High Court refers Irish copyright law on hotel TV use to EU Court on public communication interpretation.

Neutral Citation No. [2010] IEHC 79

THE HIGH COURT

COMMERICAL

2008 10743 P

BETWEEN

PHONOGRAPHIC PERFORMANCE (IRELAND) LIMITED

PLAINTIFF

AND

IRELAND AND THE ATTORNEY GENERAL

DEFENDANTS

INTERIM DECISION of Ms. Justice Finlay Geoghegan delivered on the 23rd day of March, 2010

1. This interim decision is given, pursuant to Article 267 of the Treaty on the Functioning of the European Union, to seek

a preliminary ruling from the Court of Justice of the European Union on questions of interpretation of Articles 8 and 10 of

Council Directive 92/100/EC of 19th November, 1992 on rental right and lending right and on certain rights related to

copyright in the field of intellectual property, as codified by Directive 2006/115/EC of the European Parliament and the

Council of 12th December, 2006, (together referred to as “the Directives”) which I consider necessary to enable me give

judgment on the issue in the proceedings upon which I have reserved judgment.

Parties and nature of proceedings

2. The plaintiff is an Irish company and a licensing body within the meaning of the Copyright and Related Rights Acts 2000

- 2007 (“the Act of 2000”), which holds a certificate from the Controller of Patents, Designs and Trademarks, certifying

its entitlement to act on behalf of its members in licensing their rights. Those members consist of phonogram producers

which hold rights in respect of sound recordings and have, through exclusive licenses and assignments, conferred upon

the plaintiff the exclusive right, in Ireland, to licence the playing to the public of those sound recordings.

3. In the proceedings, the plaintiff seeks, first, a declaration that Ireland, in adopting (and maintaining in force) s. 97 of

the Act of 2000, has acted in breach of Article 10 of the Treaty establishing the European Community (now Article 4 of

the Treaty on European Union) and seeks damages for breach of Article 10 TEC.

4. It is agreed between the parties that in relation to the declaration sought, the issue for determination by this Court is

whether or not s. 97(1) of the Act of 2000 is contrary to Ireland’s obligations, pursuant to the Directives and, in

particular, Article 8(2) thereof.

5. On 13th October, 2009, by order of the High Court (Kelly J.) it was directed that the issue as to whether Ireland is in

breach of its obligations pursuant to European law by the enactment of s. 97(1) of the Act of 2000 should be determined

in advance of the plaintiff’s consequential claim for damages. The parties then agreed that the issue be determined by the

Court on agreed facts. The agreed statement of facts and issue is appended to this decision. At the hearing, the plaintiff

indicated that it was not pursuing a claim in relation to an alleged breach of Article 3(2) of Directive 2001/29/EC of the

European Parliament and of the Council of 22nd May, 2001, and hence, the first issue for determination set out in that

document no longer requires determination by this Court. The relevant facts set out at paras. 7 and 8 of the agreed

statement of facts are:

“7. From the time of entry into force of section 97(1) of the Act of 2000, sound recordings have been caused to

be heard in guest bedrooms in hotels and guesthouses in the State via apparatus provided by persons responsible

for the operation of the hotels and guesthouses in question as part of the service they provide. Some of such

sound recordings are included amongst the Plaintiff’s recordings, though no admission is made by the defendants

as to the identity of, or as to the number of, hotels and guesthouses involved, or to the extent of the plaintiff’s

repertoire involved.

8. The Plaintiff’s recordings may be heard in guest bedrooms by a variety of methods, including by way of sound

systems playing physical or digital sound recordings or via radio and/or television sets. However, no admission is

made by the State as to the extent to which any or all of these methods are in fact used in the State. It is

accepted that transmissions which are interactive or on-demand do not form the subject matter of these

proceedings.”

