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CJEU rules on the broadcasting sound recordings in hotel guest rooms

06/06/2012

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CJEU rules on the broadcasting sound recordings in hotel guest rooms

snIPpets – June 2012

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Court of Justice of European Union says no to "Privacy Please!"

A recent decision of the CJEU on preliminary reference from the High Court of Ireland has given further guidance as to the meaning of "communication to the public" and when such an act will take place.  It may not be a surprise to learn that the broadcast of sound recordings ("phonograms") by a hotelier to its guests via televisions, radios or other apparatus in their rooms which might enable them to play phonograms was held to constitute such a communication requiring the hotelier to pay equitable remuneration to the phonogram producer.  However, there are some surprises in the CJEU's reasoning and the contrast with the decision in a related Italian reference Societa Consortile Fonografici v Marco Del Corso Case C-135/10 ("SCF") given on the same day.

The Reference

The reference arose from proceedings brought by Phonographic Performance (Ireland) Limited ("PPL"), a collecting society representing phonogram producers, against the Irish Government.  PPL's claim related to Article 8(2) of Council Directive 2006/115/EC on the rental and lending right (the "Directive") which requires member states to provide a right to ensure that users who broadcast phonograms published for commercial purposes or reproductions of such phonograms by wireless means or undertake any communication of them to the public pay a single equitable remuneration to the relevant performers and phonogram producers. 

PPL argued that a carve out in section 97 of the Irish Copyright and Related Rights Acts 2000-2007 which provided that copyright in a phonogram was not infringed if it was broadcast to or caused to be heard in sleeping accommodation for residents as part of amenities provided exclusively or mainly for residents deprived them of the remuneration from hotels and guesthouses broadcasting phonograms to their guests' rooms or providing them with phonograms and apparatus on which to play them.  PPL sought a declaration that the Irish Government had breached EU law and damages.

The Irish Court referred five questions to the CJEU:

  1. Was a hotelier distributing broadcast signals to televisions and radios in its guests' rooms "a user" making a "communication to the public" of a phonogram under Article 8(2)?
  2. If the answer to 1 was yes, did Article 8(2) require Member States to provide a right to equitable remuneration from the hotelier in addition to the broadcaster for the playing of the phonogram?
  3. If the answer to 1 was yes, did Article 10(1) of the Directive which provides an exemption from the right the equitable remuneration in Article 8(2) in the case of private use, permit Member States to exempt hoteliers from the obligation to pay such remuneration?
  4. & 5.    The Court asked question 1 and 3 again but in the context of a hotelier providing apparatus (other than a TV or radio) and phonograms, both physical or digital, which could be played on or heard from the apparatus in its guests' rooms.

The Decision  

Question 1 - The hotelier was a user making a communication to the public.

The CJEU said that following Article 8(2) anyone using a phonogram for broadcast or communication to the public was 'user'.  Whether there had been a communication to the public was to be determined on the principles applied in SCF.  In that case, despite noting that communication to the public was a concept shared by Article 3(1) of the Copyright Directive (2001/29/EC) relating to a prohibitory rather than compensatory right (the exclusive right of authors to prevent their works from being communicated to the public), the CJEU nevertheless adopted criteria from Article 3(1) case law in its assessment of communication to the public.  These criteria were complementary and interdependent comprising:

(a) Indispensible role of the user – The user made an act of communication when it intervened, in full knowledge of the consequences of its action, to give access to the broadcast containing the protected work to its customers.

On the facts, the CJEU held the guests were only able to listen to the sound recordings because the hotelier had provided TVs and radios in their rooms to which it distributed a broadcast signal. 

(b) The Public – The term 'public' described an indeterminate number of potential listeners and a fairly large number of people.  Although not bound by the WIPO glossary definition of 'communication to the public', the CJEU noted that it required making the work perceptible to persons in general not specific individuals of a private group.  Regarding the number of people, it had been established on the one hand that there was a de minimis threshold below which groups would be too small or insignificant and on the other that to determine the number required evaluation of how many persons had access to the same work at the same time and how many had access in succession.

On the facts, the CJEU held that the hotel guests were an indeterminate number as access to the services of the hotel was the guests' own choice and was limited only by the capacity of the hotel. The guests were persons 'in general' would constitute a fairly large number of persons.

(c) Profit-Making Nature – This was particularly relevant in the context of Article 8(2) which was a compensatory right.  The public in issue had to be targeted by the user and receptive to the communication rather than merely caught by chance.

On the facts, the CJEU held that the guests were targeted and receptive and access to broadcasts was an additional service influencing the hotel's standing and the price of its rooms, and may attract additional guests.

Question 2 - The hotelier was obliged to pay remuneration in addition to that paid by the initial broadcaster

The CJEU again referred to the case law under Article 3(1) and noted that a hotelier carrying out an act of communication to the public was transmitting the work to a 'new public.'  The same analysis applied for Article 8(2). The hotelier was using the phonogram in an autonomous way and transmitting it to a public distinct from and additional to the one targeted by the initial act of communication and from which it derived an economic benefit independent of the remuneration received the broadcaster or phonogram producer.  

Question 3 - The hotelier could not rely on the private use exemption

The CJEU referred to the AG's opinion that it was not the use by the guests in the privacy of their rooms which was determinative of whether the hotelier could avail itself of the private use exemption but rather whether the use made by the hotelier itself was private.  It was a contradiction in terms to consider a communication to the public to be a private use and the exemption could not apply in such circumstances.

Questions 4 & 5 - The hotelier was also making a communication to the public by providing phonograms and apparatus other than a TV or radio to guests so that they could listen to the phonograms.

The CJEU explained that this question needed to be determined with due regard for the concepts used and objectives pursued in the WIPO Performances and Phonograms Treaty which provided that communication involved making the sounds in a phonogram audible to the public.  By providing phonograms and apparatus upon which to play them in guest bedrooms, the hotelier made it possible for the phonograms to be audible to the public.  Without the hotelier's intervention the guests would not have had access to these works.  Applying the analysis and findings from Question 1, the CJEU confirmed that the hotelier was also making a communication to the public here and equitable remuneration was payable.

The Last Song?

The decision clearly has significant ramifications for hoteliers across the EU who broadcast signals to televisions and radios in their guests' rooms or provide apparatus such as pre-loaded MP3 players and may no longer be able to resist compensation claims from collecting societies and phonogram producers.

Whilst the CJEU's guidance on the factors to be assessed when considering a communication to the public under Article 8(2) and the consistency of its approach with regard to the similar concept in Article 3(1) of the Copyright Directive are welcome, the level of certainty offered by the factors is questionable. 

The decision contrasts with the SCF decision, made on the same day, also concerning Article 8(2). In that case, the CJEU held that a dentist who broadcasted phonograms, free of charge, to patients, and which the patients enjoyed without any choice on their part, was not making a communication to the public.  This was because the patients formed a consistent determinate group of recipients, very few of them would be in the surgery at the same time and the broadcast would not attract new patients or enable the dentist to charge more for treatments.

But what about the case of a dentist with a large client list and large waiting room or multiple treatment rooms in its practice? How big does a hotel have to be to have an indeterminate number of listeners? What about a B&B with only a few rooms? How important is the profit-making nature of the broadcast? What about a large state owned hospital broadcasting to its patients?  These are questions national courts will need to grapple with and may well mean that the CJEU's recent decisions are not the last song.

Gwyllym Tilbrook, Associate in IP Protection and IP Enforcement and Litigation at Fieldfisher.

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