PUBLIC LENDING RIGHT / RENTAL
- Judgment of the Court of 10 November 2016, C-174/15, Vereniging Openbare Bibliotheken
The VOB represents the interests of all public libraries in the Netherlands. Those libraries lend out books in physical format and, in return, pay a lump sum to the Stichting, which is the foundation designated by the Minister for Justice (Netherlands) to collect lending right payments. At present, public libraries make electronic books available via the internet, on the basis of licensing agreements with rightholders. The VOB is challenging that draft legislation on libraries providing for the creation of a national digital library for the remote digital lending of electronic books, which is based on the premiss that the digital lending of electronic books does not come within the scope of that exception. Therefore VOB has brought proceedings before the Rechtbank Den Haag (District Court, The Hague) in which it seeks a declaration that, essentially, the current Law on Copyright already covers digital lending.
The referring court asks whether Article 1(1), Article 2(1)(b) and Article 6(1) of Directive 2006/115 must be interpreted as meaning that the concept of ‘lending’, within the meaning of those provisions, covers the lending of a digital copy of a book, where that lending is carried out by placing that copy on the server of a public library and allowing the user concerned to reproduce that copy by downloading it onto his own computer, bearing in mind that only one copy may be downloaded during the lending period and that, after that period has expired, the downloaded copy can no longer be used by that user. It asks also whether Article 6 of Directive 2006/115 and/or any other provision of EU law must be interpreted as precluding a Member State from making the application of Article 6(1) of Directive 2006/115 subject to the condition that the digital copy of a book made available by the public library must have been put into circulation by a first sale or other transfer of ownership of that copy in the European Union by the holder of the right of distribution to the public or with his consent, for the purpose of Article 4(2) of Directive 2001/29. It asks whether Article 6(1) of Directive 2006/115 must be interpreted as precluding the public lending exception laid down therein from applying to the making available by a public library of a digital copy of a book in the case where that copy was obtained from an unlawful source.
The Court concluded that article 1(1), Article 2(1)(b) and Article 6(1) of Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property must be interpreted as meaning that the concept of ‘lending’, within the meaning of those provisions, covers the lending of a digital copy of a book, where that lending is carried out by placing that copy on the server of a public library and allowing a user to reproduce that copy by downloading it onto his own computer, bearing in mind that only one copy may be downloaded during the lending period and that, after that period has expired, the downloaded copy can no longer be used by that user. Also, according to the Court, EU law, and in particular Article 6 of Directive 2006/115, must be interpreted as not precluding a Member State from making the application of Article 6(1) of Directive 2006/115 subject to the condition that the digital copy of a book made available by the public library must have been put into circulation by a first sale or other transfer of ownership of that copy in the European Union by the holder of the right of distribution to the public or with his consent, for the purpose of Article 4(2) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society. Finally, the Court concluded that article 6(1) of Directive 2006/115 must be interpreted as meaning that it precludes the public lending exception laid down therein from applying to the making available by a public library of a digital copy of a book in the case where that copy was obtained from an illegal source.
Judgment of 28 Apr 1998, C-200/96 (Metronome)
By order of 18 April 1996, received at the Court on 13 June 1996, the Landgericht(Regional Court) Cologne, referred to the Court of Justice for a preliminary rulingunder Article 177 of the EC Treaty a question on the validity of Article 1(1) ofCouncil Directive 92/100/EEC of 19 November 1992 on rental right and lendingright and on certain rights related to copyright in the field of intellectual property.That question was raised in proceedings between Metronome Musik GmbH(hereinafter ‘Metronome), which produces sound recordings, including compactdiscs, and Music Point Hokamp GmbH (hereinafter ‘Hokamp), whose businessincludes the rental of compact discs.
Following the ruling of the Court:
The introduction, by Directive 92/100 on rental right and lending right and on certain rights related to copyright in the field of intellectual property, of an exclusive rental right for copyright works cannot constitute any breach of the principle of the exhaustion of the distribution right, the purpose and scope of which are different.
