Serbian O.F.P.S. cannot collect royalties for Italian music without an agreement with Italian collecting society

Earlier this year, the Serbian Commercial Appellate Court ruled that the Organization of Phonogram Producers of Serbia (O.F.P.S.) had no valid claim to royalties for communication to the public of Italian sound recordings in a Belgrade restaurant. O.F.P.S. did not provide any evidence that it had entered into an agreement with a corresponding collecting society in Italy, by virtue of which it could collect royalties.

In April 2011, the Commercial Court in Belgrade issued a first-instance judgment in the case. Based on the evidence in the trial court record, the restaurant – suitably named “Portobello” – exclusively plays Italian music. The court took notice of the statutory presumption that an organization for the collective management of copyright or related rights is authorized to act on behalf of all rights’ holders in a particular field. In the specific case, there was no doubt that O.F.P.S. was authorized to collect royalties on behalf of all Serbian producers of sound recordings (“phonograms”), except those who opted out. The nub of the matter, however, was whether O.F.P.S. had that same right with regard to Italian producers of phonograms.

The court in Belgrade held that, in principle, the presumption of acting on behalf of the rights’ holders does apply to foreign producers of phonograms as well, under the condition that O.F.P.S. has concluded an appropriate agreement with the relevant foreign collecting society. The deadline for entering into such agreements is five years after the Serbian Intellectual Property Bureau (IP Bureau) issues a general authorization to the Serbian collecting society to operate, The IP Bureau granted O.F.P.S. the authorization to operate in April 2005. However, O.F.P.S. offered no evidence at the trial that in 2008 and 2009 – the period covering the allegedly infringing acts by “Portobello” – of having had an agreement with a collecting society representing Italian producers of phonograms. The Commercial Court, on that basis, denied O.F.P.S. the standing to sue.

In its judgment of 24 May 2012, the Commercial Appellate Court entirely supported the reasoning of the Commercial Court in Belgrade. The only new issue the Appellate Court addressed concerned the provisions on national treatment in the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations (1961) and in the WIPO Performances and Phonograms Treaty (1996). These provisions obligate each contracting state (save for those who have made a relevant reservation) to accord to producers of phonograms produced in other contracting states the same treatment it accords to its own nationals with regard to the rights specifically granted in the Convention (i.e. the Treaty). O.F.P.S. invoked these provisions on appeal, but the Commercial Appellate Court found no breach of the duty to accord national treatment. Foreign producers of phonograms were able, during the period covered by the complaint, to exercise their right to equitable remuneration, provided that their organization – or the producers individually – entered into an agreement with O.F.P.S.

According to information available on the O.F.P.S. web-site, as of December 2012, the organization is party to fourteen bilateral agreements with related organizations in Europe. (The English page of the web-site is not up to date, because it refers to agreements with only eight organizations). Considering that the relevant organization from Italy is not among the fourteen organizations with which O.F.P.S. has concluded the agreements, it seems that “Portobello”, other Italian restaurants in Serbia, and, indeed, all those who communicate Italian music to the public, must be enjoying a continued free ride – as far as their obligations vis-à-vis the record producers are concerned.