Ochranny svaz autorsky—Spas face the music and will pay for it

Ochranny svaz autorsky—Spas face the music and will pay for it

What was the factual background to this claim?

Since time began, or so it seems, there have been disputes about paying royalties in respect of music works or television played in planes, trains and automobiles hotel rooms, pubs, dentists’ practices and now spas.

In this referral from the Czech Republic to the CJEU, OSA, a musical works copyright collecting society, claimed copyright licence fees for the making available of works transmitted by radio or television, in this case in the bedrooms of the spa. Under Czech law, there was an exemption for works made available to patients, when providing health care to them in establishments that provide those services.

What was the legal nub of the case?

Very simply, the case was about whether giving spa ‘patients’ access to broadcast works via television or radio sets by distributing in the patient’s rooms the signal carrying the protected works, was a communication to the public within the InfoSoc Directive, art 3(1). A second question broached whether national law in the form of the exemption from payment of fees under Czech law could be set aside, in a dispute between individuals, as contrary to the InfoSoc Directive, art 3(1). A third question addressing competition law issues—application of the Treaty on the Functioning of the European Union, art 102 (TFEU)—is not dealt with in this analysis.

What did the CJEU rule?

In terms of communication to the public within the meaning of the InfoSoc Directive, art 3(1), the CJEU neatly set out its thinking:

  1. the concept of ‘communication’ was to be construed as referring to any transmission of the protected works, irrespective of the technical means or process used
  2. the operator of a spa carries out a communication when it deliberately transmits protected works, by intentionally distributing a signal through television or radio sets, in the rooms of the patients of that establishment
  3. the term ‘public’ in the InfoSoc Directive, art 3(1) refers to an indeterminate number of potential recipients and implies, moreover, a fairly large number of persons
  4. the cumulative effect of making the works available to potential recipients should be taken into account, working on the basis of the number of persons who have access to the same work at the same time and successively
  5. a spa is likely to accommodate, both at the same time and successively, an indeterminate but fairly large number of people who can receive broadcasts in their rooms
  6. in order for there to be a ‘communication to the public’ within the meaning of the InfoSoc Directive, art 3(1), it is also necessary for the work broadcast to be transmitted to a new public, that is to say, to a public which was not taken into account by the authors of the protected works when they authorised their use by the communication to the original public—like hotel guests, the spa patients constitute such a new public
  7. the spa intervenes, in full knowledge of the consequences of its action, to give access to the protected work to its patients—in the absence of that intervention, its patients would not, in principle, be able to enjoy the broadcast work
  8. therefore, communication by a spa, of protected works through the intentional distribution of a signal by means of television or radio sets in the bedrooms of its patients constitutes a ‘communication to the public’ within the meaning of the InfoSoc Directive, art 3(1)

In response to the questions referred, the CJEU ruled that Directive 2001/29/EC, art 3(1) must be interpreted as:

  1. precluding national legislation which excludes the right of authors to authorise or prohibit the communication of their works, by a spa, through the intentional distribution of a signal by means of television or radio sets in the bedrooms of the establishment’s patients—art 5(2)(e), (3)(b), (5) of that directive is not such as to affect that interpretation, and
  2. meaning that it cannot be relied on by a copyright collecting society in a dispute between individuals for the purpose of setting aside national legislation contrary to that provision—however, the national court hearing such a case is required to interpret that legislation, so far as possible, in the light of the wording and purpose of the directive in order to achieve an outcome consistent with the objective pursued by the directive

What have we said about this case before?

In December 2013, Tom Moody-Stuart, barrister at 8 New Square Chambers, highlighted 2013’s most significant cases and how they have furthered our understanding of CTTP in his IP & IT—a review of 2013’s CTTP developments.

Moody-Stuart said: ‘This [OSA] case concerns the issue of whether the Czech Republic has correctly implemented the Infosoc Directive (2001/29/EC), and in particular whether an exception from copyright infringement in respect of content played on televisions and radio receivers in spa rooms is in accordance with art 5 of the directive. This is of limited interest to anyone other than Czech spa proprietors (who appear very likely to lose the benefit of the exception).’

At the beginning of January 2014, Mark Owen, partner in the trade mark, copyright and media group at Taylor Wessing, provided us in his Communications to the public—a review of 2013’s cases with a reference to the Advocate’s General’s opinion. Owen said:

‘Advocate General Sharpston has given an opinion that a Czech law preventing payment to authors for the communication of their works via TV or radio to patients in bedrooms in a spa was incompatible with the provisions of the Copyright Directive (following the CJEU decision in Sociedad General de Autores y Editores de Espana v Rafael Hoteles SA: C-306/05 [2006] ECR I-11519,[2006] All ER (D) 103 (Dec))….We do not anticipate that this case will be particularly significant, as it is likely to just clarify Societá Consortile Fonogrqfwi (SCF) v Del Corso C-135/10.’

Moody-Stuart and Owen both made valid points and predictions. Because of the CJEU ruling in OSA, Czech spa proprietors should lose the benefit of the exception and SCF v Del Corso C-135/10 was clarified.

The SCF case is distinguishable from the present case. First of all, SCF was not concerned strictly with authorising or prohibiting communication to the public such as in the InfoSoc Directive, art 3(1), but rather the (compensatory) right to remuneration of performers and producers of phonograms provided for in Council Directive 92/100/EEC, art 8(2) (on rental right and lending right). But in coming to its decision in SCF, the CJEU cited from its previous art 3(1) judgments.

In SCF the CJEU decided that ‘a dentist who broadcasts phonograms free of charge in his dental practice, for the benefit of his clients and enjoyed by them without any active choice on their part, is not making a “communication to the public” for the purposes of the application of art 8(2) of Directive 92/100’. Therefore, such an act of transmission did not entitle the phonogram producers to the payment of remuneration.

Factors that influenced the CJEU were that in dentists’ practices, those receiving the broadcast phonograms are a small and determinate group, who don’t come there for the music (the music is not an additional service from whom the operator expects some benefit) and the music is not profit making.

What should lawyers take from the OSA and SCF judgments?

Businesses in the UK will continue to look for ways to avoid paying for communicating phonograms at their place of work. Lawyers advising them have fairly settled and structured guidance on what constitutes a communication to the public both generally and in respect of users of commercial phonograms.

Collecting societies such as PPL and PRS for Music can be tenacious in pursuing royalties payable for the use of phonograms. The OSA case will be viewed as a victory (not for Czech legislators of course) while the SCF case will serve as a reminder that there are several factors to balance when weighing up whether a user is making a communication to the public (within the meaning of Directive 92/100/EEC, art 8(2)). In SCF the CJEU reminds that ‘an individual approach’ should be taken, and ‘that the situation of a specific user and of all the persons to whom he communicates the protected phonograms must be assessed [and] account must be taken of several complementary criteria, which are not autonomous and are interdependent. Consequently, they must be applied individually and in the light of their interaction with one another, given that in different specific situations, they may be met to varying degrees.’

In the light of this individualistic approach, we can expect collecting societies to continue to bring cases focussing on the concept of ‘public’ in order to further hone what use of phonograms might fall on the side of communication to the public and having to pay royalties.

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