IP Update: Recent Development In EU Copyright Law: Stim ... - Lexology

On 2 April 2020, the Court of Justice of the European Union (“CJEU”) issued an interesting decision in relation to a request for a preliminary ruling with respect to a dispute concerning copyrights.

Facts

The request for a preliminary ruling in this case was made in connection with two separate but similar cases pending before the Swedish Supreme Court (Högsta domstolen).

The first dispute involved Stim (Föreningen Svenska Tonsättares Internationella Musikbyrå), the Swedish organisation which collectively manages copyright in music, and Fleetmanager Sweden AB (“Fleetmanager”). Fleetmanager is a motor vehicle rental company offering, directly or through intermediaries, hired vehicles equipped with radio receivers.

Stim claimed that Fleetmanager, by making vehicles equipped with radio receivers available to third parties, contributed to the copyright infringements committed by those third parties. More specifically, such act would constitute an unauthorized communication of musical works to the public. The court of first instance held that such hire of vehicles indeed implied a ‘communication to the public’ of musical works, but that Fleetmanager did not participate in those copyright infringements. The action brought by Stim was thus dismissed. This judgment was later upheld on appeal, so Stim appealed to the Swedish Supreme Court.

The second dispute involved SAMI (Svenska Artisters och Musikers Intresseorganisation), the Swedish organisation managing the related rights of performers, and Nordisk Biluthyrning AB (“NB”). NB is also a Swedish motor vehicle rental company offering, directly or through intermediaries, hired vehicles equipped with radio receivers and CD readers.

In this dispute, NB brought an action before the Patent- och marknadsdomstolen (Swedish Patents and Market Court) seeking a declaration that NB was not required, on the basis of the fact that the vehicles which it hires out are equipped with radio receivers and CD readers, to pay fees to SAMI for the use of sound recordings. The Patents and Market Court held that the provision, by NB, of radio receivers and CD readers in the cars made it possible for their drivers to hear sound recordings and must therefore be regarded as a ‘communication to a public’. Consequently, it held that NB was liable to compensate SAMI and dismissed the action brought by NB. This judgment was overturned on appeal but SAMI also appealed to the Swedish Supreme Court.

Being confronted with these two similar cases, the Swedish Supreme Court then decided to ask the CJEU to rule on the question whether or not the hiring out of motor vehicles equipped with radio receivers and/or CD readers should be classified as a ‘communication to the public’ under EU copyright law.

Legal background

This request for a preliminary ruling concerns in essence the interpretation of Article 3(1) of the “Information Society Directive” and Article 8(2) of the “Rental and Lending Rights Directive”. Both provisions grant, in summary, authors and performers/producers of phonograms, respectively, an exclusive right to authorise the communication of their works to the public.

This right stems from article 8 of the World Copyright Treaty (“WCT”). Interestingly, the joint declaration adopted by the Diplomatic Conference concerning Article 8 of the WCT states the following: ‘It is understood that the mere provision of physical facilities for enabling or making a communication does not in itself amount to communication within the meaning of this Treaty or the Berne Convention’. This statement is repeated in recital 27 of the Information Society Directive.

Decision

The Court first considered that, since the EU legislature did not express a different intention, the expression ‘communication to the public’ used in the Information Society Directive and the Rental and Lending Rights Directive should be interpreted as having the same meaning. Furthermore, it also considered that this expression should be interpreted in the light of the equivalent concepts contained in the texts of international law (i.e. the WCT) and in such a way that it is consistent with them.

It then proceeded with repeating that the concept of ‘communication to the public’, in accordance with its settled case-law, includes two cumulative criteria, namely (i) an ‘act of communication’ of a work, and (ii) the communication of that work to a ‘public’.

Thus, subsequently, the court first assessed whether the hiring out of vehicles equipped with radio receivers constitutes an act of communication. In this context, the Court re-emphasised the important role played by the user (in this case the motor vehicle rental company) and the deliberate nature of his intervention. More specifically, a user makes an ‘act of communication’ when he intervenes, in full knowledge of the consequences of his action, to give his customers access (intentionally) to a protected work, particularly where, in the absence of that intervention, those customers would not be able to enjoy the broadcast work, or would be able to do so only with difficulty (Reha Training, C‑117/15).

Vice versa, the CJEU considered that the supply of a radio receiver forming an integral part of a hired motor vehicle, without any additional intervention by the motor vehicle rental company, falls under the above cited recital 27 of the Information Society Directive and, thus, does not in itself amount to communication within the meaning of this directive.

In line with the opinion of Advocate-General Szpunar of 15 January 2020, the Court therefore held that, by hiring out to the public motor vehicles equipped with radio receivers, the vehicle rental companies are not carrying out an ‘act of communication’ to the public of protected works, as understood under EU copyright law.

Conclusion

By underlining the importance of the role of the user (e.g. a motor vehicle rental company) and the deliberate nature of his intervention in the context of copyrights infringement, the CJEU adhered to its existing case-law. Although the CJEU’s interpretation of the concept of communication to the public has historically been relatively ambiguous and the court still has to provide a definite solid and clear interpretation, the decision at hand balances between the approaches adopted in, for example, the PPL (C-162/10) and SBS Belgium (C-325/14) judgments.

In the former PPL-decision, the CJEU held, in summary, that a hotel which provided equipment (and phonograms) to its clients for listening to music, carried out an unauthorized communication to the public. If one compares this decision to the reasoning of the CJEU in the Stim & Sami-decision, the crucial distinction between the two cases seems to be found in the degree of (deliberate) integration of the provided equipment into the respective service offering (respectively, hotel rooms and motor vehicles) by the user (respectively, the hotel operator and the motor vehicle rental company). Whereas radio receivers or CD readers typically form an integral part of a motor vehicle from its production on, music equipment and phonograms do not form an integral part of a hotel room. On the contrary, the hotel operator placed such equipment deliberately in the rooms, allowing customers access to protected works and therefore carried out an unauthorized communication to the public.

In the latter SBS Belgium-decision, the CJEU held, in a nutshell, that a user’s intervention in the dissemination of the works to the public should be deliberate in order to be considered as an (independent) communication of works to the public. This is not the case if the user merely provides or acts as the technical means for another party to carry out a communication to the public. This reasoning seems to be echoed by the Stim & Sami-decision, as motor vehicle rental companies can be considered to be merely acting as a party providing the technical means (i.e. a vehicle equipped with integrated radio receivers or CD readers) for other parties to carry out a communication to the public (e.g. radio broadcasters), without deliberately intervening in the dissemination of the works itself. Hence, they do not carry out an communication of works to the public themselves.

It remains however to be seen if and how the abovementioned reasoning may apply in situations involving for example smart watches or similar smart devices that do not require user intervention before giving customers access to protected works. Undoubtedly, another series of CJEU rulings on the same topic will follow. We can only hope they will further clarify rather than sow confusion over this highly sensitive notion of the communication to the public.