LICENSING: ORPHAN WORKS’ WAY TO A NEW HOME

Selin Pehlivan

2013

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LICENSING: ORPHAN WORKS’ WAY TO A NEW HOME

Selin Pehlivan

Table of Contents

I. Introduction.........................................1II.What is Orphan Work And What is not?.................2A. Definition..............................................2B. Related terms...........................................3

1. Out-of-print works.........................................32. Anonymous works.........................................33. Abandoned works.........................................4

C. Why now?................................................41. The United States......................................42. European Union.........................................6

III....................................Proposed Solutions7

A. The United States.......................................71. Fair use...............................................72. Registration...........................................83. Limitations............................................9

A. European Union.........................................111. Report on Digital Preservation, Orphan Works, and Out-of- Print Works..........................................112. Directive 2012/28/EU of the European Parliament and of the Council of 25 October 2012 on certain permitted uses oforphan works.............................................13

B. Hungary................................................14IV. Parenting Orphan works: Licensing..................16A. Evaluation of the proposed solutions...................16A. Why Licensing is the best solution?....................18B. Recommendations for U.S. Law...........................20

V. Conclusion..........................................21

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"The heavens and the earth

belong to [God],

because they are the work of his

word . . . .

[s]o the author of a book is its

complete master,

and as such can dispose of it

as he chooses."1

I. Introduction

Can we still call the author the complete master of

his work as the French colleague, Marie Claude Dock said

in 16th century? The purpose of copyright is to honor the

author, however, exceptions and compulsory rules

regarding copyright are not embraced by the author. In

addition to the restrictive rules, works are increasingly

orphaned due to the digital age.

In order to balance the author’s rights and the

public benefit, legislators sometimes take their stand on

the side of public benefit. So, what is the best solution

1 Marie Claude Dock, Libra. Générale Du Droit Et De Jurisprudence 78(1963).

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for the problem of orphan works without damaging the

copyright owners and making orphan works accessible to

public? This essay aims to recommend the best available

solution, which is already enacted in Hungary: Licensing

to the United States (“U.S.”) system. In this matter,

Part II firstly focuses on defining orphan works since

there is no common understanding in international law. 2

In order to define orphan works, related terms such as out

of print works, anonymous works and abandoned works will be

defined and differentiated. Part II also discusses why

orphan works become an issue. Part III identifies the

proposed solutions in U.S, the European Union (“EU”) and

Hungary. Part IV evaluates the proposed solutions defined

in Part III, discusses why licensing is the best option

and propose recommendations for U.S. law.

This paper will focus on already orphaned works

rather than preventing future orphan works.

II. What is Orphan Work And What is not?

A. Definition

2 A. N. Wilson, Jet-Setting Orphan Works: The Transnational MakingAvailable Of Works Of Unknown Authorship, Anonymous Works, or LostAuthors, Emory International L. R. 23(2) 783, 820 (2009).

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In order to explain the concept of orphan works, two

important points need to be highlighted:

1. A copyright protected work,

2. A copyright owner who cannot be identified

or located.

A third element may also be added to the definition

of orphan works: "diligent search" or "reasonable

search", this element represents the minimum requirements

to be complied while searching for the copyright owner.3

It is generally accepted that any legal provision enacted

for orphan works should include “diligent search” or any

other similar term to express potential users shall make

good faith search.4

The problems of orphan works may only arise if the

work is copyright protected and its owner cannot be

3 Jane C. Ginsburg, Recent Developments in US Copyright Law: Part I –“Orphan” Works, Colum Public L. Research Paper No. 08-183, 12 (2008).4 In this paper, recommendations regarding to how to search will notbe covered since there is a common understanding that orphan worksdefinition should include “diligent search” and main focus of thepaper is whether licensing is a better option for the solution of theorphan works problem. For recommendations regarding diligent searchsee The European Digital Libraries Initiative, Sector-SpecificGuidelines On Due Diligence Criteria For Orphan Works,http://ec.europa.eu/information_society/activities/digital_libraries/doc/hleg/orphan/guidelines.pdf ( last visited May 3, 2013).

