BERLIN - The eight German collection societies and the producers of mobile phones are likely on the verge of protracted lawsuits, with outcomes that could potentially change the price consumers pay for mobile phones while filling the coffers of the country's copyright agencies.
After the failure of over four years of negotiations between ZPÜ, a German umbrella organization for collection societies, and BITKOM, the association of hardware-producers with over 1,350 member companies, ZPÜ is preparing to sue BITKOM members in order to enforce tariffs on mobile phones.
ZPÜ's collection societies operate under the auspices of GEMA, Germany's largest music copyright organization. The group advocates levies on such items as digital hardware, blank tapes, CDs and mobile phones - the latter a much-contested premise.
Fees demanded by the collection societies go as high as 36 euros ($49.60) per phone, ostensibly for copies of music and other content protected by German copyright law.
BITKOM opposes the fees. Volker Schmid, a member of BITKOM's presiding committee, said in a statement: "This claim by ZPÜ would make mobile phones between 10 and 20 percent more expensive. Most of the content has already been licensed to the rights-holders, or are free and not protected content. That is why we as members of the IT business are in general against a levy on mobile phones. Mobile phones are normally used to make calls, for SMS or to take photos -- not to copy protected content."
ZPÜ says that BITKOM's intransigence on negotiating a settlement led to its current action, which includes a demand for various retroactive payments for all mobile phones. BITKOM "were not willing to negotiate or take the proceedings to the arbitration board of the German Patent Office in Munich," GEMA CEO Dr. Harald Heker said in a statement.
Schmid, however, disputes the rates ZPÜ is demanding. "The IT-business cannot understand claims made by ZPÜ for mobile phones. Up to 36 euro are distinctly higher than for a MP3 player (5 euro) or desktop PCs without burner (15.19 euro)." Fees demanded by ZPÜ range from 12 euro for standard phones to 36 euro for devices with touch screens, depending on memory capacity.
The dispute dates back to 2004, when ZPÜ demanded from 1.28 euro to 2.56 euro per phone. In 2008, fees asked for increased to a range of 4 euro to 11 euro. None of these tariffs have been enforced yet, and ZPÜ has yet to collect any fees thus far. But according to GEMA, the collection societies are willing to fight for those levies, even up to the European judiciary.
Last year, according to BITKOM, 27 million mobile phones were sold in Germany, representing a turnover of 3.7 billion euro.
Meanwhile, GEMA is also at the center of another copyright controversy - this one involving German Christmas markets.
The German Supreme Court in Karlsruhe ruled on Ocotber 27, 2011 that organizers of street fairs and Christmas markets have to pay fees to GEMA based on the size of the grounds on which the event takes place. Previously, they paid only for the area in front of the stage where the music is played.
The German cities Bochum and Münster, which started the legal proceedings against GEMA, issued a statement saying "it is not reasonable to pay for those areas where either no music can be heard or where the public is not admitted, for example in toilets, sales booths, safety tents." But the cities must now pay 12,000 euro for their Christmas markets, compared to 4,000 euro in the past.
The Supreme Court determined that GEMA cannot be expected to calculate its fees for each open-air event across Germany based only on the area in front of the stage. The court stated that the audience in front of a stage is constantly changing, and music heard there is characteristic of the entire event. Therefore, the court ruled, it is fair for organizers to be charged fees calculated on the whole ground.
"We are happy that the basis of our calculation we have always practiced is now been justified by the Supreme Court," GEMA CEO Heker said in a statement. "The size of the grounds of an event is a reliable figure." The city of Düsseldorf, with about 600,000 residents, reported that the Christmas market in the Schadowstrasse will, as a result of this ruling, not host music this year.