Overview of the legal framework of Independent Management Entities (IMEs) in Greece

With articles 2 §6, 4 §8 and article 32 of law 4481/2017, article 2 §4 and article 36 §1 of Directive 2014/26/EU of the European Parliament and of the Council of 26 February 2014 on the collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market (hereinafter: the Directive) were incorporated into the Greek legal order.

The provision introduced into national law the EU-originated concept of independent management entity (hereinafter: IME), which according to the definition of the Directive and the identical definition of article 3 §1, case c’ of law 4481/2017, is understood as “any organization which is authorized by law or by way of assignment, license or any other contractual arrangement to manage copyright or rights related to copyright on behalf of more than one rightholder, for the collective benefit of those rightholders, as its sole or main purpose, and which is: (i) neither owned nor controlled, directly or indirectly, wholly or in part by rightholders, and (ii) organized on a for-profit basis”.

In accordance with recital 15 of the Preamble to the Directive, ΙΜΕs are commercial entities that differ from collective management organizations (hereinafter: CMOs) “inter alia, because they are not owned or controlled by rightholders. However, to the extent that such independent management entities carry out the same activities as collective management organizations, they should be obliged to provide certain information to the rightholders they represent, collective management organizations, users and the public. The reference in the recital to the obligation of IMEs to provide a minimum level of information to users, rightholders and CMOs is specified in article 2 §4 of the Directive, according to which, only article 16 §1, articles 18 and 20, article 21 §1 (a), (b), (c), (e), (f) and (g), and articles 36 and 42 shall apply to IMEs established in the EU.

Given the application of the above provisions to IMEs, it is clear that it is not the EU legislator’s intention to leave their operation completely unregulated, as this would give them a competitive advantage over the CMOs and the requirements with which they have to comply. On the other hand, it is equally clear that the Directive does not impose extensive regulation on commercial entities that are not controlled by their members and are smaller in size, as this would impose a disproportionate administrative burden on them that would de facto exclude them from the market.

Stricter regulations of law 4481/2017

In compliance with the requirements of the Directive, law 4481/2017 provided that IMEs are obliged to provide information to the rightholders regarding the management of their rights in accordance with article 25, but also to rightholders, other CMOs and users upon request in accordance with article 27, while they are obliged to post on their website and to update certain elements of article 28 (cases a, b, c, f, g and h of par. 1) as well as to notify HCO [the Hellenic Copyright Organization] of any possible violations in accordance with article 43. But mainly, in case of violation of the provisions of law 4481/2017 and law 2121/1993, IMEs are subject to the sanctions imposed in accordance with articles 46 and 47 of law 4481/2017, i.e. to the imposition of a fine of 2,000.00 to 200,000.00 euros that is collected in accordance with the provisions of the Public Revenue Collection Code and/or to a temporary or permanent revocation of their operating license.

ΙΜΕ of Article 50 of law 4481/2017

In addition to the introduction of the EU-origin regulations for IMEs, law 4481/2017 introduced a set of provisions which, on the one hand, imposes stricter conditions on IMEs for their establishment and, on the other hand, poses practical barriers to their operation. Specifically, with article 50, it introduced the Greek-inspired institution of Independent Management Entities with a dominant position in the market (hereinafter: ΙΜΕ50), for which it reserved the application of all the provisions of law 4481/2017, equating them to the CMOs. Recital 14 of the Preamble to the Directive was mainly set forth as the legal basis of the regulation, according to which when in certain exceptional cases, due to the legal form of a CMO, the element of ownership or control is not present, the provisions of this Directive should apply to that organization as well, and Member States should take appropriate measures provided for in the Directive for the protection of authors.

The provision was criticized already from the stage of the legislative process, as in its original form, it directly prohibited dominant IMEs from operating in the market, forcing them to change their structure and convert to CMOs. The prohibition was criticized, on the one hand, as disproportionate and contrary to the provisions of the Directive which provide for the right of the rightholder to freely select the collective management body she/he wishes and, on the other hand, as directly contrary to primary EU law prohibiting Member States to set barriers to the free provision of services and the free establishment of enterprises in the single EU market.

The provision finally adopted does not seem to negate the value of the criticism as a whole, as under the guise of a new type of organization of collective management named “IME of Article 50 or IME with a dominant position in the market”, while it seeks to overcome the major hurdle of circumvention of the principle of proportionality, it nevertheless continues to create barriers to entry for entities in other Member States, as it enables them to retain only by name the type of management body through which they have chosen to operate, but forces them to change their structure in depth and hand over the actual control of the management organization to the corporate governance bodies provided by law 4481/2017. In addition, the provision that was finally introduced by article 50 of law 4481/2017 created a two-speed IME50 in the sense that it distinguished between IME50 that were active at the time of entry into force of the law (essentially identifying AEPI) and ΙΜΕ50 that will be established in the future, excluding the latter from the privileges enjoyed by CMOs despite the fact that it burdened them with all the corresponding obligations. The distinction was criticized as distorting competition because of the competitive advantage it granted to the only existing IME50 without objective reason, as well as for being contrary to the fundamental principle of intellectual property law for equal treatment of rightholders, from which the principle for equal treatment of the entities that represent them derives.

Exclusion of IMEs from the privileges of CMOs

Apart from the legally disputable provisions for ΙΜΕ50, the Greek legislator adopted regulations that go beyond the harmonization framework required by the Directive and in relation to the operation of IMEs without a dominant position. Specifically, with Article 32 §1, law 4481/2017 excluded IMEs from the possibility of managing the rights that are subject, according to law 2121/1993, to a regime of mandatory collective management and, on the other hand, from the legal presumptions of representation of article 7 of law 4481/2017. The above regulation is not a product of harmonization of national law with the Directive but is an initiative of the Greek legislator in order to secure certain rightsholders rights, originating from recital 12 of its preamble. According to this view, the Directive does not intervene in the Member States’ arrangements on matters of individual management, mandatory collective management, legal presumptions of representation and transfer of rights to collective management organizations, but grants Member States regulatory flexibility.