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identified or located by the potential user to ask for

the consent in spite of a diligent search.5 In the case

when usage constitutes exception to the copyright, the

orphan work will not become an issue.6

B. Related terms

It is important to make a distinction between orphan

works and other related terms, such as out-of-print works,

anonymous works, and abandoned works because a law outlines

how potential users obtain a license to use these works,

in most cases, help to solve the problem of orphan works.

1. Out-of-print works

Out-of-print refers to the works that are not

commercially available.7 In case that the work is

accessible online for print, then it is not considered

out-of-print, even though there are no hard copies

available.8

5 Stef Van Gompel, Unlocking the Potential of Pre-Existing Content:How to Address the Issue ofOrphan Works in Europe?, IIC 2007, 669, 672 (2007). 6 Ginsburg, supra, at 2.7 i2010: Digital Libraries High Level Expert Group – CopyrightSubgroup. Final Report on Digital Preservation, Orphan Works, andOut-of-Print Works 17 (2008) [hereinafter Final Report].8 Id.

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Both orphan works and out-of-print works are not

commercially available in the market. In that sense,

orphan works are also out-of-print works. But not all out-

of-print works are orphan works, since out-of-print works’ owners

can be identified or located.

2. Anonymous works

Anonymous works are similar to orphan works since both

in anonymous and orphan works, the owner of the works

cannot be identified. However, an orphan work is not

always an anonymous work and inability to locate the

identified copyright owner may cause the problem of

orphan works.

3. Abandoned works

Potential users may have some doubts as to whether

or no they need to ask permission before they use because

they are unaware if the work is abandoned. In most of the

cases, it is hard to identify whether the work is

abandoned by its rightful owner or it is an orphan work.

I recommend the copyright owners to use Creative Common

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license in order to make the potential users’ search

easy.9

C. Why now?

1. The United States

In U.S., various changes have been made on

intellectual property law on behalf of capturing

international compatibility.10 In particular, this changes

in copyright law accelerated after becoming the party to

the Berne Convention in 1989. Prior to the Berne

Convention, intellectual property laws had not been

changed fundamentally until the Copyright Act of 1976.

After Congress made the registration voluntarily, the

number of orphan works significantly increased.11

The protection period is another issue affects

orphan works. When the protection period lengthens,

potential users need to wait longer for the works to pass

9 Creative Commons Home Page, http://creativecommons.org/ (lastvisited May 3, 2013).10 Coree Thompson, Orphan Works, U.S. Copyright Law, andInternational Treaties: Reconciling Differences to Create a BrighterFuture for Orphans Everywhere, 23 Ariz. J. Int'l & Comp. L. 787, 792(2006).11 Christina M. Costanzo, Have Orphan Works Found A Home In ClassAction Settlements?, 83 Temp. L. Rev. 569, 573 (2011).

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into the public domain.12 The changes on the protection

period only affect the future orphan works; consequently,

by shortening the term, Congress cannot solve the current

orphan works problem.13 Instead, The Copyright Term

Extension Act (CTEA) was enacted and lengthened the

protection period in order to equalize the rights of

American and European authors.14 This resulted as an

increase in the number of future orphan works.15

a) Google Book Settlement

The Google Book Settlement prompted U.S. to open up

the discussion of the orphan works’ problem again.16

Google has created a book search engine in order to

make the books easily searchable and reachable.17 Many

authors and publishers represented by the "Authors Guild

and the Association of American Publishers” (plaintiffs),

filed a lawsuit against Google, alleging that Google

12 Id. at 588.13 Id. at 588.14 Id. at 588.15 Id. at 573.16 Notice of Inquiry, (October 22, 2012)http://www.copyright.gov/fedreg/2012/77fr64555.pdf. 17 Google Books. http://books.google.com/ (last visited May 3, 2013).

