Health spa takes a bath at the CJEU

Posted: April 29, 2014

The Court of Justice of the European Union has found that a spa transmitting copyright-protected musical works to its guests by radios or televisions in their bedrooms is liable to pay licence fees1. Essentially, the court found that the transmission was a “communication to the public” within the meaning of Article 3(1) of the Copyright Directive (2001/29/EC). The authors of the copyright works therefore had the exclusive right to authorise or to prohibit their communication in such circumstances and, as such, were entitled to royalties.

Background

A Czech musical works copyright collecting society, Ochranný svaz autorský pro práva k dílům hudebním, o.s. (OSA), issued copyright infringement proceedings in the Czech courts against Léčebné lázně Mariánské Lázně a.s. (the spa), a residential health spa establishment, also in the Czech Republic, claiming fees for the transmission of copyright works in guests’ bedrooms.

Under Czech law, the transmission of copyright works by radio or television, for which royalties might be claimed, does not include making a work available to patients when providing health care to them in healthcare establishments.

The Marienbad health spa company provided in-patient and out-patient care using local natural medicinal springs. In 2008, it installed television and radio sets in its guests’ bedrooms and began providing access to works managed by OSA. However, the spa did not have a licence agreement with OSA. Accordingly, OSA issued proceedings, claiming CZK 546,995 (approximately €21,000) in unpaid fees, plus interest. The spa claimed to be covered by the healthcare exception provided for in Czech copyright law. It also argued that OSA was abusing its monopoly position by charging fees higher than those charged in neighbouring Member States.

The Advocate General gave her Opinion in November 20132.

Reference

The Czech court asked the CJEU whether the Czech legislation, under which “health establishments” are exempt from the payment of copyright fees, was compatible with Article 3(1) of the Copyright Directive (2001/29/EC), which does not provide for such an exemption. The Czech court also asked whether Article 3(1) of the Directive could be relied on by OSA in its dispute with the spa for the purpose of setting aside the Czech legislation. Finally, the Czech court asked whether OSA’s monopoly over the collection of fees in the Czech Republic was compatible with the freedom to provide services and with competition law.

Decision

The CJEU found that the transmission of copyright works in guest bedrooms amounted to a “communication to the public” under the Copyright Directive and that, accordingly, such communication should be authorised by the copyright owners who should, in principle, receive adequate compensation.

First, the concept of “communication” had to be construed as referring to any transmission of the protected works, irrespective of the technical means or process used. Therefore, the spa was clearly carrying out a “communication” when it deliberately transmitted protected works by intentionally distributing a signal through TV or radio sets in the rooms of its guests.

The CJEU found that the term “public” referred to an indeterminate number of potential recipients but implied a fairly large number of persons. It considered that the cumulative effect of making the works available to potential recipients should be taken into account and, in that regard, it was relevant to ascertain the number of people who had access to the same work both at the same time and successively.

The CJEU noted that, as the Advocate General had pointed out in her Opinion, a spa establishment was likely to accommodate, both at the same time and successively, an indeterminate but fairly large number of people who could receive the “communications” in their bedrooms. Further, contrary to the spa’s claim, the mere fact that the patients of a spa generally stayed for a longer period than the guests of a hotel did not invalidate that finding, since the communication of the works to such patients was likely, as a result of the cumulative effect, to concern a fairly large number of people.

As for the need for the public to be “new”, i.e. a public that had not been taken into account by the authors of the protected works when they first authorised their communication to the original public, the guests of a spa, like the guests in a hotel, did indeed constitute a “new” public. The spa was an organisation that intervened, in full knowledge of the consequences of its actions, to give access to the protected works to its guests. In the absence of that intervention, its guests would not, in principle, be able to enjoy the broadcast work while at the spa.

Since the spa’s acts did indeed constitute a “communication to the public”, it was clear, the CJEU said, from the wording of Article 3(1) of the Directive that national legislation had to provide authors with the exclusive right to authorise or prohibit such communication, unless that communication was covered by an exception or limitation under the Directive.

