21 October 2022
#Company News

Movie theaters are fighting for the right to revise payments for soundtracks

IP Court, in the consideration of the RAS's (Russian Authors' Society) claim against the Premier Hall cinema chain in the city of Meleuz in Bashkortostan, regarding royalties for music in films, decided to seek clarification on the legality of these penalties to the Constitutional Court.

RAS collects royalties from cinemas for music in films in favor of its authors, both Russian and foreign (3% of the fees), and traditionally, the practice in courts is in favor of RAS. “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 RAS as “right holders” in relation to the said remuneration without confirming this status with any documents,” explained Evgeny Dedkov, managing partner of the Dedkov and Partners Collegium of Advocates, representing the interests of the Premier Hall. The cinema chain insists that RAS has no right to collect payments in favor of legal entities.

IP Court first requested scientists, but did not receive a consensus, so 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 a film to receive remuneration during the public performance of the film.” “If RAS wins, then we can expect a wave of lawsuits against cinemas on music, which were previously on pause, precisely for 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 RAS claims against cinemas, Evgeny Dedkov believes.

RAS Executive Director Alexey Karelov explained that the request to the Constitutional Court concerns the norm of the Civil Code of the Russian Federation, which states that when a musical work is performed in public, its authors retain the right to remuneration. “Cinemas 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.

The issue of payments to foreign authors has escalated in recent months. For example, Russia's largest film chain, the united Formula Kino and Cinema Park, said that remuneration should be paid to authors from "unfriendly" countries only after the return of the organizations representing them to the Russian Federation. Movie theaters and restaurateurs are asking RAS to suspend payments for foreign music from March, but RAS assures that there are no problems with the calculations.

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 RAS.

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. “RAS 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.

Source: Kommersant Publishing House

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