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copied millions of books to digital domain without

copyright owners’ consent and violated the copyrights.18

Google’s principle defense was “fair use.”19 The parties

decided to settle, however, the final approval of the

Amended Settlement Agreement has been objected.20 The

court has held that Congress should regulate the orphan

works, as it deems necessary instead of third person or a

court’s decision.21

A Book Rights Registry (“the Registry”) would be set

up and have the authority to exercise the rights on

behalf of all the copyright holders according to the

Amended Settlement Agreement.22 This authorization also

includes the orphan works owners.23 The orphan works are

in the category of “opt-out” that includes all books that

18 Authors Guild V. Google, Inc., 770 F. Supp. 2d 666 (S.D.N.Y.2011).19 Authors Guild, 770 F. Supp. 2d at 672.20 Authors Guild, 770 F. Supp. 2d at 671. 21 Authors Guild, 770 F. Supp. 2d at 678.22Amended Settlement Agreement, Authors Guild, Inc. v. Google Inc.,http:// www.googlebooksettlement.com/r/view_settlement_agreement/ §1.6, § 6.7. (last visited May, 3 20013).23 Dahlberg, Brianna. The Orphan Works Problem: Preserving Access ToThe Cultural History Of Disadvantaged Groups, 20 S. Cal. Rev. L. &Soc. Just. 275, 304 (2011).

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are not commercially available.24 Therefore, Google would

have the right to use orphan works without the diligent

search and the consent of the copyright owner. In case

that the orphan work’s owner is aware of Google’s use, he

may choose to opt-out to stop future use.25

2. European Union

As a result of EU’s desire to create a digital

library, the problem of orphan works became an issue. 26

The Commission Recommendation of 24 August 2006 On the

Digitization and Online Accessibility of Cultural

Material and Digital Preservation is the first step taken

towards solving the problem. Commission recommends that a

mechanism should be created to facilitate the use of

orphan works”.27 So far, only Hungary followed this

recommendation.

24 Id. 25Amended Settlement Agreement, supra, at § 17.33.26 i2010, http://www.euractiv.com/infosociety/i2010/article-140935(last visited May 3, 2013).27 Commission Recommendation on the Digitisation and OnlineAccessibility of Cultural Material and Digital Preservation(2006/585/EC) L 236/28 (Aug. 24, 2006).

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EU has reached its goal of creating Europe's online

library, museum and archive with Europeana in 2008.28

Contributing organizations sign Europeana Data Exchange

Agreement in order to make their collections available

via Europeana.29 According to this agreement, Europeana

has the right to publish the metadata so third parties

can re-use them without any restrictions.30

One of the challenges Europeana faced is copyright

protected works.31 In order to address the challenges on

the path to form a digital library, Commission set up a

High Level Expert Group (“HLEG”) on Digital Libraries.32

Copyright Subgroup of the HLEG presented the Report On

Digital Preservation, Orphan Works, and Out-of-Print

Works.33

III. Proposed Solutions

28 Communication from the Commission to the European Parliament, theCouncil, the European Economic and Social Committee and the Committeeof The Regions - Europeana : Next Steps COM(2009) 0440 Final. 29 Europeana Data Exchange Agreement,http://pro.europeana.eu/web/guest/data-exchange-agreement (lastvisited May 3, 2013).30 Id.31 COM(2009) 0440 Final  3.2.32 2006/178/EC supra. 33 Final report, supra.

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A. The United States

1. Fair use

Fair use defense has been recommended as a solution

to the problems of orphan works. Similar to the fair use

doctrine, an orphan work defense is also considered.34 The

four factors of fair use doctrine35 are not explanatory

enough for users.36 This situation creates uncertainty in

drawing the framework of the defense of fair use and also

it may not be sufficient to encourage the potential users

of orphan works.

2. Registration

In the first recommended registration system, the

copyright owner is required to make a small payment every

fixed period after publishing the work to maintain their

34 Brito & Dooling, supra, at107-113.35 17 U.S.C. § 107 (2006).36 William F. Patry & Richard A. Posner, Fair Use And StatutoryReform in the Wake of Eldred, 92 Cal. L. Rev. 1639, 1645 (2004).

