Undoubtedly, the year 2019 set a milestone in copyright law as Directive 2019/790 on copyright and related rights in the Digital Single Market ("Directive 2019/790") entered into force. In Directive 2019/790, the European legislator set numerous rules that clarified some of the existing standards of the copyright law. Consequently, the national provisions needed to be amended to meet the standards of this new Directive. Thus the main principle of the Directive is to create an updated legal system for the copyright environment, especially to provide a high level of protection for rightsholders, as specified in recital 2 of the Directive's preamble. In recital 72 of the preamble, the European Legislator explains and points out that the authors are usually the weaker party to the copyright contract. One of the provisions introduced in response to this issue is the principle of contract adjustment (article 20).
Due to that fact, there was a necessity to establish a mechanism ensuring that remuneration will be granted to authors based on the principle of fairness. Article 20 sets out that Member States shall ensure that "...authors are entitled to claim additional, appropriate and fair remuneration from the party with whom they entered into a contract for the exploitation of their rights, or from the successors in title of such party, when the remuneration originally agreed turns out to be disproportionately low compared to all the subsequent relevant revenues derived from the exploitation of the works or performances."
Needless to say that the so called "bestseller clause" is also known in the Polish law. Nevertheless, the provision in this regard in Polish law was evaluated according to the guidelines of Directive 2019/790. Therefore, this article is to present the "bestseller clause" from the Polish perspective.
Previous legal status of the "bestseller clause" in Poland
Until 20 September 2024, i.e. when the amendments to the Copyright Law were passed, the bestseller clause regulations were that in case of a gross disproportion between the author's remuneration and the benefits of the purchaser of author's economic rights or licensee, the author may demand an appropriate increase in remuneration by the court. The following conditions arise from this provision: (i) the author must have a valid contract, (ii) such contract needs to set out a fee and (iii) there is a gross disproportion between the author's remuneration and the benefits of the counterparty.
Nonetheless, the most important issue is to establish the meaning of the expression "gross disproportion." What exactly does it cover? In the Polish legal doctrine, it is said that the meaning of "disproportion" is determined by comparing the usual remuneration rates used in the rights trade with the remuneration paid in the case under review. In other words, in order to conclude that the remuneration is unjustly low, the difference must make it appear that the author, taking into account all the circumstances, has been wronged. [K. Sobczyk-Sarbińska [in:] Copyright and Related Rights. Commentary, ed. by W. Machala, R. M. Sarbiński, Warsaw 2019, Article 44].
This statement shows what the proper approach to the bestseller clause is. First of all, it should be noted that this term is undefined and therefore should be examine individually in every case. While trying to understand the concept of "gross disproportion" one should verify separately each of the words. This means that the term "disproportion" should be understood as lack of proportion, symmetry or equality. On the other hand, the term "gross" refers to the possible wide reach of said disproportionality. Moreover, the legal doctrine points out that in order to consider disproportion to be "gross," it should be exceptional. In other words, a person that is just and reasonable should perceive the disproportion as inequitable as well as breaching the social moral rights at the same time.
Another example from the jurisprudence states that "the bestseller clause is applied not to protect the author from undercutting their remuneration, below market rates, but only to give the author an instrument to increase their share of the benefits from the exploitation of copyrights that they have transferred, if these benefits are disproportionate." [Judgment of the Court of Appeals in Katowice - I Civil Division dated October 23, 2019, case files no.: I ACa 163/19]. Such statement shows the shift in how the courts understand this clause. The emphasis is placed on the increase of the benefit the author earns from their participation in work exploitation rather than on the low amount of remuneration.
Legal status of "bestseller clause" after amendments to the Copyright Law
After transposition of the Directive, the Polish Copyright Law states that if the author's remuneration is disproportionately low in relation to the benefits of the copyright purchaser or licensee, the author may demand an appropriate increase in remuneration by the court.
As it might be noticed, the bestseller clause after the amendments has a different wording, which at the same time puts emphasis differently. In previous legal status, the stress was on the term "gross disproportion" (which has been explained in detail above).
However, in the new version, the provision focuses on the term "disproportionately low remuneration."
The term "disproportionately low remuneration," like the concept of "gross disproportionality," is vague, and the law does not provide its definition. When interpreting this term, it is worth referring to the literal (dictionary) meaning of the term and assume that "disproportionately low remuneration" is remuneration that deviates significantly from the remuneration received by the purchaser in exchange for obtaining author's economic rights. We will certainly have a situation of "disproportionality" between two benefits when there is a lack of proportion between them and when the benefits are difficult to compare due to their amounts.
One might also say that this lack of proportion should be sufficiently noticeable. The exact meaning of the expression: "disproportionately low remuneration" will certainly be forged within the framework of judicial jurisprudence. However, as always in the case of a vague term, it will be subject to interpretation. It also follows that during a potential trial the court will examine the relationship and the difference between the remuneration received by the author and the remuneration of the party for whom the copyrights are being transferred for further exploitation..
Comparing the previous state of the law with the current one, one must conclude that the legal requirements allowing the author to take advantage of the bestseller clause have been relaxed compared to the previous regulation. This is because, despite the fact that the determination of disproportionality of benefits requires that one of them is significantly lower than the other, we no longer need to expect that such disproportionality to be gross, that is exceptional or visible at first glance.
It is worth noting that such an amount sum for the buyout of copyrights is often set as a lump sum, which means that it is certain averaged remuneration. The Directive is rather clear on such matters, and in the preamble, in recital 73, it indicates that a lump sum may also constitute a proportionate remuneration, but this should not be taken as a rule. Indeed, it emphasizes that the remuneration of authors should be appropriate and proportional to the actual or potential economic value of the rights transferred. To determine the remuneration of authors, the contribution of the author and all other circumstances of the case, such as market practices or the actual exploitation of the work, should be taken into account.
Even though there are no jurisprudential materials re. this issue, in our view the current wording of article 44 is less strict that the previous one and provides easier possibilities to obtain additional remuneration by the author in the potential dispute with the purchaser.
In this wording, there is no need to determine the exact meaning of the very vague principal of disproportion being "gross" and there is no need to relate to the general impression of a just person deciding in their view whether disproportion is extreme or not. It seems like the current expression refers to the relation that is between the author and the purchaser of the rights. It seems that the "disproportionately low remuneration" gives authors easier access to remuneration.
To recap, in our view, the change of the regulation should be considered positive.
First of all, the factor of "disproportionately low remuneration in relation to the buyer's benefit" seems to be fairer, taking into consideration the aim of the Directive and uneven relations between the author and the purchaser , than the prior concept of "gross disproportion." Mostly because even if it still relies on an unspecified and ambiguous term (which is interpreted individually and separately in every case), this mechanism seems to be less strict than it was in the prior state of the law.
Secondly, the current wording should simplify potential disputes between authors and purchasers. In our opinion, currently, the focus is only on the contractual relation between two parties – author and the purchaser of the rights and there is no need to refer to the opinion of the society.
Thus, having in mind that the main purpose of the bestseller clause is to safeguard the economic position of authors on the market, we believe that this aim will be achieved by the application of the new article 44 of the Copyright Law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
