The judicial review hearing of Law No. 28 of 2014 on Copyright to hear the Petitioner’s witness and expert, Tuesday (6/14/2022). Photo by Humas MK/Ifa.
Tuesday, June 14, 2022 | 15:43 WIB
JAKARTA, Public Relations—Copyright protects both moral rights and economic rights. The moral rights remains with the creator forever, but the economic rights allow one to produce, distribute, perform, or perform the creator’s copyrighted work. In business economic law, economic rights can actually be transferred and traded, said Nindyo Pramono at the seventh judicial review hearing of Law No. 28 of 2014 on Copyright in the Constitutional Court (MK) on Tuesday, June 14, 2022. The hearing for case No. 63/PUU-XIX/2021 took place in the plenary courtroom and was presided over by Chief Justice Anwar Usman and the other eight constitutional justices.
As an expert for the Petitioner, Nindyo said that Article 18 of the Copyright Law, especially the phrase “transferred in a flat fee agreement,” contains a way to transfer copyright and economic rights to other people, in this case the producer, through a flat fee/outright buyout agreement, which is essentially the same as a normal purchase. In such an agreement, the Copyright Law will apply, so there is a transfer of ownership of a work’s economic property rights from the creator to the producer.
“If the creator chooses the flat fee [agreement], it must be interpreted as a transfer of economic rights to the producer. Thus, the producer deserves protection and Article 18 of the Copyright Law violates the provision of Article 28D paragraph (1) of the 1945 Constitution,” explained the business law expert from Gadjah Mada University (UGM).
In simple terms, Nindyo said, a flat fee agreement cannot be interpreted as a mathematical balance, but a balance between the rights and obligations of the seller or buyer in a reciprocal manner. If the normative provisions in the Copyright Law are not corrected, he believed this would be an imbalance between the rights of the buyer and the seller, or the producer and the creator.
Ownership Right
The Petitioner also presented a constitutional law expert from the Muslim University of Indonesia, Fahri Bachmid. Fahri asserted that, as a legal entity, PT Musica Studios had rights and obligations as well as protection from the state because the economic rights arising from the agreement were related to the transfer of ownership right. In essence, copyright in the form of economic rights can be transferred, so it must also be guaranteed on a subjective basis. Thus, the normative provisions of the Copyright Law reviewed in this case are not in line with a person’s ownership right.
“In this case, the enforcement of this norm reduces the Petitioner[’s rights] as a buyer and owner of economic rights, but in practice there is no restoration of rights for the buyer when the economic rights are returned to the creator. So this [provision] does not position both [parties equally]. As a result, within reasonable limits, the a quo Law is at least contrary to the 1945 Constitution,” said Fahri.
300 Billion Loss
The Petitioner also presented a witness, the President Director of the Indonesian Recording Industry Association (Asirindo) Jusak Irwan Sutiono. In his testimony, Jusak recounted the process of creating a master recording as well as the compensation or royalties obtained by the creator or artist who perform a song created by the creator.
Jusak said that in the early stages, a producer looks for songs for an artist to record. In order to get a song, the producer will contact a creator and then both parties will be bound by an agreement, which could be one of four types. First, an agreement where the creation is paid for one time or (flat fee/outright buyout agreement) where the economic rights of the creation is transferred to the buyer completely so that they cannot sell it to other parties. Second, an agreement where one master song is paid for, where the creator does not get royalties on the master song, but may sell the work to other parties after a certain period. Third, an agreement where the creator receives a number of payments in advance and royalties after the sales reach a certain amount. Fourth, an agreement where the creator is not paid in advance, but receive royalties.
“The most common transaction is the second type, where the creation is paid once for one master song, so the creator chooses it because they can still use the work for other parties outside the master,” Jusak said.
After receiving a song, Jusak added, the producer makes an agreement with the artist with the same payment system as that for the creator. The artist may get paid in advance and receive royalties, and after the sales reach a certain amount, artists only get royalties. Most artists, he said, choose the first agreement because the prepayment system is considered uncomplicated and the artists can get economic benefits at the beginning.
“However, in practice, in the sold flat agreement, the creator and artist ask for bonuses if the song is a hit, in the form of money and goods. If the artist is popular, they ask for additional royalties even though there is a valid contract. With the provision of Article 18 of the Copyright Law, Asirindo members, who manage 78 record companies that work on around 30,000 songs, cannot [have those songs] circulated because of this norm. Of these 30,000 songs, if the recording costs come from the production, the studio rent is 10,000 so that financial loss can amount to around 300 billion before the economic benefits [are enjoyed],” Jusak explained.
Also read:
PT Musica Studios Questions Duration of Economic Rights in Copyright Law
PT Musica Studios Reduces Copyright Law Articles to Review
House: Creator Should Have Received Great Economic Benefits
Piyu PADI: Provision on Copyright Duration Protects Songwriters
Copyright in the Eye of Musicians
Marcell Siahaan: Copyright Law Protects Creators and Performers
The case No. 63/PUU-XIX/2021 was filed by PT Musica Studios, who argues that Article 18, Article 30, and Article 122 of the Copyright Law violate Article 28D paragraph (1), Article 28H paragraph (4), and Article 28I paragraph (2) of the 1945 Constitution.
Article 18 of the Copyright Law reads, “The Works of books, and/or all other written works, songs and/or music with or without text that are transferred in a flat fee agreement and/or indefinite transfers, are to be reverted to the Author when the agreement reaches a period of 25 (twenty-five) years.” Article 30 of the Copyright Law reads, “The economic rights to a Performer’s Work of songs and/or music that have been transferred and/or sold, return to the Performer after a period of 25 (twenty-five) years.”
The Petitioner argued that Article 18 of the Copyright Law had harmed their economic rights of works on which outright buyout agreement applies. The article stipulates a limit of copyright duration on a work, and the copyright shall be returned to the original copyright holder after 25 years. The Petitioner believes the provision is detrimental because they only have a status as a leaser and will have to return the right some time to the creator of the work.
They also argued that they lost economic rights due to the enactment of Article 122 of the Copyright Law, because by returning the copyright to the creator, they cannot receive royalties over another party’s exploitation of a phonogram of the work. Therefore, in the petitum, the Petitioner requested that the Court declare Articles 18, 30, and 122 of the a quo law unconstitutional and not legally binding.
Writer : Sri Pujianti
Editor : Nur R.
PR : Tiara Agustina
Translator : Yuniar Widiastuti (NL)
Translation uploaded on 6/15/2022 08:22 WIB
Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian versions, the Indonesian version will prevail.
Tuesday, June 14, 2022 | 15:43 WIB 319