29 June 2017
Czech Republic

What does the 22nd Amendment to the Czech Copyright Act Mean for Businesses?

Act No. 102/2017 Coll., amending Act No. 121/2000 Coll., the Copyright Act, entered into force on 20 April 2017, while some changes will only take effect on 1 July 2017. One of the main purposes of the new legislative framework is to implement Directive 2014/26/EU on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market. The amendment also responds to some practical issues in relation to the licensing of copyrighted works, and generally aims to make the Copyright Act more coherent.

The following summary focuses on changes having immediate implications for typical legal issues that arise in corporate transactions and in day-to-day commercial arrangements.

Expansion of the statutory licence rights to works of architecture

Article 38d of the Copyright Act provides for statutory licences in relation to works of applied arts and works of architecture. According to Article 38d (a) of the Copyright Act:

Copyright is not infringed by anyone who

a.     leases, lends or exhibits the original or reproduction of a work of applied art expressed in its applied form or a work of architecture expressed in the form of erecting a building;

According to the amended wording of Article 38d (b) of the Copyright Act:
Copyright is also not infringed by anyone who

b.    uses a work of architecture expressed in the form of a building structure, drawing or project for the purpose of maintenance works or changes to a completed building to the extent necessary and provided that the value of the work of architecture is preserved […]

In comparison to the previous wording of Article 38d (b) of the Copyright Act, the statutory licence has been extended to architectural drawings and project documentation. The statutory licence provided under the previous wording of Article 38d (b) only covered the building as such, ie the actual structure, and not the project documentation. This has been causing many difficulties mainly in real estate transactions, where it was often discovered during the due diligence process that the present licence agreements do not address the possibility of changes to project documentation, while the parties could not rely on the statutory licence only covering the final product, ie the building. The new wording now provides a back-up solution in case of missing or insufficient contractual licence arrangements relating to ongoing real estate projects, and will certainly be appreciated in practice. More accurate definition of "employee work" The new wording of Article 58 of the Copyright Act aims to address yet another practical issue often arising in corporate transactions as well as in the daily lives of corporations whose employees create copyright-protected works. Most continental IP lawyers and businesspeople are probably familiar with the concept of an "employee work". In principle, the employer is entitled to claim rights to or ownership of works of authorship created by an employee under an employment relationship. However, the bizarre fact that any contractual transfer of such exploitation rights from the employer to a third party is subject to the employee's explicit consent (unless the transfer of rights occurs in connection with the transfer of the entire business) appears to be unique to the Czech Republic. Perhaps unfortunately for businesses, the 22nd amendment to the Copyright Act does not change this rule either. Nevertheless, certain improvements leading to better legal certainty in favour of employers and businesses have been made. According to the new wording of Article 58 (1) of the amended Copyright Act, the employee's consent to the transfer of exploitation rights to the employee work shall be deemed irrevocable and shall extend to any third parties to whom the employee work has been sold or transferred. For this purpose, such third parties shall be considered employers. Although this change merely embodies the commonly accepted interpretation of the respective legal provisions, it certainly brings more transparency and legal certainty for businesses. It will also reduce the necessity of adding additional clauses to employment contracts or providing special warranties in transaction documentation.