The Copyright and Related Acts 2000-2007

6. The scheme of the Act of 2000, in relation to sound recordings is that s. 17(2)(b) provides that copyright subsists in

accordance with the Act in sound recordings. Sections 21(a) and 23(1) together provide that the producer of a sound

recording is the author and, as such, the first owner of a copyright in a sound recording. Section 37(1)(b) grants to an

owner of copyright (including the producer of a sound recording) the exclusive right “to make available to the public the

work” and deems such an act to be one restricted by copyright. A phonogram producer, as an author, in accordance with

these provisions, has a wider right in Irish law than granted by the relevant Directives. The parties are in agreement that

such Irish position is not relevant to these proceedings as the plaintiff’s claim is exclusively based upon the obligations it

contends are imposed on Ireland by the Directives in relation to rights of phonogram producers.

7. Section 37(2) provides that copyright in a work is infringed by a person who, without the licence of the copyright

owner, undertakes or authorises another to undertake any of the acts restricted by copyright. However, s. 38 of the Act

of 2000, makes provision for licences of right to play sound recordings in public and to include them in a broadcast or a

cable programme service. A person may do so as of right where he agrees to make fair payments in respect of such

playing or inclusion in a broadcast or in cable programme service, and complies with the requirements s. 38 of the Act of

2000. These requirements include the giving of certain notices. The section also includes provision for the determination

of fair payment (more often referred to as equitable remuneration) in the event of a dispute.

8. Section 97 of the Act provides:

“(1) Subject to subsection (2), it is not an infringement of the copyright in a sound recording, broadcast or cable

programme to cause a sound recording, broadcast or cable programme to be heard or viewed where it is heard or

viewed -

(a) in part of the premises where sleeping accommodation is provided for the residents or inmates, and

(b) as part of the amenities provided exclusively or mainly for residents or inmates.”

(2) Subsection (1) does not apply in respect of any part of premises to which subsection (1) applies where there is

a discrete charge made for admission to the part of the premises where a sound recording, broadcast or cable

programme is to be heard or viewed.”

9. Section 246 of the Act contains a similar provision in relation to performers’ rights. There is no similar provision in

relation to an author’s right (in the EU sense) in relation to literary, artistic, dramatic or musical works.

10. The plaintiff has drawn attention to the unclear wording of s. 97(2). There is a lack of clarity. Nevertheless, insofar as

it is relevant to any issue in the proceedings, I am satisfied it can be construed as excluding from the possible exemption

in s. 97(1) the playing of a sound recording, broadcast or cable programme in a part of a premises to which there is a

discrete entry charge where the entire premises also include a part providing sleeping accommodation. In relation to

hotels and guesthouses, which are the subject matter of the proceedings, it excludes from the benefit of s. 97(1) an area

such as a nightclub or concert area in respect of which a discrete charge for entry is made.

11. It is not in dispute that s. 97(1) applies to hotels and guesthouses. The plaintiff, in submission, draws attention to the

requirement that the sound recording is provided as part of the amenity of residents and thus forms part of what hotels

and guesthouses may decide to offer guests (residents) as part of its services.

12. The effect of s. 97(1), for the plaintiff, is that it does not have a right to receive equitable or fair remuneration for

the playing of sound recordings in the circumstances set out therein which include the agreed facts herein. This loss

forms the basis of the claim for damages against Ireland, if a declaration is made that Ireland is in breach of Article 8(2)

of the Directives in enacting (and maintaining) s. 97 of the Act of 2000.

13. The defendants draw attention to the fact that s. 97 also applies potentially to other types of facilities and

institutions which may provide television and radio sets in sleeping accommodation for residents and inmates such as

hospitals, nursing homes, residential care facilities and prisons. This appears correct.

Findings

14. On the agreed facts and the application thereto of Irish law, I make the following findings prior to seeking a

preliminary ruling:

(a) These proceedings only concern sound recordings or phonograms heard in guest bedrooms in hotels and

guesthouses in Ireland and not in any other part of such hotels and guesthouses.

(b) The proceedings do not concern the use by hotel guests of transmissions which are interactive or on-demand.

