Vasil Kisil & Partners Wins the First Case over Withdrawal of Rights from CMO
Eva Media LLC, an exclusive licensee of U.S. rightsholder, has sent a request to the Ukrainian League of Copyright and Related Rights (ULCRR) for withdraw its phonogram catalog. The ULCRR is a collective management organization (CMO) exclusively authorized to collect remuneration for public performance of phonograms in Ukraine.
The CMO has ignored the application filed by the right holder not alone but tried to collect remuneration from catalog users, believing that it only has the right to do so. Users who paid the remuneration to Eva Media LLC as a licensee started to doubt whether the rights had been in fact withdrawn because a list of withdrawn phonograms was not published on the ULCRR website.
Although the CMO has six months to withdraw the phonograms, the right holder had been waiting for an answer for almost a year and then filed a lawsuit against ULCRR. The Ministry of Economy of Ukraine as a controlling body over accredited CMOs and PressCom LLC as a music catalog distributor joined the case. The courts of three instances sustained the claim filed by Eva Media LLC and ordered ULCRR to take actions to withdraw the rights to the catalog.
As part of the case, the procedure for withdrawal of rights from the CMO has been analyzed for the first time ever, though its detailed regulation was introduced in 2018 by the Law on Effective Management of Property Rights of Right Holders in the Field of Copyright and (or) Related Rights (Law 2415).
We are grateful to the client for the trust and proud that the court's judgment shows how the CMO should actually deal with rights holders. We hope that the case will contribute to the fair and transparent management of copyright and related rights in Ukraine. If ULCRR fails to learn from this example how to observe the law, then the right holders should not be afraid of resorting to court and collecting their legal expenses from the CMO.
Please find below the most important findings regarding enforcement of the Law 2415, that have been confirmed by the Supreme Court:
1. A licensee, such as Eva Media LLC, may withdraw its rights because it is the right holder within the meaning of Law 2415.
2. It is a proper and effective remedy if the rights are recognized to have been withdrawn. The withdrawal of rights is a unilateral transaction made with effect from the date when the CMO received the application. The rights are withdrawn from the date when the CMO receives the application, while six months are needed to take the other actions.
3. Law 2415 contains an exclusive list of information that must be set out in the application for withdrawal. The CMO may not impose any additional requirements, let alone demand a fee for the withdrawal of rights. The court pointed out that if the CMO added requirements that contradicted Law 2415, they were unlawful.
4. Having received the application, the CMO must take actions to complete the withdrawal and, in particular, terminate legal proceedings relating to such phonograms and not collect the remuneration. Finally, the CMO should publish on its own website information relating to the phonograms rights to which have been withdrawn. Such publication signals to the users that they must contact the right holder directly to pay the fee.