The Antitrust Attorney Blog
Author: Steven Madoff
If you are an in-house counsel, your company colleagues may, unfortunately, think of your group as the “business interference” department. But, if you are lucky, an opportunity to create a profit-center for your company may present itself. You just have to recognize it.
Early in my entertainment-law career, we were fortunate to see one of these rare opportunities. This is that story.
This big break first came to my attention in 1982 just after I started working at the Motion Picture Association of America (“MPAA”). The MPAA is the trade association representing the worldwide interests of the major U.S. motion picture and television studios (which at the time were Columbia Pictures, Disney, MGM/UA, Paramount Pictures, Twentieth Century-Fox, Universal Pictures and Warner Bros.).
In Europe, the European Court of Justice decided a major case that adjudicated complex issues relating to the conflict between EU law and national copyright principles. Specifically, there had been a conflict between the EU law mandating the free flow of goods and services between and among EU member countries and the widely recognized copyright principle granting each copyright owner the right to exploit its exclusive “bundle of rights” as it deems appropriate in its sole discretion.
The case was titled Coditel S.A. and others v. Cine Vog Films S.A. and others (“Coditel II”). Coditel was a group of cable television companies in Belgium that had retransmitted the German television broadcast of the Claude Chabrol’ film, “Le Boucher.” Cine Vog Films, the owner of the exclusive distribution rights to Le Boucher, complained, stating that Coditel’s cross-border cable retransmission of the German broadcast violated its exclusive right to exploit Le Boucher in Belgium. Codite l argued that these exclusive rights interfered with the requirement of a free flow of goods and services between member states as embodied in EU law by means of the Treaty of Rome.
Importantly, for a variety of historical and geographic reasons, Belgium is the most cabled country in the EU. At the time, over 80% of Belgian TV households received their television through cable. That rate of penetration is currently over 95%. Moreover, the cable systems not only retransmit the local Belgian channels, but also transmit the cross-border broadcasts from Germany, France, Luxembourg, The Netherlands and the U.K.
The European Court of Justice ruled that the copyright holder’s exclusive rights were not subject to the prohibition against interfering with the free flow of services between member states. But it also said that the Belgian national court (which had referred the case to the ECJ) could determine in this or any individual case that the manner in which this exclusive right was exercised could result in the distortion of competition (e.g. an interference with the free flow of services).
Based on this language and the recognition that this issue had far wider implications than the broadcast of a single movie, the Belgian Court recommended to all parties involved that they arrive at a mutually acceptable framework that would preclude the need for individual negotiations between each cable operator and each rights holder for each film and television program being retransmitted.
The relevant parties, therefore, were the cable operators in Belgium on the one hand, and on the other side, the producers of motion pictures and television programs, broadcasters (which in Europe produce a significant amount of their own content), and the authors (i.e., music composers, writers and directors) represented by the powerful authors’ rights societies in Europe (e.g., GEMA in Germany, SESAC in France, etc.).
Recognizing the substantial sums of revenues being negotiated and then apportioned out, and that a similar process would occur in The Netherlands (which also has significant cable penetration) and then other European countries, my company, the Motion Picture Association of America, took the lead to form an international organization to represent (1) itself (as the agent for the seven major U.S. Motion picture and television producers and independents it would need to sign up individually); (2) the motion picture and television program producer associations for each country; and (3) the umbrella association of the film producer associations (FIAPF).
This led to a new organization called AGICOA, the French acronym for Association for the International Collective Management of Audiovisual Works (Association de Gestion Internationale Collective de Oeuvres Audiovisuelles).
At the time, I had limited international law experience, had little knowledge of the EU Treaty and was daunted by the scope of the project ahead and its challenges: signing up hundreds and eventually thousands of independent producers and negotiating with the broadcasters and authors’ rights societies against the cable operators in each country.
Despite this inexperience, we formed AGICOA in the early 1980s and proceeded to enter negotiations involving the authors’ rights societies and broadcasters so as to pre-agree on what the split of revenues among rights’ owners groups should be. This enabled them to enter negotiations with the cable operators with a unified approach. Otherwise, of course, the cable companies would engage in a divide-and-conquer strategy that could have some success. Eventually, we finished the negotiations with the cable operators in The Netherlands and Belgium and we began the challenge of registering thousands of claimants.
Since that time, a little over 35 years ago, AGICOA has grown so that it now oversees 12 allied organizations in Switzerland, Luxembourg, Belgium, Germany, Norway, France, Finland, Spain, Sweden, Portugal and Poland. In total, AGICOA has collected in excess of $3 billion in revenues, close to $200 million in 2018 alone. It represents over 18,000 rights holders from 36 countries and over one million individual programs.
Over the years, many people have been involved in forming, developing and operating this organization; I was fortunate to have played a small role in the nascent years when I was in-house counsel at the MPAA. Later, when I moved over to Paramount Pictures, I assumed more of an oversight and management role from the vantage point of a major studio rights holder.
It is amazing to think that this little group we put together to follow the Belgium Court’s advice is now an established part of the entertainment business world with hundreds of millions of dollars of revenue a year.
But I look back now and realize that the decision I made to dig into this difficult (but new revenue-generating) project boosted my career in ways I could not have imagined. It certainly added some business experience to my legal toolbox.
If you are an in-house counsel, you might think outside of your legal box—try to find a way to help your company in other than the traditional ways. It could create a path for you that you never imagined.