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rights.37 While the owner keeps making these payments,

government will keep the records and if the payments are

not done, the work will pass to public domain.38 This

system will facilitate a database to reach the rights

owners easily and non-renewal of registration will result

the work in the public domain, therefore, the problem of

orphan works will be mainly eliminated. This

recommendation has been criticized on the grounds that it

is contrary to the Berne Convention.39

Another recommendation is to build a voluntary

registration system.40 Since it is based on voluntary

acts, the information may not be updated regularly.

Additionally, all the recommendations highlighting the

registration system are far from solving the problem of

orphan works. These approaches may only prevent works to

37 Lawrence Lessig, Protecting Mickey Mouse at Art's Expense, N.Y.Times, (2003). Also see Landes, William & Posner, Richard A.Indefinitely Renewable Copyright, 70 U. Chi. L. Rev. 471, 475 (2003).38 Lawrence Lessig, Protecting Mickey Mouse at Art's Expense, N.Y.Times (2003).39 Jerry Brito & Bridget Dooling, An Orphan Works Affirmative Defenseto Copyright Infringement Actions, 12 Mich. Telecomm. & Tech. L. Rev.75, 86 (2005).40 Christopher Sprigman, Reform(aliz)ing Copyright, 57 Stan. L. Rev.485, 494 (2004).

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be orphaned in the future.41 However, they are

insufficient for the works already classified as orphan

works.

3. Limitations

a) Report on Orphan Works

Senator Orrin Hatch and Patrick Leahy, in 2005,

requested a report on possible solutions to the problem

of orphan works from the United States Copyright Office

(USCO) since PDEA and CTEA have spread the concerns

regarding the problem.42

As a result of round table meetings and more than

850 comments, a common definition and factors contribute

41 Megan L. Bibb, Applying Old Theories To New Problems: How AdversePossession Can Help Solve The Orphan Works Crisis, 12 Vand. J. Ent. &Tech. L. 149. 161 (2009).42 Frank Muller, Owners And Users Unite!: Orphan Works In TheCopyright Modernization Act of 2006, 17 Depaul-LCA J. Art & Ent. L.79, 82 (2006).

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to the problem of orphan works have been identified.43

Limitation of remedies is proposed as a solution.44

Under the recommended statutory language section of

the report, the infringer, prior to the infringement,

shall perform a good faith, reasonably diligent search to

locate the copyright owner in order to limit the

remedies.45 If it is appropriate, attribution to the

copyright owner needs to be provided through the

infringement.46 How to perform a “reasonably diligent

search” is not specified in the Report.

According to the recommended statutory language, no

monetary relief shall be made other than “reasonable

compensation”.47 The lack of information on how to

determine the fair compensation has been criticized since

the determination is left to the judges without proper

guidance.48 This lack of guidance may cause the potential

43 United States Copyright Office. Report on Orphan Works, 7 (2006). 44 Id. 45 Id. at 127.46 Id.47 Id.48 Muller, supra, at 117.

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users to step back. On the other hand, if the infringer

performed the infringement without any purpose of direct

or indirect commercial advantage, even fair compensation

cannot be made.49 Limiting the monetary relief has been

also criticized since it may create an incentive to

purposefully infringe orphan works.50

In regard to injunctive relief, the court may

impose injunctive relief unless the infringer has

prepared or commenced preparation of derivative work, and

any injunctive relief shall not restrain the infringer’s

preparations or use of the derivative work.51 In this

case, the infringer still required rendering a reasonable

compensation and providing attribution to the copyright

owner.52

b) Legislation

49 Report on Orphan Works, supra, at 127.50Darren Keith Henning, Copyright's Deus ExMachina: Reverse Registration As EconomicFostering Of Orphan Works, 55 J. Copyright Soc'yU.S.A. 201, 213(2008).51 Report on Orphan Works, supra, at 127.52 Id.

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Considering the USCO Report and the doctrine

discussions, the total of three drafts are submitted by

the House of Representatives and the Senate: the Orphan

Works Act of 200653, Shawn Bentley Orphan Works Act of

200854, and the Orphan Works Act of 200855. None of the

bills are passed.

