COU22-0633

Mr Igor Grosu
President of the Parliament
Parliament of the Republic of Moldova
105 Stefan cel Mare blvd.
Chisinau, MD 2004
Republic of Moldova

Neuilly-sur-Seine, 6 July 2022

By email: info@parlament.md

Dear Mr Grosu,

Moldova’s newly proposed Copyright Bill nr. 251/2022: serious creators’ concerns over conflicts with EU and
international norms

I am writing to you on behalf of CISAC, the International Confederation of Societies of Authors and Composers. As the
leading worldwide organisation of authors’ societies (also referred to as Collective Management Organisations, or
CMOs) CISAC unites 228 CMOs from 119 countries. Through these CMOs, CISAC is the voice of over 4 million creators
from all artistic fields including music, drama, literature, audiovisual, graphic and visual arts.

In Moldova, our CISAC’s only member is Asociația Națională “Copyright” (ANCO). ANCO is entrusted with protecting and
managing both domestic and international repertoire, through numerous reciprocal agreements signed with similar
CMOs throughout the world. ANCO therefore performs an essential role in ensuring the protection of rights in Moldova
for both local and foreign creators.

We were recently informed about the proposed new Copyright Act of Moldova nr. 251/2022 (“the Bill”) which aims to
replace current law (nr.139/2010). While CISAC generally welcomes the modernisation of copyright legislation and
harmonisation of Moldavian legislation with EU standards, we have serious concerns with the Bill. Specifically, the Bill
will weaken the existing system of collective rights management, instead of strengthening it. It will thus be detrimental
to both Moldavian and foreign creators and rightsholders whose works are used in the country and whose livelihood
depends on an effective licensing mechanism.

Our global membership strongly objects to the Bill’s proposal and recommends that it does not further proceed before
the Moldavian Parliament, for the following reasons:

1. Dangerous changes to the regime for establishing, registering, and accrediting CMOs

Under art. 48 (5) of the existing law (nr.139/2010), an organisation shall function as a CMO if the following two criteria
are met: a) it is registered as an organisation according to the applicable legal provisions (law on civil associations); and
b) it is accredited as a collective management organisation by the State Agency on Intellectual Property (AGEPI).
Art. 6 of this Law lists several requirements that a CMO must meet to be accredited by AGEPI. In accordance with
international practice, the main criterion is the representativeness of the CMO, which is assessed based on the number
of local authors and rightsholders represented by the CMO and the number of reciprocal representation agreements
with foreign CMOs. If more than one CMO applies for accreditation with AGEPI, the most representative CMO shall
obtain the accreditation (assuming that all other criteria are also met).

The main idea behind the applicable accreditation procedure is to allow only legitimate (representative, capable and
efficient) CMOs to operate. This is in the interest of authors, users, and the general public alike. It follows from existing
law that only accredited CMOs are in the position to provide effective one-stop shop licensing solutions via extended or
mandatory collective management in the special areas designated by the law.

It shall also be noted that the very clear and precise procedure enshrined in the current copyright legislation was the
result of the advice and drafting by one of the most knowledgeable and recognised experts in the collective
management field, Prof. Mihaly Ficsor (former WIPO deputy director for copyright).

Unfortunately, however, and using the pretext of the 2014 EU CRM Directive (2014/26), the new Bill radically departs
from the above well-crafted regime (which was already in compliance with the CRM Directive) and paves the way for a
potential dysfunctional collective management system, encouraging the proliferation of non-representative CMOs and
possible parallel administration of the same category of rights by more than one CMO.

Under art. 83 of the Bill, any small group of individuals can create a CMO by complying with just a few basic criteria. The
new CMOs accreditation procedure under art. 84 completely disregards (in an unprecedented way!) the key criterion
of CMO representativeness, by omitting any reference to the representation of a substantial number of local
authors/rightsholders, as well as the requirement to have reciprocal agreements in place with similar foreign societies.
Moreover, such a criterion is absent even when AGEPI is designating the sole CMO collector among all accredited
CMOs—in cases of extended or mandatory collective management under art. 103—which is against basic European
norm and practices. The recent European Commission report on the extended licensing (“ECL”) practices in the EU
underlines: "CMO representativeness is an important safeguard, which has been identified in all national laws providing
for CLEE. It is now a harmonised requirement under Article 12(3)(a) of the DSM Directive."
(https://ec.europa.eu/newsroom/dae/redirection/document/81236).

in the specific Eastern Europe sub-region, to which Moldova belongs, solid copyright protection is still the exception
rather than the rule. The licensing and enforcement of copyright also presents rightsholders with multiple challenges.
CISAC’s experience in this region shows, with no exception, that efficient collective management of rights can only exist
where the number of entities operating in the country is limited to one society per category of rights, as opposed to
multiple societies representing the same type of rightsholders.