(c) If a hotel or guesthouse in Ireland provides TV or radio sets in its bedrooms and, by cable or other technology,

distributes to those TV and radio sets a signal received centrally, then such hotel or guesthouse is not required by

reason of s. 97(1) of the Act of 2000 to make any payment of equitable remuneration to phonogram producers for

sound recordings included in TV or radio broadcasts which may be heard by guests in its bedrooms.

(d) If a hotel or guesthouse places in its bedrooms other apparatus and makes available sound recordings in

physical or digital form which may be played by guests thereon, such hotel and guesthouse is, likewise, not obliged

to pay equitable remuneration to phonogram producers by reason of s. 97(1) of the Act of 2000.

(e) Whilst the claim in these proceedings only relates to use of sound recordings made by hotels and guesthouses,

if a like use were made by hospitals, nursing homes, residential care facilities, prisons and other institutions then

similarly, by reason of s. 97(1) of the Act of 2000, no equitable remuneration is payable to phonogram producers.

(f) The sound recordings at issue in the proceedings are phonograms published for commercial purposes within the

meaning of Article 8(2) of the Directives and will be referred to as “phonograms” in the remainder of this decision.

European Union law issues and the need for Preliminary Ruling

15. The EU law issue in dispute is whether Articles 8(2) and 10 of the Directives oblige Ireland to give phonogram

producers a right to receive a payment of equitable remuneration from a hotel in the factual circumstances set out in the

findings at paragraph 14(c) and (d) above. Article 8(2) provides:

“Broadcasting and communication to the public

2. Member States shall provide a right in order to ensure that a single equitable remuneration is paid by the user,

if a phonogram published for commercial purposes, or a reproduction of such phonogram, is used for broadcasting

by wireless means or for any communication to the public, and to ensure that this remuneration is shared

between the relevant performers and phonogram producers. Member States may, in the absence of agreement

between the performers and phonogram producers, lay down the conditions as to the sharing of this remuneration

between them.”

16. Article 10 insofar as relevant, provides:

“Limitations to rights

1. Member States may provide for limitations to the rights referred to in this Chapter in respect of:

(a) private use

...

2. Irrespective of paragraph 1, any Member State may provide for the same kinds of limitations with regard to the

protection of performers, producers of phonograms, broadcasting organisations and of producers of the first

fixations of films, as it provides for in connection with the protection of copyright in literary and artistic works.

However, compulsory licences may be provided for only to the extent to which they are compatible with the Rome

Convention.

3. The limitations referred to in paragraphs 1 and 2 shall be applied only in certain special cases which do not

conflict with a normal exploitation of the subject matter and do not unreasonably prejudice the legitimate interests

of the rightholder.”

17. The primary issue which this Court must decide is whether a hotel or guesthouse which provides TV or radio sets in

guest bedrooms, and distributes to those TV and radio sets a signal received centrally, is a “user” making a

“communication to the public” of phonograms which may be played on TV or radio broadcasts for the purposes of Article

8(2) of the Directives. There are subsidiary issues relating to the provision of other apparatus and sound recordings in

physical or digital form and the exemption of private use relied on, in the alternative, by the defendants, pursuant to

Article 10(1)(a) of the Directives.

18. On the primary issue, in summary, the plaintiff contends, in reliance upon the judgment of the Court of Justice in SGAE

v. Rafael Hoteles SA (Case C-306/05) [2006] ECR I-11519, that the distribution by a hotel operator of a signal by means

of television sets installed in hotel bedrooms to guests staying in the rooms is a communication to the public by the hotel

operator as user within the meaning of Article 8(2) of the Directive. The judgment in Rafael Hoteles concerned what

constitutes a “communication to the public” within the meaning of Article 3(1) of Directive 2001/29/EC on the

harmonisation of certain aspects of copyright and related rights in the information society (“Copyright Directive”). In

Rafael Hoteles, the Court ruled that:

“1. While the mere provision of physical facilities does not as such amount to communication within the meaning of

Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of

copyright and related rights in the information society, the distribution of a signal by means of television sets by a

hotel to customers staying in its rooms, whatever technique is used to transmit the signal, constitutes

communication to the public within the meaning of Article 3(1) of that directive.