In the Bills, reasonable compensation is detailed

due to the criticism the Report got. According to the

bill, the burden of the proof of the amount is on the

copyright owner who is required to show the amount on

which a reasonable willing buyer and a reasonable willing

seller would have agreed.56

Even though the language of the three bills is

similar, there are also some differences such as the

search should be “reasonably diligent” in the text of

H.R. 5439 and “qualifying” in the text of 2008 dated

bills. Since articles relating to monetary and injunctive

53 H.R.5439, 109th Cong. (2006). 54 S.2913, 110th Cong. (2008).55 H.R.5889, 110th Cong. (2008).56 H.R. 5439, 109th Cong. § 514(B)(3).

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relief are similar to the ones on the USCO recommended

statuary, I will not repeat them here.57

A. European Union

1. Report on Digital Preservation, Orphan Works, andOut-of- Print Works

i2010: Digital Libraries’ strategy has been set out

as digitization, online accessibility and digital

preservation of Europe's collective memory.58 In order to

address the challenges on the path to form a digital

library, the Copyright Subgroup presented the Report On

Digital Preservation, Orphan Works, And Out-of-Print

Works.59

The Sub-group states that Member States may suggest

different solutions to the problem of orphan works,

however, it considered necessary to provide some of the

basic principles in unity. The issues must be

57 S. 2913, 109th Cong. § 514(c)(2); H.R. 5889, 109th Cong. § 514(c)(2).58 Report on Orphan Works, supra, at 5.59 Id.

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harmonized:60 (1) a shared definition; (2) including

guidance on diligent search; (3) Including provision for

withdrawal if the right holder reappears; (4) Offering

cultural, not-profit establishments a special treatment

when fulfilling their dissemination; (5) Include

requirement remuneration if the right holder reappears.

The Copyright Subgroup examines other regimes where

public body may issue the license to orphan works. It

begins with Canadian regime.61 In Canadian Copyright Law,

orphan works are regulated under “Owners Who Cannot be

Located” title.62 Under this law, the board will issue a

license if it is satisfied that the applicant has made

reasonable efforts to locate the owner.63

In the final report, extended collective license

technique that Nordic countries use is also examined.64

This technique is defined as "the situation where

a license agreement freely negotiated between

60 Final Report, supra, at 14, 15.61 Id. at 12.62 Copyright Act (R.S.C., 1985, C. C-42) art. 77.63 Id.64 Final Report, supra, at 13.

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a collective management organization and a user … by

legal provision is extended onto the works of rights

holders who are not members of the Collective Management

Organization (“CMO”)."65 The main advantage of this

system, works under the copyright protection, potential

users in good faith can take advantage of a clear legal

way to be followed. It also stops works from being

orphaned and works in the absence of the owners are

protected.66

The Copyright Subgroup proposed to develop a rights

clearance procedure and a Rights Clearance Centre to

grant licenses to use orphan works.67 This Rights

Clearance Centers will examine license applications to

determine the diligent search criteria fulfilled and the

65 Severine Dusollier & Caroline Colin,Symposium: Collective Management of Copyright: Solution orSacrifice?: Peer-to-Peer File Sharing and Copyright: What Could Bethe Role of CollectiveManagement?, 34 Colum. J.L. & Arts 809, 819(2011). Christian Rydning, Extended Collective Licences - TheCompatibility of the Nordic Solution with the InternationalConventions and EC Law 11 (2010).66 Maciej Barczewski, From Hard to Soft Law – A Requisite Shift inthe International Copyright Regime?, IIC 2011, 40, 49 (2011).67 Final Report, supra, at 11.

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license application within a certain period of time will

be finalized.68

2. Directive 2012/28/EU of the European Parliament andof the Council of 25 October 2012 on certainpermitted uses of orphan works

Subject matter of the Directive is defined in the

first article as “this Directive concerns certain uses

made of orphan works by publicly accessible libraries,

educational establishments and museums, as well as by

archives, film or audio heritage institutions and public-

service broadcasting organizations, established in the

Member States, in order to achieve aims related to their

public-interest missions.”69

In the Directive, orphan works are defined as: “A

work or a phonogram shall be considered an orphan work if

none of the rightholders in that work or phonogram is

identified or, even if one or more of them is identified,

none is located despite a diligent search for the

rightholders having been carried out and recorded in

68 Id. at 25.69 Directive 2012/28/EU of the European Parliament. and of theCouncil on certain permitted uses of orphan works, art. 1 (Oct 25,2012).

