5.10.5 Control over administrative management

Where it exists, there are two kinds of state supervision. The first is where the Swiss Federal Institute of Intellectual Property (IPI) supervises the administrative side of how a collecting society manages rights. The royalties tariffs used by the society are also supervised by the Federal Arbitration Commission for the Exploitation of Copyrights and Related Rights.

Supervision of the administrative processes of management

There are several aspects to this kind of supervision. Firstly, collecting societies have to have authorisation from the Swiss Federal Institute of Intellectual Property to exercise rights (Art. 41 CopA). The law stipulates that, as a general rule, the authorisation is only granted to a single society in each category of work (Art. 42 para. 2 CopA). For example, one society for music, one for literature, etc. This makes matters far simpler as users only have to acquire rights from a single source. It is fair to say that this simplicity encourages people to respect literary and artistic property.

Another aspect of management supervision is that the law defines set rules which collecting societies are required to follow. They are obliged to uphold the principle of equal treatment, to conduct their business in a sound and financially prudent manner and may not aim to make a profit, etc. (Art. 45 CopA). The IPI is responsible for ensuring societies uphold their obligations. It is also required to approve the annual reports of collecting societies (Art. 53, para. 1 CopA) as well as their distribution regulations, i.e. their rules which determine how royalties are distributed to rights holders (Art. 48 para. 1 CopA).

According to Art. 49 para. 1 CopA, collecting societies must distribute the funds generated by their management in proportion to the revenue collected from each work and performance. In other words, they have to remunerate each author in proportion to the amount the collecting society collected for them (“to each their due”). But, if this distribution entails unreasonable expense, the collecting society may estimate the revenue collected from the works and performances (Art. 49 para. 2 CopA). At the same time, Art. 51 CopA requires users to provide societies with all the information they need for distribution. According to this provision, however, the obligation only applies where it is reasonable to ask users to comply. In short, given the legal principles involved, it is necessary to make a distinction between two types of distribution. The first is distribution based on lists of works actually used as provided by users (usually electronic files amenable to automatic processing). The second is distribution based on evaluation, in other words, on representative statistical databases collated by collecting societies. This method is used when exact distribution is too expensive or, in general, when the principle of proportionality requires it. For both types of distributions, the relevant regulatory provisions must be approved by the IPI.

Supervision of tariffs

In areas subject to federal supervision, the tariffs of societies, which are used to calculate the royalties collected from users, are subject to a special procedure where societies must first negotiate their tariffs with associations which represent the users (Art. 46 para. 2 CopA). For example, for those using works for educational purposes, ProLitteris negotiates the Common Tariff 7 with umbrella teaching organisations, including the Swiss Conference of Cantonal Ministers of Education (EDK). After negotiating, the collecting societies have to submit their tariffs to the Federal Arbitration Commission for the Exploitation of Copyrights and Related Rights for approval (Art. 46 para. 2 and 55 CopA). It is made up of three neutral members and representatives from the collecting societies and associations which represent users (Art. 56 CopA), making it a joint body. Before making its decision, the Federal Arbitration Commission hears from the Price Supervisor, who acts in an advisory capacity (Art. 15 para. 2bis Price Supervision Act, see RSPI (Swiss Intellectual Property Review) 1996 p. 437 et seq., c. 4). In order to reach a decision, the Federal Arbitration Commission draws on Art. 59 and 60 CopA. The decision may then be appealed to the Federal Administrative Court (Article 74 para. 1 CopA), followed by the Federal Supreme Court (this is a public law appeal: Art. 82 (a) and Art. 86 para. 1 Federal Supreme Court Act, Federal Supreme Court judgement in 2C_658 / 2008, c. 1.1). Once approved, the tariffs are published (Art. 46 para. 3 CopA) and the law stipulates that they are binding on the courts (Art. 59 para. 3 CopA).

There are dozens of different tariffs which have been approved by the Federal Arbitration Commission for many different uses of works. This large number of tariffs and the complexity of some of them are sometimes criticised. In fact, they can compromise the system’s transparency. For some years now, collecting societies have been trying to simplify their tariffs in other areas and reduce the number of tariffs. However, we must not forget that the tariffs are the product of negotiations with associations which represent users. In most cases, these negotiations end with an agreement. We must therefore assume that the diverse nature and contents of tariffs also corresponds to the needs of users of works and protected performances. A specific tariff or a tariff with different rules can be created in order to better take into account the specifics of a particular group of users.


5.10.5-1 Is the amount of royalties specified by the Common Tariff 7 for those using works for educational purposes negotiable?

Yes and no. The right to remuneration under Art. 19 para. 1 (b) and Art. 20 para 2 CopA can only be exercised by collecting societies with IPI authorisation. The management of the right to remuneration is subject to federal supervision. The amount of royalties is fixed by the Common Tariff 7, which is managed by ProLitteris. ProLitteris also represents other collecting societies. ProLitteris has to negotiate the Common Tariff 7 with umbrella teaching organisations and then submit it to the Federal Arbitration Commission for approval (Art. 46 para. 2 and 55 CopA). Once approved, the tariff is binding on the courts (Art. 59 para. 3 CopA). The tariff is therefore binding and schools can no longer dispute the amount of royalties it stipulates or secure different terms and conditions. By way of compensation, however, schools know they can obtain all rights from a single source with little fuss.

5.10.5-2 And what about the amount of royalties collected by SUISA for making music available on the Internet?

Management of the right to make music available on the Internet to be accessed on demand (Art. 10 para. 2 (c) in fine CopA) is not supervised by the Swiss Confederation. In this area, SUISA is subject to market and cartel law, which means it does not manage the rights to all works. The user, therefore, has to research beforehand whom to ask for the necessary licences. Assuming that SUISA is competent, the royalties are not fixed by binding tariffs but by simple civil licencing terms and conditions. SUISA collects fees based on these terms and conditions, although contractual freedom ultimately applies. The user and SUISA are free to reach an agreement on the amount of royalties which takes the specific circumstances of the case into account. This means there is more flexibility compared with areas that are subject to federal supervision. However, the process of acquiring rights will be more complicated.