Against this background, it is clear that the new Bill, instead of strengthening the existing one-stop shop licensing
solution, encourages the proliferation of competing CMOs. This would undermine the interests of Moldova in a stable
and well-functioning licensing system. It would not only be damaging and counter-productive but could also have far-
reaching consequences for both local and international stakeholders, as it would likely lead to fragmentation in a small
market.

2. Unjustified and arbitrary interference with the private nature of authors’ rights, as managed by
CMOs

2.1. Tariffs setting

The Bill aims at replacing the previous system of free negotiations between CMOs and users, combined with minimal
state-approved tariffs, with a new system of negotiated remuneration methodologies and related mediation
mechanism under AGEPI auspices. The new tariffs setting system raises a number of serios concerns, which could have
been avoided if properly crafted.

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First, the Bill arbitrarily limits the tariff setting methods that can be applied by CMOs to either a flat rate or percentage
in accordance with art. 101 (1). Such a statutory limitation does not take into account complex market realities or
emerging new business models e.g. in the online area where CMOs frequently apply a combination of rates, e.g. a
percentage rate with a monthly flat minimum or any other appropriate rate. Moreover, art. 101 (6) stipulates that, in
the case of broadcasting, CMOs can only request a percentage-based rate, which unjustifiably contradicts the freedom
of negotiations (as also confirmed by the European Court of Justice in the STIM case (Case C-52/07)).

In addition, art. 101 (1) and (2) of the Bill arbitrary limit the application of the above-mentioned percentage-based rate
either to the revenues generated by the user or (in the absence of revenues) to the costs of use. Such a statutory
limitation based on calculation of the licensing fee is not aligned with the 2014 CRM Directive, which basically requests
that: “Licensing terms shall be based on objective and non-discriminatory criteria” and that: “Rightsholders shall receive
appropriate remuneration for the use of their rights”. Under the CRM Directive principles, CMOs shall be free to
negotiate the methods, the tariffs setting criteria and the basis of calculation of the tariffs for each type of exploitation,
taking also in consideration the nature of the rights at stake, e.g., exclusive rights or mere rights of remuneration.

Finally, the Bill introduces a new system of negotiating remuneration methodologies between CMOs and users, which
seems to be identical to the one applied in neighbouring Romania for many years. In this aspect, we share the fears of
our member ANCO and other stakeholders that the mechanic introduction of such a rather complicated system in
Moldova may not produce the same results as it did in Romania (though, many Romanian rightsholders still complain
about burdensome and slow procedures). On the contrary, it may block the collective management mechanism for an
indefinite period. The copyright market in Moldova is still limited and immature, with only a few CMOs with enough
experience and even fewer copyright and collective management experts; there are very few representative
associations of users. Last but not least, Moldova is still facing significant rule of law challenges.

2.2. Excessive supervisory powers of AGEPI

It is a well-established practice for CMOs to be subject to proper and balanced state supervision by specialised bodies
to prevent any possible abuse of its dominant position. As far as supervision is concerned, the CRM Directive expressly
provides in art. 36 p. 3, that the eventual measures or sanctions that may be imposed by national supervisory bodies
shall always be “effective, proportionate and dissuasive”.

We believe that some of the supervisory measures proposed in the Bill do not meet the above criteria of effectiveness
and proportionality and go beyond the CRM Directive requirements. Such measures shall only serve to ensure
transparent and effective functioning of the CMO but should not allow any parties to abuse the necessary supervision
for their own benefit e.g. by threatening the CMO with constant and unwarranted questioning of its activities. This
includes the possibility for AGEPI to carry out not only annual audits but also audits at any time upon complaints by
users or “from other competent sources” (as vaguely stated in art. 106 (3)).

Also, CISAC strongly objects to art. 84 (1)h of the Bill, which, as part of CMO’s accreditation procedure, requests the
submission of societies’ repertoire to AGEPI in an electronic format established by order of AGEPI’s Director General.
Such a provision is excessive because the establishment and maintenance of an up-to-date database of rights and
rightsholders should be an indispensable task of a CMO, eventually subject to governmental authority verification, but
not subject to the proposed Bill’s mandatory regulation. Art. 20 of the CRM Directive establishes an obligation for CMOs
to provide certain repertoire information via electronic means, and upon justified request, only to “any collective
management organisation on whose behalf it manages rights under a representation agreement or to any rightsholder
or to any user”, but not to supervisory bodies.