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accordance” with diligent search factors.70 The language

of the article is construed to be clear as much as it can

in order to not to give any doubts. In case that a Member

State considered a work an orphan work, then it is

considered an orphan work in all Member States.71

In order to comply with this Directive by 29 October

2014, Member States shall provide for an exception or

limitation to the right of reproduction and the right of

making available to the public to ensure that the

organizations referred in the first article are permitted

to use orphan works.72 Therefore, member states shall

provide a legal solution to non-commercial use of orphan

works.

Even though the Directive recommends the related

sources for establishing a diligent search such as WATCH,

the ISBN, and ARROW for published works,73 it allows

70 Directive 2012/28/EU, art. 2, 3.71 Directive 2012/28/EU art. 4.72 Directive 2012/28/EU art. 6, 9.73 Directive 2012/28/EU Annex.

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Member States to generate their own diligent search

factors appropriate for each category of work.74

B. Hungary

Following the Copyright Subgroup of the HLEG

presented the Report On Digital Preservation, Orphan

Works, and Out-of-Print Works, Hungary conducted the law

making process for the first time among other EU member

states. The rules regarding licensing of orphan works has

been regulated by a decree dated 2009 with 14 articles.75

Potential users who want to use orphan works shall

file their application to Hungarian Intellectual Property

Office (“HIPO”)76 when the author is unknown or resides in

an unknown place.77 The licenses granted by the HIPO are

non-exclusive, non-transferable, only valid in Hungary

and its term cannot exceed five years.78 In order to keep

74 Directive 2012/28/EU art. 3 and see annex.75 Decree 100/2009. (V. 8.) Korm. of The Government On The DetailedRules Related To The Licensing of Certain Use of Orphan Works.76 Decree 100/2009, art. 2(4).77 Decree 100/2009, art. 1(1).78 Directorate General For Internal Policies, How to deal with orphanworks in the digital world? An introduction to the new Hungarianlegislation on orphan works,

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the licensing process transparent, anyone can check the

process at the website of HIPO.79

The HIPO grants licenses in return to a fixed

remuneration fee that is deposited and can be claimed by

the copyright owner within five years after the expiry,

or withdrawal of the license.80 The HIPO considers all

relevant circumstances that are stated by the applicant

in the application form, to fix the remuneration fee.81

The deposit of money is essential in order to start

using.82 On the other hand, if the use is not-for-profit,

then the applicant may start using without depositing

money.83 In case the copyright owner reappears, he may

claim the remuneration directly from the user.84 This

approach is also in line with the Final Report’s

recommendation, which “offer[s] cultural, not-profit

http://www.europarl.europa.eu/RegData/etudes/divers/juri/2009/419607/IPOL-JURI_DV(2009)419607_EN.pdf at 10 (Oct. 2009).79 "Árva Művek" means orphan works, http://epub.hpo.hu/e-kutatas/?lang=hu# ( last visited May 3, 2013).80 Directorate General For Internal Policies, supra, at 17.81 Id.82 Decree 100/2009, art. 6(3).83 Directorate General For Internal Policies, supra, at 19.84 Id. at 10.

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establishments a special treatment when fulfilling their

dissemination purposes.”85

According to the interview with the HIPO, between

May 2009 and March 2012, the HIPO received 38

applications in total and granted 17 licenses.86 Since

then, the list87 provided by The HIPO’s webpage shows an

increase in the demand of licensing. This data confirms

that the decree has established its purpose to solve the

problem of orphan works.

