German industry rocked by Federal Supreme Court ruling

A court ruling that ends the decades-long practice of distributing copyright levies equally between authors and publishers is rocking Germany’s book industry.

According to the German Federal Supreme Court, the Bundesgerichtshof (BGH), publishers are not entitled to half of the monies distributed by the collecting society Verwertungsgesellschaft (VG) Wort.

BGH ruled in favour of author and copyright expert Martin Vogek who set the ball rolling when he took VG Wort to court in 2011. The court upheld two earlier rulings, both contested by VG Wort, that distributions can only be made to the holder of rights and claims from copyright. For the judges this is solely the author because publishers are not considered rights holders under German copyright law.

The argument brought about by VG Wort that publishers facilitate the exploitation of published works in the first place, does not justify them to receive a blanket revenue share from VG Wort, the court has decided.

Alexander Skipis, chief executive of the trade association Börsenverein des Deutschen Buchhandels, has called the ruling a heavy blow for the unique German publishing culture and “highly problematic both culturally and politically”. And while it had been widely expected, its implications only now seem to fully hit home.

The judges have ruled that publishers are required to pay back in full the money have received over the last three years. Skipis has warned that small and medium-sized publishers, with their already tight budgets, may be forced into bankruptcy. According to the Börsenverein, the sum in total will run into hundreds of millions of Euros. Depending on the size of the publisher reclaims will amount to between 20 and 200% of their average annual profit.

As controversial as the ruling may be, it cannot be contested. BGH is the court of last resort for civil proceedings and the only option now would be for an appeal on a constitutional issue or legal correctives to the copyright law. With this in mind, Skipis and VG Wort have called for political help, not only to cushion the consequences of the ruling but also to find ways for publishers to participate in the payouts again in the future.

“Politics holds the key to the whole problem”, Skipis says. Minister of justice Heiko Maas and culture minister Monika Grütters have already voiced their support. Reportedly Börsenverein and Grütters’ department are already in talks over setting up a credit fund.

Börsenverein will also go ahead and press for a clarification in the European copyright framework to also acknowledge publishers as rights holders, factoring in German EU commissioner Günther Oettinger. The dilemma: while political support is obviously there, it takes a long time to change laws, and that is time that many publishers might not have.