[The IPKat] [Guest post] No cultural funding from a collecting society at its own discretion and not for unauthorised parties

[Eleonora Rosati]

[Guest post] No cultural funding from a collecting society at its own discretion and not for unauthorised parties

 Eleonora Rosati Sunday, April 05, 2026 - C-840/24, CJEU, collecting societies, copyright, Guest post, Norbert P. Flechsig, VG Wort

The IPKat has received and is pleased to host the following guest contribution by Norbert P. Flechsig (Faculty of Law, University of Tübingen, Germany) concerning the recent Opinion of Advocate General (AG) Szpunar in VG WORT, C-840/24. Here’s what he writes:

No cultural funding from a collecting society at its own discretion and not for unauthorised parties

by Norbert P. Flechsig

In Case C-840/24 AG Szpunar takes the view that Article 11(4) and Article 12(4) of the Collective Rights Management Directive (CRMD), read in conjunction with Article 5(2)(b) of the InfoSoc Directive and Article 6(1) of the Rental and Lending Rights Directive (RLRD) are to be interpreted as not precluding a Member State’s legislation which allows a collecting society to use part of the revenue from the administration of rights for cultural activities which may also benefit persons who are not copyright holders, provided, however, that the rightholders receive fair compensation and appropriate remuneration.

The question arises as to whether this view can be considered convincing. In my view, there is no legal basis for it.

The main proceedings

The claimant, an author of academic works, complained that the German collecting society VG WORT had reduced the distributions by deducting expenses for cultural promotion measures, carried out through the VG WORT Fund for the Promotion of Science (Förderungsfonds Wissenschaft der VG WORT GmbH, FFW). In doing so, VG WORT used deductions from revenue collected as compensation for private copies and as remuneration for lending by public libraries.

IPKat-recommended cultural activities

The Federal Court of Justice (BGH) deemed it possible that VG WORT, under a provision of German law, might be entitled to do so without the consent of the rightholders and even if this would benefit unauthorised persons.

However, the BGH considered it necessary to clarify issues of EU law by means of a preliminary ruling from the CJEU.

Summary of the AG Opinion

The AG bases his Opinion primarily on a particular understanding of literary and artistic property rights. He assumes that these rights differ in principle from ownership of tangible objects. The main function of that property and of the law protecting it is to contribute to artistic and scientific creation. Whilst this contribution primarily consists of ensuring that authors and performing artists receive appropriate financial remuneration for their activities, it should also pursue more general objectives in the sense of contributing to cultural development. In line with this special role of literary and artistic property in society, the role of collecting societies should not be limited to distributing the proceeds from the administration of rights to the rightholders. Their collective management of rights is carried out in the collective interest not only of the rightholders, but also of the users of works and the public (Opinion para. 1 et seq., 26 et seq.).

In line with this view, the AG considers it permissible to make very substantial deductions from the collection proceeds to be distributed to the rightholders: In the case of deductions from the revenue derived from the exploitation of exclusive rights, an upper limit of 10% is generally regarded as acceptable (see Opinion para. 27). In the case of remuneration claims such as compensation for private copying or remuneration for public lending, the scope for discretion on the part of national legislators or the collecting societies themselves appears to be greater.

The funds could be used for cultural and educational activities that benefit not only rights holders but also the general public or specific individuals such as scholarship holders (Opinion para. 27 et seq). Revenue from the enforcement of claims for fair compensation for private copying and for public lending could also be used for such support measures (Opinion paras. 44–65). The general assembly of members of the collecting society is entitled to decide on the support measures itself (Opinion paras. 33, 41). Finally, it is feasible that the CRMD could be interpreted as not precluding a national provision which permits collecting societies to implement such support measures (Opinion para. 38).

Critical assessment and recommendations for resolving the case

The AG’s view that the fundamental right to intellectual property differs in principle from the right to ownership of tangible property and must therefore, unlike the latter, also serve the public interest and the interests of users is incompatible with EU law. Under Article 17 of the EU Charter of Fundamental Rights, the fundamental right to intellectual property is, rather, an integral part of the general fundamental right to property (InfoSoc Directive Recital 9; CJEU C-277/10, Luksan para. 66 et seq.). Although it is not protected without restriction but must be balanced against other fundamental rights, it serves, like ownership of property, to protect the rights holder’s fundamental rights under individual law. Contrary to the observations in the Opinion, it cannot therefore be inferred from the very nature of the intellectual property right alone that private-law organisations could be authorised by the EU legislature or a national legislature to use, at their own discretion, revenues from the management of the right, in amounts they themselves determine, for unspecified cultural promotion measures for the benefit of third parties. Consequently, the EU legislature may also impose restrictions on copyright only under the strict conditions set out in Article 17 and Article 52 of the EU Charter. The CRMD does not contain such restrictions in the first place and therefore contains no provisions that would satisfy the requirements of EU law regarding restrictions on property rights.

According to the legal definition in Article 3(a) of the CRMD a collective rights management organisation is an organisation that manages copyright or related rights ‘on behalf of several rightholders for their collective benefit’. The obligation to act exclusively for the benefit of rightholders is specified in Article 4 of the CRMD to the effect that Member States shall ensure that collecting societies act in the best interests of the rightholders whose rights they represent and that they do not impose on them any obligations that are not objectively necessary for the protection of their rights and interests or for the effective management of their rights‘.

Nor does the CRMD provide that the general assembly may, contrary to this primary obligation of the collecting society, decide of its own accord to promote the cultural interests of third parties using management revenues. Under Article 8(d) of CRMD, the general assembly merely decides on ‘the general policy on deductions from revenue‘ and not on the specific purposes for which such deductions are to be used (to distinguish between these different powers see Article 8(5) (b) and (c)). Accordingly, Article 12(4) also does not authorise the general assembly to decide on the use of collection revenues for the promotion of third parties.

The use of revenue from the fair compensation under Article 5(2)(b) of the InfoSoc Directive to finance general cultural promotion is unlawful simply because, according to established case law of the CJEU, fair compensation is to be paid to rightholders as compensation for legally permitted private copies. Member States must ensure that rightholders actually receive the fair compensation. It is permissible only for part of the fair compensation to be paid to the rightholders indirectly via social and cultural institutions established for their benefit, provided that these institutions actually benefit the rightholders and the operating arrangements of these institutions are not discriminatory (CJEU C-521/11, Amazon.com International Sales and Others, paras 46 et seq.).

The same applies to remuneration for lending in the public library sector, which also serves as compensation for loss. Even if this remuneration were to exceed the amount payable at least to the authors as rightholders, a collecting society should not be permitted to pass on the difference to third parties who have not granted it any rights or claims to manage. Furthermore a collecting society’s tariffs must not exceed the economic value of the use.

That is why the CJEU should not interpret EU law in the manner set out in the Opinion of the AG. Even in the AG’s view, cultural activities of a collecting society funded by revenue from fair compensation for private copying and remuneration for lending by public institutions are only permissible ‘in so far as rightholders receive, directly or indirectly, fair compensation and appropriate remuneration’ (Opinion, para. 66). As explained, however, even under EU law, a collecting society’s tariffs may not include additional amounts for the cultural purposes of third parties. Regarding remuneration for public lending, the AG even states himself, with reference to the case law of the CJEU, this may be much lower than the appropriate remuneration (Opinion para. 61).

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