2. The private nature of hotel rooms does not preclude the communication of a work by means of television sets

from constituting communication to the public within the meaning of Article 3(1) of Directive 2001/29.”

19. The plaintiff submits that the concept and phrase “communication to the public” in Article 8(2) of the Directives must,

in accordance with the decision of the Court of Justice in Stichting ter Exploitatie van Naburige Rechten (SENA) v.

Nederlandse Omroep Stichting (NOS) (Case C-245/00) [2003] ECR I-1251 at paragraph 23, be given an autonomous and

uniform interpretation throughout the European Union. It submits that this principle means that the phrase must be given

the same meaning in Article 8(2) of the Directives as that given by the Court of Justice in Rafael Hoteles to the same

phrase for the purposes of Article 3(1) of the Copyright Directive. Whilst it recognises the difference in the nature of the

protection given by the Copyright Directive to authors from that given by the Directives to phonogram producers, it relies,

inter alia, upon the assimilation of the level of protection for those respective rights in many of the recitals to the

relevant Directives to submit that phase should have the same meaning in both provisions.

20. In SENA at para. 23, the Court of Justice stated:

“As the United Kingdom points out, the Court has already held that the need for uniform application of Community

law and the principle of equality require that the terms of a provision of Community law which makes no express

reference to the law of the Member States for the purpose of determining its meaning and scope must normally

be given an autonomous and uniform interpretation throughout the Community; that interpretation must take into

account the context of the provision and the purpose of the legislation in question (see, for example, Case 327/82

Erko [1984] ECR 107, paragraph 11; and Case C-287/98 Linster [2000] ECR I-6917, paragraph 43, and Case C-

357/98 Yiadom [2000] ECR I-9265, paragraph 26.”

21. The defendants do not dispute that the phrase “communication to the public” in Article 8(2) of the Directives should

be given an autonomous and uniform interpretation through the Union. However, in reliance upon the above principle that

interpretation of a provision of Union law must take into account “the context of the provision and the purpose of the

legislation in question”, the defendants submit that this Court cannot simply apply the meaning given by the Court of

Justice in Rafael Hoteles to the concept and phrase “communication to the public” in Article 3(1) of the Copyright

Directive to the same phrase in Article 8(2) of the Directives, but rather that the phrase and the word “user” in Article

8(2) must be interpreted in the context of the rights sought to be protected and the obligations placed on Member States

in Article 8(2) of the Directives.

22. The defendants submit that there are significant differences between the contexts of Article 3(1) of the Copyright

Directive and Article 8(2) of the Directives and the purposes of the Copyright Directive and the Directives. They have

made very detailed submissions which it is not proposed to repeat. They rely, inter alia, upon the differences in the rights

sought to be protected and in the origins of the two provisions. They submit that the right protected in Article 3(1) of the

Copyright Directive is the exclusive right of authors to authorise or prohibit any communication to the public of their

works, by wire or wireless means, including the “making available to the public” of their works. Further, that the origin of

such rights is Article 11 bis (1) of the Berne Convention, as extended by Article 8 of the World Intellectual Property

Organisation Copyright Treaty (1996). They submit that, by contrast, the right protected by Article 8(2) of the Directives

is the economic right of, inter alia, phonogram producers to receive equitable remuneration; and that the origin of that

right is Article 12 of the International Convention for the Protection of Performers, Producers of Phonograms and

Broadcasting Organisations, signed at Rome on 26th October, 1961. It is submitted that, by contrast with Article 3(1) of

the Copyright Treaty, Article 8(2) does not include a right to equitable remuneration on the “making available to the

public” of a phonogram. The defendants submit that the Court of Justice, in Rafael Hoteles, when interpreting the phrase

“communication to the public” for the purposes of Article 3(1) of the Copyright Directive relied (at paras. 43 and 44 of the

judgment) on the fact that the “making available to the public” right is included in Article 3(1).

