The transparency obligation: what information must an exploiter give me as a maker or performer?

Since 7 June 2022, anyone who has entrusted the exploitation of their work to another has had the right to be informed annually about that exploitation and about what it earns. Merel Teunissen on what the exploiter has to disclose, how sub-licensees fit in, when the obligation does not apply and what you can do when it is not met.

This blog centres on the transparency obligation that has applied since 7 June 2022. If you have outsourced the exploitation of your work as a maker, or have otherwise enabled someone else to exploit your work, you have the right to be informed about that exploitation and about the income the exploiter earns from it. Which information has to be provided exactly, how do (sub-)licensees fit in, are there situations in which the transparency obligation does not have to be met, and what can you do when it is not met?

What is an exploitation agreement?

As the writer of a book or the maker of a film, you want your book to be published or your film to be shown in cinemas. In such a case you are the maker of a copyright-protected work. Whoever publishes your book, or makes sure your film gets made and reaches the cinema, is an exploiter.

As a maker you are the copyright holder in a work. That means that you, in principle, are the only one entitled to communicate the work to the public and to reproduce it (to make identical copies of a work). Depending on what you agree, you can assign that right in whole or in part, or grant a licence in it, to the exploiter. The agreement concluded between the maker and the exploiter is the exploitation agreement. In that agreement, maker and exploiter make arrangements about the exploitation of the work: think of printing a book, producing an eBook or recording an audiobook.

Assigning your copyright in whole or in part means that, as a maker, you are no longer the copyright holder for the part you have assigned. As a maker you may not want to assign the full exploitation right in a work. You then give the exploiter the right to use the work in a particular way for the duration of the agreement. You can agree, for instance, that the exploiter may only print books and may only sell them in the Netherlands, for a limited period. That way you do not lose your copyright.

The exploiter can, where that has been agreed, in turn grant a sub-licence or assign rights to a third party. That third party and the sub-licensee are then exploiters themselves.

Where the exploiter has the right to exploit your work, they are obliged in return to pay you as the maker a reasonable (the Act speaks of “fair”) remuneration. That fair remuneration can in principle be a one-off amount, a lump sum, but it is more common for a royalty to be paid: a percentage of the exploiter’s profit or of turnover.

What does the transparency obligation involve?

The transparency obligation means that exploiters have to account to the maker annually for the exploitation of the work (how and what) and for what is being earned from that exploitation. That puts you as a maker in a position to assess whether the remuneration due to you is fair. This blog deals with the transparency obligation in general terms.

The Act prescribes that the exploiter must provide the maker with information about:

• the way in which the work is exploited. For the sale of a book, think of the number of printed copies sold in the calendar year concerned, the number of damaged copies and misprints, and the remaining stock of unsold printed copies (including copies received back);
• what the revenues of the exploitation are, which includes income from merchandising;
• the remuneration due.

Exactly how this information obligation is to be given practical shape will have to emerge in practice, or be filled in by the courts.

The information must be up to date, relevant and complete. That is to say that you as a maker must be able to obtain access to recent data that is clear and important to you.

Transparency obligation for (sub-)licensees and third-party acquirers

The exploiter also has to provide information about any (sub-)licensees and any other third parties, and about what they have earned. Where the exploiter, (sub-)licensee or third-party acquirer does not give that information to the “main exploiter”, you can also request it from them directly. That applies even where you as a maker have not concluded a contract with the (sub-)licensee yourself.

In the music sector, for example, a great deal is done with (sub-)licences, even (sub-sub-)licences. Composers and artists then have little sight of income, but the transparency obligation creates more openness.

Exploiter outside the EU

Problems can arise where the exploiter or sub-licensee is not established in the EU. The transparency obligation came about on the basis of European legislation. It does not apply to exploiters and sub-licensees outside the EU. Where the contract was not concluded under European law, obtaining access to the data may prove difficult. Note that the obligation does apply regardless of where in the world the exploitation takes place. Another blog goes further into what the transparency obligation means for you as an exploiter.

Who can require exploiters to be transparent?

The maker of a work is entitled to transparency from their exploiter. Alongside makers, performers can also claim this information: singers on a track, dancers and actors. They too can require the record label, the producer and/or the broadcaster to be transparent.

The transparency obligation applies not only to new agreements, but also to agreements already concluded at the moment the Act entered into force (7 June 2022).

When does the transparency obligation not apply?

In two exceptional situations you cannot, as a maker or performer, require the exploiter to be transparent. The first is where your contribution to the work is so small that it is regarded as not significant. Think of appearing as an extra in a film, or of freelancers working for a daily newspaper. Producing an information statement for individuals of that kind would involve too much administrative work. What counts as a “not significant” part will have to emerge in practice or in the case law.

There is, in turn, an exception to that exception. Where you as the maker of a not significant part of the work want to show that the remuneration you have received is out of proportion to the revenues of the exploitation, the exploiter can still be expected to provide that information to you. As a maker you may be entitled to additional remuneration where the remuneration received is disproportionate to the revenues of the work. That is known as the bestseller provision. Transparency about revenues certainly helps in assessing whether such a disproportion exists.

Secondly, the exploiter may refuse to provide information where they can show that the revenues of the exploitation are so limited that they are out of proportion to the administrative burden the transparency obligation entails. In other words, where your work earns little and providing the information causes disproportionate administrative trouble, the information obligation goes no further than what can reasonably be expected of the exploiter. What does that mean? The legislator has worked with an open standard here. It will ultimately have to emerge in practice, or be filled in by the courts, what can be expected of you as an exploiter in that specific case.

Finally, the transparency obligation does not apply to agreements between makers and end users. These are employers and clients (whether a business or a consumer) who do not exploit the work or the performance themselves. Think of logos, corporate identities or bespoke software.

What steps can you take as a maker or performer where the transparency obligation is not met?

Where the exploiter or (sub-)licensee does not meet their annual transparency obligation, you can as a maker or performer request them to do so. Such a request can be made by letter or email. Should the exploiter or (sub-)licensee still not come forward with the exploitation data, you can lodge a complaint with the Stichting Geschillencommissies voor Beroep en Bedrijf (SGB), the Dutch disputes committee foundation for the professions and business. That can be done anonymously, but if you want the SGB to give a decision in your case you will have to identify yourself. The thinking behind the disputes committee is that it offers a lower threshold. You can also go to court to claim access to the information. Our firm can help you with that.

Conclusion

As a maker you are entitled, at least once a year, to information about the way your work is exploited and about what it earns, so that you can judge whether the money you receive for it is still in proportion to the exploitation revenues. It is therefore important to take this transparency obligation into account when concluding your agreement or contract. Make concrete arrangements about, among other things, the date on which the information is provided and which specific information it has to cover.