CJEU in VG Wort: Collecting Societies Cannot Fund Outsiders by Deducting From Authors' Revenue
The Court of Justice of the European Union (CJEU) has set a limit on how far a collecting society can use authors' money for cultural causes. In its judgment of 22 October 2026 in Case C-840/24, VG Wort, the Fifth Chamber held that rights revenue cannot be cut to fund services for people who are not rightholders, although other money held by the society can be used for that purpose.
The dispute
VG Wort manages rights for authors of texts and their publishers in Germany, where it holds a de facto monopoly. Two authors who were members challenged its practice, between 2016 and 2019, of financing a science promotion fund, the Förderungsfonds Wissenschaft. The fund pays printing costs for scientific and specialist publications and supports related research.
The money came from deductions from revenue VG Wort collected, including compensation for private copying and remuneration for public lending. The authors argued that this reduced what they were paid. The case reached the Bundesgerichtshof (Federal Court of Justice), which asked the CJEU how the Collective Rights Management Directive (Directive 2014/26/EU) applies.
What the Court held
The Court gave two answers.
First, Article 11(4) of the directive, read with Articles 12(4) and 13(4) and (6), precludes a collecting society's articles of association from allocating part of its "rights revenue" to social, cultural or educational services that benefit people who are not copyright holders, where that is done by deductions from the revenue. This applies even where national law asks collecting societies to promote works of cultural importance. It does not preclude such funding where it comes from "non-distributable amounts", meaning sums that cannot be paid out because the rightholders cannot be identified or located within the directive's time limits.
Second, services funded by deductions may benefit "rightholders" in a broad sense. They do not need a present right to remuneration or a management agreement with the society, as long as managing their rights falls, directly or indirectly, within the society's activity.
Why it matters
The ruling draws a clear line between money that belongs to identifiable rightholders and money that does not. Cultural and social funds remain lawful, but a society funding them through deductions must be able to show that the beneficiaries fall within its circle of rightholders. Funding for the wider public has to come from non-distributable sums.
The judgment is binding on EU member states only. For rightholders elsewhere, it is a useful reference when asking how a collecting society accounts for deductions and who benefits from the funds it runs.
Sources
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