The principle of exhaustion of distribution rights in the event of the offering for sale, by the rightholder or with his consent, of copyright works derives from settled case-law of the Court of Justice, according to which the exclusive right guaranteed by the legislation of a Member State on industrial and commercial property is exhausted when a product has been lawfully distributed on the market in another Member State by the actual proprietor of the right or with his consent. However, literary and artistic works may be the subject of commercial exploitation by means other than the sale of the recordings made of them.
By authorising the collection of royalties only on sales to private individuals and to persons hiring out those recordings, it is impossible to guarantee authors of works a remuneration which reflects the number of occasions on which the works are actually hired out and which secures for them a satisfactory share of the rental market. The release into circulation of a sound recording cannot therefore, by definition, render lawful other forms of exploitation of the protected work, such as rental, which are of a different nature from sale or any other lawful form of distribution. Just like the right to present a work by means of public performance, the rental right remains one of the prerogatives of the author and producer notwithstanding sale of the physical recording.
2. The freedom to pursue a trade or profes METRONOME MUSIK v MUSIC POINT HOKAMP Treaty, constitutes a ground of general interest which may justify restrictions on the free movement of goods and, second, the cultural development of the Community forms part of the objectives laid down by Article 128 of the EC Treaty, as amended by the Treaty on European Union, which is intended in particular to encourage artistic and literary creation.
More specifically, the inclusion of producers of sound recordings among the beneficiaries of the exclusive rental right appears justified by the protection of the extremely high and risky investments which are required for the production of recordings and are essential if authors are to go on creating new works. The grant of an exclusive right to producers certainly constitutes the most effective form of protection, having regard in particular to the development of new technologies and the increasing threat of piracy, which is favoured by the extreme ease with which recordings can be copied. In the absence of such a right, it is likely that the remuneration of those who invest in the creation of those products would cease to be properly guaranteed, with inevitable repercussions for the creation of new works.
Furthermore, the obligation to establish, for the producers of sound recordings and all other holders of rights in respect of such recordings, an exclusive right to authorise or prohibit the commercial rental of those products is in conformity with the combined provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (‘TRIPs’), annexed to the agreement establishing the World Trade Organisation.
Since it does not appear that the objectives pursued could have been achieved by measures which preserved to a greater extent the entrepreneurial freedom of individuals or undertakings specialising in the commercial rental of sound recordings, the consequences of introducing an exclusive rental right cannot be regarded as disproportionate and intolerable.
Judgment of 22 Sep 1998, C-61/97 (Laserdisken) See summary above )under distribution right)
Judgment of 30 Jun 2011, C-271/10 (VEWA)
C-271/10 Vereniging van Educatieve en Wetenschappelijke Auteurs (VEWA), judgment of 30 June 2011
The authors whose works are the subject of public lending are entitled to the payment of adequate income.
Directive 92/100/EC on rental right and lending right and on certain rights related to copyright in the field of intellectual property provides that authors have an exclusive right to authorise or prohibit rental and lending of copyright works. However, Article 5(1) of this Directive introduces a derogation in respect of public lending, provided that authors obtain a remuneration for such lending.
The VEWA, a Belgian copyright management society, brought action before the Council of State challenging a Royal Decree transposing Directive 92/100/EC. It argues that the provisions of this Decree, which provide for remuneration fixed on a flat-rate basis according to the number of borrowers registered with public establishments, are contrary to Article 5(1) of the Directive, in so far as this remuneration is insufficient. The Council of State referred a question to the Court of Justice for a preliminary ruling on the interpretation of the concept of ‘remuneration’ referred to in these provisions.
The Court points out that the purpose of the remuneration referred to in Article 5(1) of the Directive is to compensate for the harm suffered by authors from the use made of their works without their authorisation. It is also to allow them to receive an ‘adequate income’. The Court draws a distinction between this concept and that of ‘equitable remuneration’ which concerns the arrangements of an economic or commercial nature in the context of trade, such trade being absent in the case of public lending. The ‘adequate income’ may therefore be lower than ‘equitable remuneration’ and fixed not in accordance with the value of the subject-matter protected in trade, but on a flatrate basis. However, its amount cannot be purely symbolic.
