights in the Digital Single Market (DSM). The decision promptly triggered widespread reactions, primarily due to these uncertain implications for national laws. We have been closely monitoring developments and, now that the initial dust has settled, take stock of the current situation.

 

The CJEU ruling

The case related to an ongoing dispute between the National Orchestra of Belgium (ONB) and its musicians. For five years, the musicians' trade union delegation and the ONB attempted to agree on a transfer of related rights to the ONB. After multiple failed attempts and a “memorandum of disagreement” signed by the musicians, a Royal Decree was adopted on 1 June 2021 by the Belgian State. This Royal Decree imposed a statutory transfer of the musicians' exclusive rights of communication to the public and reproduction and distribution rights in exchange for an annual fixed allowance of 600 EUR. The Belgian government relied on a Royal Decree, as the ONB's musicians were engaged under an administrative law statute similar to that of civil servants.

The CJEU's ruling in March stated that such a compulsory transfer of rights without the prior consent of the musicians (who are performers) is contrary to EU law.  According to the CJEU, more specifically, the Royal Decree was found to violate the provisions of Directive 2001/29 (InfoSoc Directive) and Directive 2006/115 (Lending Directive), since performers’ rights are of a preventive nature. Additionally, the principles of contractual freedom and a fair balance of the rights and interests under the DSM were not respected.

 

The impact on national laws

The CJEU made it clear that a transfer of related rights requires the prior consent of the performers. As a result, the Belgian Royal Decree is found to be contrary to EU law. At first glance, this might seem insignificant, as the Royal Decree only related to the ONB's musicians. There are however other provisions and practices in both Belgian national copyright laws and those of other EU member states which are brought into question by this case.

Firstly, the practice of statutory transfers in Belgium is not uncommon, as governmental bodies also rely on legislative statutes to obtain the copyrights of their civil servants. In addition, articles XI.182 and XI.206 of the Belgian Code of Economic Law provide a rebuttable presumption that copyrights and related rights of the author and performer of audiovisual works are transferred to the producer. Some EU member states, such as the Netherlands, go even further and provide the presumption that the copyright of employees is transferred to the employer, unless agreed otherwise.

The question arises as to what extent the practice of statutory transfers and presumed transfers respect the requirement to obtain prior consent and the contractual freedom under the DSM.

Regarding statutory transfers, it should be noted that the CJEU's ruling does not categorically prohibit statutory transfers of related rights, as long as a prior consent was obtained. The CJEU also allows EU member states to decide how such prior consent must be given. For example, consent could be granted through negotiations with an individual or through collective agreements with union delegations. In the case at hand, the memorandum of disagreement signed by the musicians left no doubt that no prior agreement was obtained by the ONB, hence such a statutory transfer was unlawful. The situation would have been different if the negotiations between the ONB and the musicians were successful and codified in a Royal Decree.

Regarding presumed transfers, it has been suggested by legal doctrine that such a presumption does not allow for a proper prior consent. These scholars suggest that the presumption must be reversed to favour the authors and performers – for example by creating a rebuttable presumption that no transfer takes place, unless agreed otherwise. Some other scholars note that precisely this rebuttable nature of the presumption provides for sufficient proof of prior consent, as the involved parties could decide to exclude such a transfer. To settle this debate, the CJEU cases C-277/10 (Luksan) and C-484/18 (Spedidam) could offer some clarity. In the Luksan-case, the CJEU decided that a presumed transfer of exploitation rights for cinematographic works to producers can be compatible with EU law, provided that such a presumption is not irrebuttable. In the Spedidam case, the CJEU explained that rebuttable presumptions are merely procedures for proving that prior consent has been granted. Since parties can still demonstrate that no such consent has been granted, there is no violation of EU law.

Even if the rebuttable nature of presumed transfers is accepted by the CJEU as proof of prior consent, the DSM still requires that appropriate and proportionate remuneration is offered. The current CJEU case did not offer any guidance as to whether a fixed annual fee of 600 EUR fulfilled this requirement. In any case, this condition poses no great obstacle for Belgium's presumptions regarding audiovisual works, as articles XI.183 and XI.206, par. 3 of the Belgian Code of Economic Law explicitly provide that authors and performers are entitled to separate remuneration for each type of the transferred exploitation rights.

In summary, it seems that both statutory and presumed transfers could be compliant with EU law, although national laws might need to be amended in order to eliminate compulsory transfers, to provide appropriate and proportionate remuneration, and to allow for the possibility to rebut transfer presumptions.

 

The temporal and personal application of the DSM

The case C-575/23 is not only relevant due to its ruling on statutory transfers, but also because it clarifies both the temporal and personal application of the DSM.

Regarding the application ratione temporis, article 26 of the DSM provides that the DSM applies to all works (including performances) that are protected by copyright on or after 7 June 2021. Its second paragraph states however that the temporal application shall not prejudice any acts concluded and rights acquired before 7 June 2021.

The Belgian government argued that the DSM is not applicable, since the performances by the musicians for the ONB were regulated by a Royal Decree adopted on 1 June 2021 and published on 4 June 2021. It is interesting to note that the Royal Decree entered into force on its publication day, whereas royal decrees normally only enter into force on the tenth day following their publication.

The CJEU did not agree with the Belgian government and stated that such a reasoning would run contrary to the DSM's aim to protect performers in the event of a transfer of their rights. Therefore, acts of exploitation regulated by contracts or legislative acts which predate the DSM can still fall under its scope, if there are future effects which take place after 7 June 2021.

Regarding the application ratione personae, it is important to remember that the ONB's musicians were engaged under an administrative law statute similar to that of civil servants. The Belgian referring court was uncertain whether the DSM was applicable, due to the DSM's referral to “contracts of authors and performers”, “contractual freedom” and “contractual provisions” in articles 18 to 23. The CJEU clarified that the term “contract” should be interpreted broadly and that the term “performer” is an autonomous concept of EU law. Consequently, the DSM also applies to performers employed under statutory agreements.

 

Conclusion: Clear copyright transfer mechanisms needed

In certain EU member states, such as the Netherlands, the current case law of the CJEU could require a change in agreements with all employees who create and innovate on behalf of their employer, such as product and software developers, advertisers, content creators, journalists, etc. In others, including Belgium, agreements with performers and authors of audiovisual works could be impacted.

Regardless of which national laws apply, intellectual property rights are of high commercial value across all EU member states and all sectors. It is therefore important that employers, companies and producers have a clear and enforceable agreement regarding the transfer of copyright or related rights, or at least legal certainty ensured by robust national legislation that is aligned with EU law.

Considering the CJEU's ruling, DLA Piper can assist you with the following mitigating actions for employers, producers and governmental bodies alike:

• Verify whether the current contract portfolio and contract templates provide for an unambiguous and effective transfer of rights created or developed by employees, performers or statutory personnel.
• Consider including an explicit intellectual property transfer clause in contracts;
• Ensure that there is an agreement on the compensation for such assignment, for example by stating in the contract that such a compensation is included in the salary or renumeration.
• Assess and mitigate new risks in due diligence projects, given that the target might not have correctly obtained all relevant intellectual property rights from its employees.
• Ensure that the prior agreement of trade union delegations or other representatives has been obtained when relying on collective negotiations or statutory acts.