Copyright, Competition and Development Report by the Max Planck Institute for Intellectual Property and Competition Law, Munich December 2013 Preliminary note: The preparation of this Report has been mandated by the World Intellectual Property Organization to the Max Planck Institute and has been released in December 2013. Most of the information that is provided in the Report was collected in the second half of 2012 and has only partially been updated until summer 2013. This Report is authored by Professor Josef Drexl, Director of the Max Planck Institute. Many other scholars at the Institute took part in the research that led to this report. These include in particular Doreen Antony, Daria Kim and Moses Muchiri, as well as Dr Mor Bakhoum, Filipe Fischmann, Dr Kaya Köklü, Julia Molestina, Dr Sylvie Nérisson, Souheir Nadde‐Phlix, Dr Gintarė Surblytė and Dr Silke von Lewinski. The author will be happy to receive comments on the Report. These may relate to any corrections that are needed regarding the cases cited in the Report or additional cases that would be interesting and that have come up more recently. It is planned to publish the Report in a revised version in form of a book at a later stage. Comments can be sent to [email protected]. As regards agency and court decisions, the author would highly appreciate if these decisions were delivered in electronic form. Structure of this Document: Summary of the Report 2 Report 13 Annex: Questionnaire 277 1 Summary of the Report 1 Introduction (1) This text presents a summary of the Report of the Max Planck Institute for Intellectual Property and Competition Law on “Copyright, Competition and Development”. The Report itself analyses the practice of competition law jurisdictions on copyright‐related markets around the world. The preparation of the Report was mandated to the Institute by WIPO in 2012. As part of the research for this Report, the Institute conducted a survey among competition agencies based on a Questionnaire, which is annexed to the Report. The bulk of this survey was conducted between September and December 2012. The Report was drafted between January and August 2013. This summary does not repeat any of the case studies provided by the Report. Rather, it is designed to give the reader a quick overview of the major results of the Report. 2 Motivation, Objectives and Scope of the Study (2) The Report is motivated by the increasing economic importance of copyright‐ protected works, including most diverse subject‐matter of protection ranging from cultural content, media and information products to more technology‐based computer programs, including in emerging economies and developing countries. Growing populations in such countries provide a large basis of human resources for creativity and, at the same time, lead to large consumer markets. Copyright‐related activity therefore has to be recognised as an important factor of economic development around the world but also and particularly in emerging economies and developing countries. (3) The objectives of the Report are basically threefold: (i) The Report aims at making accessible a large body of competition law practice around the world as guidance for competition law enforcers in other jurisdictions. (ii) It also tries to promote general knowledge and understanding of how competition law should be applied to copyright‐related markets. (iii) The Report is also meant to provide benefits for international copyright policy. With its market‐oriented analysis, competition law can provide new insights on how markets for authorised use of copyright‐protected subject‐matter work in the practice of different jurisdictions. (4) The Report only covers markets for copyright‐protected works. Thereby, it takes into account all different markets in the distribution chain, from the creation of works to 2 the distribution of such works to consumers. This is why the Report puts a particular emphasis on media distribution. Media distribution also impacts on other rights in intangible assets such as sports rights, personality rights or trademarks. Such adjacent issues are not taken into account, although, with regard to the distribution and licensing of sports rights in particular, competition law jurisdictions have produced quite considerable case‐law in recent years. (5) The Report covers all different jurisdictions of the world. Whereas in the past comparative research mostly concentrated on US antitrust law and EU competition law, the Report puts its emphasis on the quickly increasing body of case‐law in younger competition jurisdictions of the emerging economies and developing countries. In addition, it was not possible to report on all cases that have so far been dealt with. Especially with regard to the more experienced jurisdictions this would not have been feasible and would have changed the focus of the study. This is why US and EU law are mostly referred to as the jurisdictions where specific issues have first been dealt with and solved with international impact. This is so in particular with regard to the specific sector of collective rights management. Moreover, the Report puts an additional emphasis on the smaller jurisdictions, including those within Europe and the European Union, which are often overlooked and more difficult to access. National experience in EU Member States is of increasing importance due to the decision to decentralise EU competition law enforcement with regard to restrictive agreements and abuse of market dominance as of 2004. 3 Methodology (6) The Report is based on two research methods, namely, on the abovementioned survey and on traditional legal research on case‐law, done mainly by using available Internet resources. In addition, many contact persons, most at local universities, provided additional insights by answering the Questionnaire. The agencies of more experienced competition jurisdictions, where access to decisions is not a problem, did not receive the Questionnaire. Many agencies and researchers around the world put a lot of effort and enthusiasm into preparing their answers to the Questionnaire. However, the case‐law that they mentioned was only taken as an indication of the most important cases and was – wherever possible – cross‐checked with original sources. For countries in which it was not possible to establish contacts or whose agencies even declined to cooperate, mainly for lack of time and resources, the Report had to rely on publicly available sources. Only in a very few instances did competition law jurisdictions have to be completely excluded. Some jurisdictions are mentioned more frequently than others. This does not necessarily reflect the relative amount of case‐law available in these jurisdictions. There were important practical 3 constraints, such as less developed Internet information and language barriers, that had an impact on the selection of the cases. In several instances interesting cases did not enter the Report because accessible information appeared inconsistent, for example when information in annual reports of the agencies was superficial or translated in deficient English. 4 The Survey Based on the Questionnaire (7) The Questionnaire turned out to be a useful tool for collecting information on different jurisdictions. Yet it was only after the survey was completed that a decision had to be made on the structure of the Report. The latter considerably differs from the structure of the Questionnaire in that it generally follows the logic of the traditional competition law violations. This decision was made in order to provide more guidance to law enforcers in different jurisdictions. (8) In addition to the case‐law that was identified, the survey provided a series of most useful additional insights, including the following: (i) Some of the smaller and younger jurisdictions are not aware of the importance of copyright‐related markets because they think that competition law does not apply due to exemption provisions on intellectual property they find in their competition laws. (ii) An extremely high number of competition law jurisdictions feel an urgent need to build up expertise concerning the interface of IP and competition law. This is also true in economically highly developed but smaller jurisdictions where agencies have problems finding staff knowledgeable in both fields. (iii) Some competition jurisdictions attributed the lack of practice in part to the fact that copyright law is poorly enforced in their jurisdiction. This is especially convincing in the field of collective rights management. In jurisdictions where CMOs have not yet managed to build up efficient systems of licensing and monitoring, users will not bring any complaints against CMOs. (iv) Many agencies felt a particular lack of understanding and even incompetence in the field of collective rights management and often declined to answer these questions. 5 On the Relationship between Copyright and Competition (9) The preliminary question that needs to be answered at the interface of intellectual property and competition law is whether there is a fundamental conflict between intellectual property and competition law. Many jurisdictions around the world that have exemption provisions on IP seem to be inspired by the idea that this question is to be answered in the affirmative. In contrast, the Report is based on the modern understanding according to which IP and the competition principle are not in 4 inherent conflict. Rather, both IP law and competition law are designed to promote a