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Rates for screening not changed
ZAPA   17.12.2020

In the end of November 2020, the Adjudicating Panel of the Copyright Commission (AP-CC) issued decisions by which it refused to approve the remuneration tables of the collective management organizations (CMO) related to film screening in cinemas, but only due to formal considerations. CC arbitrators did examine the remuneration rates included in the applications submitted by CMOs. Those decisions are not final.

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In July 2019, the AP-CC, pursuant to Article 62 of the Code of Administrative Procedure, decided to combine the cases initiated by five collective management organizations to hear them jointly. And when closing the first-instance procedure, it concluded that all the CMOs should file one joint application for approval of their tables. This means that right users and right holders waited for 18 months for a decision that was finally issued on the basis of formal issues that were known when the CMOs filed their applications in mid-2019. The Polish Filmmakers Association does not agree with the AP-CC and is going to file an appeal soon.

Practical meaning of the decision issued by the adjudicating panel of the Copyright Commission

As the Copyright Commission did not examine the rates proposed by the CMOs in their respective tables, settlement with right users will still be made on the basis of the current rates, shaped by years of market practice. Therefore, the combined rate for the SFP-ZAPA and ZAiKS will be 2.1 percent. Operators which refuse to pay royalties due to authors must consider that they can be sued by organizations that represent them. The fact that the tables do not apply does not exclude the possibility to collect royalties as they must be paid by cinemas under Article 70(21) of the Act on Copyright and Related Rights. This requirement has been emphasized many times by court of law hearing litigations between CMOs and right users. A good example is the judgment issued in November by the Court of Appeal in Warsaw in the case Polish Filmmakers Association vs. Cinema City, the largest cinema network in Poland.

Termination of agreements – cui bono?

CMOs are being informed that some cinemas are under pressure to terminate their contracts with the CMOs. Activities to persuade operators to terminate their contracts are now subject to comprehensive legal analyses to check if they represent an act of unfair competition. And cinema operators are misled that the decision the CC made in November means that the rates applied by CMOs cease to be applicable. It is not true that refusal to approve the tables due to procedural reasons (restrictive interpretation of law by the AP-CC indicating that there must be only one application for approval of tables) means that cinemas are not required to pay royalties at the combined copyright rate of 2.1 percent, applicable for nearly 20 years. Cinemas which choose that scenario will be exposed not only to the risk of being obliged to pay court costs, including the costs of legal services for many years, but also to the risk that they will finally have to pay royalties with high interest. Attempts to persuade club and local cinemas to terminate their contracts can only be interpreted as an attempt to support the largest multiple-screen cinemas at the expense of those smaller players. While small cinemas, screening ambitious productions, have been paid for years the royalties due to authors represented by the SFP-ZAPA, multiplex operators kept refusing to pay because the CMO rates were allegedly not accepted by the other cinemas. After many years, when the multiple-screen cinema operators are losing the court cases, the attempts of those large corporations to use club and local cinemas only to support their lines of defense in courts seem even less understandable. The Polish Filmmakers Associations has been trying for years to obtain approval of the royalty rate tables for the filmmakers it represents. And this is the next time when the main obstacle to achieve this goal is purely procedural issues. As a result, and because of the lack of approved tables for many years, the rate to be used for calculation of royalties due to filmmakers will depend on market practice and if it is challenged, judgments that will be issued by courts of law.