2.3. Cap on CMOs’ management fees

The Bill sets caps on the level of CMOs’ management fees under art. 98 (6), e.g., not more than 30% from the collected
royalties in case of mandatory or extended collective management by a Single Collector. We understand that initially
the cap was set at 20% and subsequently increased.

COU22-0633 Page 3 of 5
While CISAC promotes efficiency and low administrative costs by its members, we believe that setting arbitrary caps on
societies’ costs in legislation is unnecessary and could be unhelpful. It is for the same reason that other laws, including
EU rules, avoid stipulating specific levels of acceptable management fees. For example, Art. 12 (3) of the CRM Directive
clearly states that “Management fees shall not exceed the justified and documented costs incurred by the collective
management organisation in managing copyright and related rights.” In our view, the management costs of a CMO shall
be decided and approved in a transparent way by a society’s democratically elected bodies. Such bodies are in the best
position to decide based on economic factors and costs of operations of their CMO. Therefore, we would suggest that
such a cap be eliminated or at least redrafted as a mere recommendation. Under article 8.5 of the CRM Directive, the
General Assembly of the CMO is the body in charge of deciding on any policy regarding deductions on rights revenues,
including management fees.

3. Introducing pseudo compensation for the private copying of works

Private copying (“PC”) compensation is an essential source of income for all authors, performers, and other
rightsholders, as demonstrated by the Private Copying Global Study published by CISAC in 2020.1 When properly
implemented, it is the only efficient mechanism that allows them to be indemnified for the harm caused by the
widespread copying of their works for personal use. Thanks to the harmonisation with the EU InfoSoc Directive
2001/19/CE, strong private copying systems have been implemented in the EU, resulting in the fact that 97% of the total
world PC collections come from Europe.

In Moldova, the PC scheme is already working with great difficulties, with first (rather low) collections only as of 2017.
To our dismay, instead of being directed to strengthen the PC mechanism, the proposed amendments almost lead to
the liquidation of the PC compensation. Indeed, the unjustified and drastic reduction of the current 3% rate of PC levy
on devices and mediums to the symbolic 0.3% under art. 71 (5) of the Bill will render the whole PC compensation scheme
completely useless. Such an outcome will be in breach of art. 5.2(b) of the Directive 2001/29/EC on the harmonisation
of certain aspects of copyright and related rights in the information society (i.e., InfoSoc Directive) and of CJEU
jurisprudence. The ECJ recalled in C‑462/09 (Stichting de Thuiskopie v Opus) that, unless it is to be deprived of all
practical effect, art. 5.2(b) of the InfoSoc Directive imposes “on a Member State which has introduced the private
copying exception into its national law, an obligation to achieve a certain result, meaning that it must guarantee, within
the framework of its competences, the effective recovery of the fair compensation intended to compensate the
rightholders harmed for the prejudice sustained.”

It is unclear to us what are the policy reasons underlying this proposed amendment. We are unaware of any objective
market analysis that was carried out by the government prior to tabling its Bill, a preliminary step that is indispensable
to assess the impact of such a significant change in the private copying system in Moldova.

Considering all the above, CISAC believes that the Bill, contrary to its declared goal to modernise and strengthen authors’
rights protection and collective management system via further harmonisation with EU legislation, will instead weaken
and jeopardise the positions of creators and their CMOs in Moldova, if adopted by the Parliament in its current form
and as approved at first reading.

CISAC strongly urges your intervention to ensure that the still pending legislative proposal is withdrawn and returned
for further revision with the assistance of renowned international and EU experts in the field, in order to secure
compliance with EU and international norms as well as to safeguard the interests of local and foreign creators.

1
The Private Copying Global Study 2020 was produced by CISAC, in partnership with BIEM and Dutch Society Stichting
de Thuiskopie. The full report can be downloaded here.

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We remain at your disposal for any additional information or clarification you may need.

Yours sincerely,

Mitko Chatalbashev
Regional Director for Europe, CISAC

cc: Maia Sandu, President of the Republic of Moldova

Natalia Gavrilita, Prime Minister of the Republic of Moldova
Gadi Oron, Director General, CISAC
Roman Strejček, Chair of the CISAC European Committee
Leon Știrbu, President of Asociația Națională “Copyright”

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