Potential users may also obtain licenses with the

extended licensing system managed by CMOs in regard to

orphan works.88

IV. Parenting Orphan works: Licensing

A. Evaluation of the proposed solutions

Factors that play a role in the emergence of the

problem of orphan works are different in the U.S. and the

85 Final Report, supra, at 15.86 E-mail interview with HIPO (Apr. 6, 2012).87Please note that licenses might be more than one work. SzellemiTulajdon Nemzeti Hivatala - Árva művek nyilvántartásahttp://sztnh.gov.hu/szerzoijog/arva/ARVA-muvek-nyilvantartas_teljes.pdf (last visited May 3, 2013). 88 Directorate General For Internal Policies, supra, at 10.

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EU. While the EU faced with the problem of the orphan

works in order to preserve the cultural heritage of the

EU, in the U.S., private companies are mostly involved in

digitization of works.89

Another problem of orphan works is moral rights of

the author. While the owner of the work is unreachable,

it is important who will protect the moral rights. U.S.

and EU have different approaches regarding the moral

rights of the author. These differences should be

considered while recommending solutions to the orphan

works problem. None of the recommendations in the EU

examine this issue so far.

In U.S., three bills are prepared in two different

legislative terms but none of them passed. The U.S. bills

postpone the solution until the copyright owners

reappear. Use of the work without consent of the

copyright owner has been accepted as infringement.

Therefore, when the copyright owner reappears, he may sue

89 Katharina de La Durantaye, Finding A Home For Orphans: GoogleBook Search And Orphan Works Law In The United States And Europe, 21Fordham Intell. Prop. Media & Ent. L.J. 229, 257 (2011).

25

the infringer. But under certain conditions, the

infringer’s responsibility has been limited in the bills.

This solution is considered in the interest of the

copyright owners as well as users. As a result of their

use, infringers will not encounter high amounts of fines

and just render a reasonable compensation when the

copyright owners reappear. The advantage of this

solution, if the right holder does not reappear, is that

the costs will occur only in the research process.

However there is also a negative side. When the copyright

owner reappears and files a lawsuit against the

infringer, it is unclear whether the infringer actually

followed the certain conditions and therefore will enjoy

the advantage of limitation of remedies. Uncertainty of

the amount of reasonable compensation is a burden on both

the copyright holders and the infringers. In the bills,

there is a tendency to put the burden of proof of the

reasonable compensation on the copyright owners. When

infringers decide to use orphan works, they have taken

the risk of payment of uncertain amount of compensation.

Since the factors of diligent search are not clearly

26

listed in the bills, theoretically a good solution has

lost its point. Until the court reaches a verdict,

infringers will remain unaware whether they fulfill the

criteria of diligent search, and are under the risk of

paying high compensations.

The first objective of EU is to set up databases to

not to give a passage to the problem of orphan works in

the first place. After the problem occurs, EU prefers to

consider license options instead of assuming the use as a

violation of the copyrights in the Copyright Subgroup

Report. On the other hand for the non-commercial use of

orphan works, EU sets out the common rules for publicly

accessible libraries, educational establishments and

museums, archives, film or audio heritage institutions

and public-service broadcasting organizations,

established in the Member States on the digitization and

online display of orphan works through a directive.

However, at this point, there is no EU acquis regarding

the licensing of orphan works for commercial use.

One of the member states of EU, Hungary complied

with the recommendation of the European Commission to

27

develop a system for orphan works. Hungary is applying to

the license system actively to solve the orphan works

problem.

While the general approach to the problem of orphan

works in the U.S. is limiting the remedies, it is quite

interesting that the Amended Settlement Agreement of

Google preferred the licensing solution between Google

and the Registry. The difference between Hungary and the

Registry’s license system that the license provided by

the Registry is only for books and it only grants the

rights to Google who would become a monopoly since there

will no one to object in the absence of the owners of

orphan works.90

A. Why Licensing is the best solution?

a) Right owners may check their works’ status on

orphan works licensing database

It is almost impossible to find out whether your

work has been infringed in U.S. unless you are famous

enough to notice it. Under the licensing system, the

90 Id. at 264.

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website of HIPO provides all the relevant data regarding

the orphan works that they give licenses. In case that

any copyright owner assumes their work has been licensed

without their knowledge, they can easily check that

database. If their works have been orphaned by mistake

and licensed, they can contact HIPO to cancel the license

and claim the fee they attained. Since users pay the fee

for a fixed term, they will be reimbursed for remainder

of time.

b) Users do not have any fear of infringement

A copyright infringer’s liability before the U.S.