23. I have concluded, on the detailed submissions made by the defendants in support of the above contentions, that, in

interpreting each of Article 3(1) of the Copyright Directive and Article 8(2) of the Directives in a manner consistent with

the relevant international law provision from which it originates (as required by the judgment of the Court of Justice in

Rafael Hoteles at para. 35), there are significant differences between each in the rights being protected. Further, it

appears to me, that having regard to those differences, the context in which the phrase “communication to the public” is

used in each, and the purpose of the respective provision, this Court should not now simply apply to the concept and

phrase “communication to the public” in Article 8(2) of the Directives the meaning given by the Court of Justice in Rafael

Hoteles to the same phrase in Article 3(1) of the Copyright Directive. Rather, it appears to me, in accordance with the

principles set out by the Court of Justice in SENA (and applied in Rafael Hoteles), that an autonomous and uniform

meaning of a “user” and “communication to the public” for the purposes of Article 8(2) of the Directives must be

determined, having regard to the context in which those terms are used in Article 8(2) and the purpose of the Directives.

Further, as this requires the interpretation of Article 8(2) of the Directives for the purpose of giving to it an autonomous

and uniform meaning throughout the Union, that such interpretation should be made by the Court of Justice on a

preliminary ruling, rather than by this Court.

24. The defendants have made further submissions upon which they rely to distinguish the circumstances in which

Member States must provide a right to a phonogram producer to receive equitable remuneration in accordance with Article

8(2) of the Directives, from those in which an author must be entitled to authorise or prohibit a communication to the

public, pursuant to Article 3(1) of the Copyright Directive. They submit, first that the obligation to provide a right to

receive “a single equitable remuneration” [emphasis added] in Article 8(2) does not include the right to receive equitable

remuneration from hotel operators in addition to the broadcaster, in the factual circumstances set out at paragraph 14(c)

above.

25. The defendants also make an alternative submission that even if Article 8(2) obliges Ireland to provide a right to the

phonogram producers to receive equitable remuneration from hotel operators on the agreed facts, that Ireland is

permitted by Article 10 to exempt a hotel operator from the obligation to pay, by reason of the private use involved. They

draw attention to the fact that in its decision in Rafael Hoteles the Court of Justice, at para. 38 of its judgment, took into

account, not only customers in hotel rooms, but also customers who are present in any other area of the hotel and able

to make use of a television set installed there. On the agreed facts in the proceedings before this Court, in relation to s.

97(1) of the Act of 2000, the Court is only concerned with the use by hotel guests of television sets installed in bedrooms

and not in any other part of the hotel.

26. For the reasons set out, in summary, above, it appears to me necessary to seek the preliminary ruling of the Court of

Justice on the following questions prior to giving judgment:

(i) Is a hotel operator which provides in guest bedrooms televisions and/or radios to which it distributes a

broadcast signal a “user” making a “communication to the public” of a phonogram which may be played in a

broadcast for the purposes of Article 8(2) of Codified Directive 2006/115/EC of the European Parliament and the

Council of 12th December, 2006?

(ii) If the answer to paragraph (i) is in the affirmative, does Article 8(2) of Directive 2006/115/EC oblige Member

States to provide a right to payment of equitable remuneration from the hotel operator in addition to equitable

remuneration from the broadcaster for the playing of the phonogram?

(iii) If the answer to paragraph (i) is in the affirmative, does Article 10 of Directive 2006/115/EC permit Member

States to exempt hotel operators from the obligation to pay “a single equitable remuneration” on the grounds of

“private use” within the meaning of Article 10(1)(a)?

(iv) Is a hotel operator which provides in a guest bedroom apparatus (other than a television or radio) and

phonograms in physical or digital form which may be played on or heard from such apparatus a “user” making a

“communication to the public” of the phonograms within the meaning of Article 8(2) of Directive 2006/115/EC?

(v) If the answer to paragraph (iv) is in the affirmative, does Article 10 of Directive 2006/115/EC permit Member

States to exempt hotel operators from the obligation to pay “a single equitable remuneration” on the grounds of

“private use” within the meaning of Article 10(1)(a) of Directive 2006/115/EC?