The Court specifies that it is for the Member States alone to determine, within their territory and in accordance with their own cultural policy objectives, the criteria allowing such remuneration to be determined. It adds, however, that the determination of the amount cannot be completely dissociated from the elements which constitute harm for authors, and must therefore take account of the extent to which protected works are made available under public lending. It follows that this amount must take account firstly of the number of protected works made available to the public and secondly of the number of borrowers registered with a lending establishment. Under these conditions, large establishments should pay a greater level of remuneration than smaller establishments.
Directive 92/100/EC therefore precludes a system which, as in the present case, would take account only of the number of borrowers registered in the lending establishments.
Judgment of 15 Mar 2012, C-135/10 (SCF or Marco del Corso), see summary above
Judgment of 16 Feb 2017, C-641/15 (Verwertungsgesellschaft Rundfunk) – also for communication to the public, see summary above
Judgment of 15 Mar 2012, C-162/10 (Phonographic Performance) – also for communication to the public, see summary above
Judgment of 14 Jul 2005, C-192/04 (Lagardère) – also for communication to the public, see summary above
Judgment of 6 Feb 2003, C-245/00 (SENA)
Before the entry into force of the WNR, an agreement had been entered into on 16 December 1986 by NOS and Stichting Radio Nederland Wereldomroep (Radio Netherlands World Broadcasting Association), of the one part, and the Nederlandse Vereniging van Producenten en Importeurs van Beeld en Geluidsdragers (Netherlands Association of Producers and Importers of Image and Sound Media, hereinafter NVPI), of the other part. Under that agreement, NOS was liable to pay NVPI, on an annual basis as from 1984, (indexed) remuneration in consideration of the use of the rights of performing artists and phonogram producers. The remuneration paid by NOS to NVPI under that agreement amounted in 1984 to NLG 605 000 and, in 1994, to NLG 700 000.
SENA was, pursuant to Article 15 of the WNR, designated to collect and distribute the equitable remuneration in respect of fees in place of NVPI, whereupon NVPI, by a letter of 23 December 1993, terminated the agreement between itself and NOS. SENA and NOS sought to agree the amount of equitable remuneration to be fixed under the WNR, pursuant to Article 7(1) thereof. They failed to do so and SENA consequently brought an action before the Arrondissementsrechtbank te ‘s-Gravenhage pursuant to Article 7(2) of the WNR,
The case reached the Supreme Court of Hoge Raad der Nederlanden which decided to refer three questions to the Court of Justice for a preliminary ruling:
By its first question the national court is asking, essentially, whether the concept of equitable remuneration within the meaning of Article 8(2) of Directive 92/100 must, firstly, be interpreted in the same way in all Member States, and secondly, be applied using the same criteria in all Member States.
By its second and third questions, the national court is asking, essentially, what criteria are to be used for determining the amount of the equitable remuneration, and what limits are imposed on the Member States in laying down those criteria.
Following the Court’s ruling:
Article 8(2) of Directive 92/100 on rental right and lending right and on certain rights related to copyright in the field of intellectual property requires the Member States to lay down rules ensuring that users pay an equitable remuneration when a phonogram is used for broadcasting or any form of communication to the public. The concept of equitable remuneration in that provision must be interpreted uniformly in all the Member States and applied by each Member State; it is for each Member State to determine, in its own territory, the most appropriate criteria for assuring, within the limits imposed by Community law and Directive 92/100 in particular, adherence to that Community concept.
In that regard, Article 8(2) does not preclude a model for calculating what constitutes equitable remuneration that operates by reference to variable and fixed factors, such as the number of hours of phonograms broadcast, the viewing and listening densities achieved by the radio and television broadcasters represented by the broadcast organisation, the tariffs fixed by agreement in the field of performance rights and broadcast rights in respect of musical works protected by copyright, the tariffs set by the public broadcast organisations in the Member States bordering on the Member State concerned, and the amounts paid by commercial stations, provided that that model is such as to enable a proper balance to be achieved between the interests of performing artists and producers in obtaining remuneration for the broadcast of a particular phonogram, and the interests of third parties in being able to broadcast the phonogram on terms that are reasonable, and that it does not contravene any principle of Community law. (see paras 33, 38, 46, operative part 1-2)