Courts could reach to $150,000 in total.91 This amount is

good enough to prevent potential users from using the

orphan works. Under the licensing system, users do not

infringe on rights. Therefore, they would be encouraged

enough to use orphan works which were hidden before the

public eyes.

91 Sherman, David B. Cost and Resource Allocation Under the OrphanWorks Act of 2006: Would the Act Reduce Transaction Costs, AllocateOrphan Works Efficiently, and Serve the Goals of Copyright Law?, 12Va. J.L. & Tech. 4, 32 (2007).

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c) Economic aspect

Another problem of orphan works is the economic

loss. For example the creativity benefited from orphan

works does not result in new derivative works. 92 The

costs of liability discourage potential users from

benefiting and creating new works. Since the potential

users would have no fear to use orphan works under the

licensing system, they can enjoy the benefits of

derivative works.

Conducting diligent searches might be expensive.

Under licensing system, only one diligent search for an

orphan work is sufficient. When a potential user made his

diligent search and granted his non-exclusive license for

the work, the commission who grant license, will keep the

diligent search records regarding that work. Therefore

that work will be accepted as an orphan work. In case of

any other license applicant to that work, there is no

need to repeat the search. This will reduce the time and

money spent.

92 Muller, supra, at 89.

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d) The right owner may claim the license fee from

the deposit without dealing with the law suit

When the right owners reappear, he may claim the

license fee from the commission who grants the licenses.

B. Recommendations for U.S. Law

In the presence of the problem of orphan works, the

various countries decided to keep the current law without

any amendment. However, in order to clarify the legal

stands of the potential users and the copyright owners,

legal guidance will be in the benefit of potential user.

Discussions in U.S. postponed the solution of the

orphan works problem until the copyright owner reappears.

In my opinion, it does not constitute an effective

solution to the problem of orphan works, since the use

has been considered as a violation of copyright. This

method is successful unless the copyright owner does not

reappear, but it is not enough to encourage potential

users. In this regard, it will be better to take the

discussions in EU into consideration to amend the

copyright law.

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The legal outcome to be achieved by amending the law

is to maintain a certain degree of balanced satisfaction

on both the potential users and the copyright owners. In

accordance with this ideology, the recommendations for

the U.S. law:

1. Enacting a law with the definition of an orphan

work and the guideline of diligent search;

2. A commission to be set up by USCO –because of its

experience in that field-, checks the necessary

conditions have been fulfilled upon application and

license the orphan works;

3. Granting non-exclusive licenses for a certain

period of time no longer than 5 years;

4. Allowing the use of the derivative work;

5. In case of the right owner reappears, whether

revoke the granted license and reimburse the

remainder or let the licensee to use the work;

6. Depositing the license fee and if it has not been

requested by the copyright owner at the end of a

certain period of time, transferring the

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unrequested amount to a system to search for the

owners.

7. Providing libraries, museums and educational

institutions an exception but not wide enough to

cause damage to copyright owners.

V. Conclusion

Today, we might not discuss the problem of orphan

works, if Bern Convention does not oblige legislators to

remove the administrative formalities. Contrary, this

paper would be about protecting the right of people who

put effort to create new works but deprived from legal

protection since they did not follow the necessary steps

that rules of the country where they wanted to protect

their works. In this regard, even though removal of the

administrative formalities has caused orphaned works, it

is the right step to protect the works widely.

The problem of orphan works shall not be solved

without any regulatory act. The best solution for the

problem of orphan works without damaging the copyright

owners and making orphan works accessible to public is

the licensing system.

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In the absence of the authors, the licensing will be

processed in the right clearance centers whether

governments or private entities administer it. The

requirements and the procedure of licensing shall be

transparent and in accordance with the law. Furthermore,

considering the intended use of potential users, a fair

remuneration policy should be followed.

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