The CJEU noted that Article 5(3)(b) of the Directive provided that Member States could provide for exceptions or limitations to the rights provided for in Article 3 (i.e. an author’s exclusive right to authorise or prohibit a communication to the public of his/her works) in respect of uses for the benefit of people with a disability, which are directly related to the disability and are of a non-commercial nature, to the extent required by the specific disability. In the case of the Marienbad spa, there was nothing in the documents before the CJEU to indicate that all of the conditions of Article 5(3)(b) were met. Therefore, Article 3(1) of the Directive had to be interpreted as precluding national legislation which excludes the right of authors to authorise or prohibit the communication of their works by a spa establishment, which is a business, through the intentional distribution of a signal by means of TV or radio sets in its guests’ bedrooms. Consequently, the exemption under Czech law (for making copyright works available to patients when providing health care to them in healthcare establishments) did not comply with the Directive.

In relation to the second question that it had been asked to consider (i.e. whether Article 3(1) of the Directive could be relied on by OSA in its dispute with the spa for the purpose of setting aside the Czech legislation), the CJEU found that Article 3(1) had to be interpreted as meaning that it could not be relied on by OSA in its dispute with the spa for the purpose of setting aside the Czech legislation. However, the national court hearing such a case would be required to interpret the national legislation, insofar as possible, in light of the wording and purpose of the Directive, in order to achieve an outcome that was consistent with the objective of the Directive.

In relation to the final question that the CJEU had been asked to consider (i.e. whether OSA’s monopoly over the collection of fees in the Czech Republic was compatible with the freedom to provide services and with competition law), the CJEU accepted that OSA’s territorial monopoly constituted a restriction on the freedom to provide services, inasmuch as it did not allow users of protected works to choose the services of a collecting society established in another Member State. The court emphasised, however, that the restriction was justified, since the system was appropriate and necessary for the effective management of intellectual property rights. As EU law stood at present, there was no other method of achieving the same level of copyright protection, the court found. The CJEU therefore concluded that OSA’s monopoly was compatible with the freedom to provide services. It did note that the imposition by a national copyright collecting society of fees which were appreciably higher than those charged in other Member States, or the imposition of prices which were excessive in relation to the economic value of the service provided, would be indicative of abuse of a dominant position. However, it was for the Czech court to decide whether that was the case here.

Comment

The spa had argued that the “communication” of the musical works in its guests’ bedrooms had the same characteristics as a communication of protected works by a dentist in his/her dental practice, as discussed in Case C-135/10 Società Consortile Fonografici (SCF) v Marco Del Corso. In that case, the court had found that the communication did not constitute a “communication to the public” since, although a dentist intervened deliberately in the broadcasting of sound recordings, and without such action the patients would not be able to listen to them, the dentist’s patients generally formed a consistent group of persons constituting a determinate circle of potential recipients. Further, the group was not large enough to constitute a “public” and was, in fact, insignificant, given that the number of persons present in the practice at the same time was, in general, very limited. Moreover, although there were a number of patients, since they attended one at a time, they did not generally hear the same sound recordings.

Somewhat unexpectedly, particularly as in the current case its Advocate General had gone to some length to distinguish SCF, the CJEU merely said that the principles developed in SCF were not relevant. Although, in terms of interpreting the word “public”, the concepts of an “indeterminate number of potential recipients” and a “fairly large number of persons” were the same, in SCF the right in question was the right to remuneration of performers and producers of phonograms within the meaning of Article 8(2) of the Rental and Lending Right Directive (92/100/EEC, now replaced) (Rental Directive), rather than copyright under Article 3(1) of the Copyright Directive.

On the one hand, the decision is useful in that it confirms that SCF (and other case law concerning the meaning of the “public” for the purposes of Article 8(2) of the Rental Directive) does not apply to cases concerning Article 3(1) of the Copyright Directive. However, on the other hand, it is somewhat unfortunate that the CJEU disregarded SCF, not least because in its judgment in SCF the CJEU clearly applied jurisprudence applicable to both measures.

Eleanor Steyn

Article written for Entertainment Law Review

 

  1. Ochranný svaz autorský pro práva k dílům hudebním, o.s. v Léčebné lázně Mariánské Lázně a. s., Case C-351/12, 27 February 2014. http://curia.europa.eu/juris/document/document.jsf?text=&docid=148388&pageIndex=0&doclang=en&mode=req&dir=&occ=first&part=1&cid=167731
  2. http://curia.europa.eu/juris/document/document.jsf?text=&docid=144496&pageIndex=0&doclang=en&mode=req&dir=&occ=first&part=1&cid=709650