The court will listen to music in the cinema – Newspaper Kommersant No. 196 (7397) of 10/21/2022

A new twist has taken place in the legal proceedings of the Russian Authors’ Society (RAO) and cinemas over penalties for music in films. Following a lawsuit filed by the company against one of the cinemas, the intellectual property court decided to seek clarification from the Constitutional Court (CC). The question is how legal it is to collect royalties in favor of not specific foreign authors, but legal entities to which musicians transfer the rights to their songs. The further practice of recovering royalties from cinemas for music depends on the outcome of the case. However, a number of experts doubt that market participants will be able to change the practice that has developed in favor of UES.

The Intellectual Property Court, within the framework of considering the claim of RAO against the Premier Hall cinema chain in the city of Meleuz in Bashkiria, regarding royalties for music in films, decided to apply to the Constitutional Court for clarification on the legality of these penalties. This was told to Kommersant by the managing partner of the Dedkov and Partners Bar Association, Evgeny Dedkov, who represented the interests of the cinema. It follows from the file cabinet that on October 20 the consideration of the case in cassation was suspended.

RAO collects royalties from cinemas for music in films in favor of its authors, both Russian and foreign (3% of fees), and traditionally, court practice is in favor of society. “As part of the case, the cinema challenged the collection of royalties under paragraph 3 of Art. 1263 of the Civil Code in favor of music publishing houses named by RAO as “right holders” in relation to the said remuneration without confirmation of this status by any documents,” Evgeny Dedkov explained.

The cinema insists that payments not directly to the authors, but in favor of legal entities, including film studios and publishing houses, RAO has no right to collect.

As part of the consideration of the case, the intellectual rights court first requested scientists (of three institutions, including Moscow State University), but did not receive a consensus, therefore it turned to the Constitutional Court “with a request to verify the constitutionality of the norm of paragraph 3 of Article 1263 of the Civil Code of the Russian Federation on the right of the author of music included in film, to receive remuneration during the public performance of the film,” says Evgeny Dedkov. Now Hollywood films have dropped out of the repertoire of Russian cinemas, but “the royalties that cinemas paid in previous years are at stake,” he explains: past periods. If the Constitutional Court gives an explanation about the illegality of penalties in favor of the studios, this may change the entire practice of RAO’s claims against cinemas, the lawyer believes.

RAO Executive Director Alexei Karelov explained to Kommersant that the request to the Constitutional Court refers to the norm of the Civil Code of the Russian Federation, which states that when a musical work is performed publicly, its authors retain the right to remuneration.

“Cinema theaters state that this right belongs only to the authors and cannot be transferred to other persons. That is, they demand to deprive the right to remuneration of heirs and other right holders. Such a position is contrary to the law – the right to remuneration is part of the exclusive right and is alienable, i.e. can be inherited and transferred under an agreement,” says Alexey Karelov. It is common practice for authors to interact with music publishers and labels, he added: “the intellectual property court used its right to request the RF Constitutional Court to get a clear and unambiguous position and close the issue of ownership of the right to receive remuneration once and for all.”

The issue of payments to foreign authors has escalated in recent months. As Kommersant wrote on September 1, the largest cinema chain in Russia, united by Formula Kino and Cinema Park, said that it is necessary to pay remuneration to authors from “unfriendly” countries only after the return of their organizations to the Russian Federation. Cinemas and restaurateurs are asking RAO to suspend royalties on foreign music from March (see “Kommersant” dated March 23, 2022), but they assure that there are no problems with the calculations.

The disputed point concerns who is the copyright holder of the music that is part of the film, explains the managing partner of Zuykov and Partners Sergey Zuykov.

“RAO collects money in favor of the copyright holder, which should be the producer of the film. But so far too little information has been presented to understand the prospect of recognizing this norm as unconstitutional,” the lawyer believes.

Yury Fedyukin, managing partner of Enterprise Legal Solutions, doubts that applying to the Constitutional Court can affect the practice: “The Constitutional Court can only check the compliance of the norm itself with the Constitution, it does not check its application by the courts.” Much more meaningful, according to the lawyer, would be to send a complaint to the Supreme Court within the framework of a specific dispute, such a decision would be very important for practice.

Valeria Lebedeva