C-351/12 – Two rulings from the ECJ: Health spas are obliged to pay compensations for copyright infringement & centralisation of collecting copyright fee by one collective rights management society doesn’t infringe Community law

by Miina Viitala

The European Court of Justice interpreted its Directive 2001/29/EY Articles 3 and 5 on Copyright and Related Rights in Information Society, Article 16 of Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market and TFEU Articles 56 and 102 in its decision C-351/12 Ochranný svaz autorský pro práva k dílům hudebním, os (OSA) v Léčebné lázně Mariánské Lázně (27th February, 2014).[1]

The directive releases non-commercial institutional organisations such as hospitals from paying copyright fees. The Czech Republic’s domestic system differs slightly from the wording of the Directive; national law doesn’t oblige such entities to obtain any permission for streaming radio and/or TV-shows when shows are streamed for individuals receiving health care in hospitals. National law and the Directive’s interpretation can differ as the national law might enable less restricted interpretation regarding who is obliged to pay copyright fees.

The OSA (i.e. the Collective Rights Management Society) of the Czech Republic required a domestic health spa, offering commercial services, to pay copyright fees connected to radio and TV-streaming. Radio and TV shows were also enabled in each customer’s room. The health spa claimed to be under the domestic exception for not having to pay the copyright fee. This meant that no permission would be needed for streaming radio and TV-shows for customers receiving health-related treatments. If the national law were incompatible with the Community Directive, the OSA would not be able to rely on the Directive in a dispute between private legal entities.

The Health Spa also argued that the OSA was illegally using its monopoly in the marketplace as the copyright fees it was collecting were excessive when compared to those in neighbouring countries. Subsequently, this has the potential to give the Spa a competitive edge when compared to other, competing spas in neighbouring countries. The Spa argued that it would be entitled to enter an agreement with another collective rights management society located in another Member State.

The Krajský soud v Plzni District Court referred three preliminary questions to the European Court of Justice. First, the District Court asked whether the directive is to be interpreted in such a way that the exception would apply to a commercial Health Spa, meaning that such an establishment is not obliged to pay the copyright fee when offering copyright protected radio and TV-shows for its customers. Secondly, the District Court asked whether Article 3(1) of Directive 2001/29 must be interpreted as meaning that it can be relied upon by a collective rights management society in a dispute between individuals for the purpose of setting aside national legislation which is contrary to that provision. Thirdly, the District Court asked whether a monopoly system for collective rights management societies is in accordance with Community law (namely Article 16 of Directive 2006/123 and Articles 56 TFEU and/or 102 TFEU).

At its ruling, the ECJ stated that the directive is a restriction for the exception which doesn’t oblige health spas to pay copyright fees. As the spa has a commercial nature, it should pay its copyright fees if it wishes to stream copyright material for its customers. For the second issue, the ECJ stated that individual legal entities/individuals cannot rely on the directive in a way that domestic law differing from the Community law would not be implemented. Domestic courts should interpret the national legislation together with the directive. To the third issue the ECJ ruled that Community Law is not a barrier for the provisions of domestic law whereby the collection of copyright fees are granted for one collective rights management society. The Court noted that collective management society shall not abuse its dominant position within the domestic market with excessive copyright fees under Article 102 TFEU and the activities of collecting societies are subject to the provisions of Article 56 TFEU relating to the freedom to provide services.

Miina Viitala is LLM Candidate at Queen Mary University of London and is working as a Queen Mary Intellectual Property Research Institute (QMIPRI) Student Research Fellow and Assistant Editor of Queen Mary Journal of Intellectual Property (QMJIP)