In a much-anticipated decision, the Court of Justice of the European Union (‘CJEU’) conclusively determined that the activities of car-leasing companies offering vehicles fitted with radio equipment for hire do not constitute a ‘communication to the public’ of musical works subject to copyright protection for the purposes of the Information Society Directive (Directive 2001/29/EC) and the Rental Rights Directive (2006/115/EC). Such companies are therefore not required to purchase annual licences from the relevant musical authors’ rights management associations. The CJEU’s judgment overrules the findings of the Swedish District Court and the Swedish Court of Appeal in that respect but is consistent with the opinion of Advocate General Szpunar.
The judgment arose from a request for a preliminary ruling by the Swedish Supreme Court in respect of two separate but factually very similar sets of proceedings. The defendants in both actions were Swedish car rental companies directly or indirectly offering vehicles with radio equipment for hire to members of the public. The companies were in litigation with two Swedish musical authors’ rights management associations (STIM and SIMI) about whether they were required to purchase annual licences from them. STIM and SIMI were arguing that, by offering radio-equipped vehicles to customers without first obtaining a radio licence, the companies breached musical authors’ exclusive right to authorise or prohibit the communication to the public of their music by wireless means under Article 3(1) of the Information Society Directive, and their corresponding right to receive ‘equitable remuneration’ under Article 8(2) of the Rental Rights Directive.
The two disputes were heard by different Swedish appellate courts which reached diverging judgments. Both first instance courts decided that the car-leasing companies did perform an act of ‘communication to the public’. However, the appellate courts handed down conflicting judgments, with one upholding the ruling of the first instance court and the other overruling the judgment of the court below. Both sets of proceedings ended up before the Swedish Supreme Court.
Sweden’s highest court noted that the CJEU’s jurisprudence on the subject matter was inconsistent, insofar as it established that the broadcasting of radio in cafés, rehabilitation centres and spa hotels did amount to a ‘communication to the public’, whilst at the same time reaching the opposite conclusion in relation to radio broadcasting in the waiting room of a dental practice. The Supreme Court therefore decided to stay the proceedings and refer the matter to the CJEU for clarification. The two questions that the Swedish Supreme Court referred to the CJEU were:
1. “Does the hiring out of cars which are equipped as standard with radio receivers mean that the person who hires the cars out is a user who makes a communication to the public within the meaning of Article3(1) of Directive 2001/29 and within the meaning of Article 8(2) of Directive 2006/115?”
2. “What is the significance, if any, of the volume of the car hire activities and the duration of the hires?”
In his Opinion addressed to the CJEU, issued in January 2020, Advocate General Szpunar recommended that both actions against the car-leasing companies be dismissed. He noted that ‘communication to the public’ was not defined in the legislation, but Recital 27 to the Information Society Directive clarified that the mere provision of physical facilities for enabling or making a communication does not in itself amount to ‘communication to the public’. AG Szupnar’s Opinion went on to observe that the jurisprudence of the CJEU distinguishes between the provision of physical facilities, which does not constitute communication, and the dissemination of radio signals via these physical facilities, which does constitute communication. The Advocate General then emphasised the importance of the role of the user in manipulating the relevant physical equipment for determining whether a ‘communication to the public’ has taken place. He noted that the user’s intervention in operating the facilitates must necessarily be linked to protected material for it to constitute a ‘communication to the public’. AG Szupnar therefore concluded that, in the context of offering radio-equipped cars for hire, the crucial element which distinguishes an act of communication to the public from the mere provision of physical equipment, namely the active user intervention in manipulating the facilities to allow access to protected material, was missing. The role of the car-leasing companies was limited to the mere provision of physical equipment, which in accordance with Recital 27 does not constitute ‘communication’.
With regards to the referring court’s second question, namely whether the number of the people comprising the ‘public’ in the relevant communication, or the duration of the ‘communication’, have any role to play in determining if Articles 3(1) of the Infosoc Directive and 8(2) of the Rental Rights Directive were breached, AG Szupnar’s short answer was ‘no’. He quoted the established jurisprudence that any number of recipients of the communication was sufficient to trigger Articles 3(1) and 8(2), subject to a de minimis threshold. Moreover, in the context of a continuous communication to members of the public (such as through radio broadcasting in rental cars), the number of recipients at any given point in time was irrelevant, since it was always likely to be above the de minimis threshold over the course of the continuous communication.
Ruling of the CJEU
The ruling of the CJEU itself was comparatively short and echoed most of the arguments put forward in the Opinion of Advocate General Szupnar. The CJEU held that whether a certain activity constitutes a ‘communication to the public’ for the purposes of the Directives depended on a number of inter-connected but separate criteria, each of which fell to be considered in light of the individual circumstances of the case at hand.
The Court, in alignment with the Advocate General, underlined the crucial role of the user’s ‘conscious intervention’ in manipulating the physical facilities, which was fundamentally important to ascertaining whether an act of ‘communication to the public’ has taken place. Quoting its earlier jurisprudence, the CJEU emphasized that unless the user, in full knowledge of the consequences of its actions, intervenes to provide its customers with access to the protected material (which the customers would not have otherwise been able to access), there can be no ‘communication to the public’ within the meaning of the Directives. When such conscious intervention does not occur, the relevant activity would fall into the circumstances envisaged by recital 27 to the Directive, which clearly states that the mere provision of physical equipment does not constitute a ‘communication to the public’.
The CJEU therefore concluded that the defendants’ car-leasing activities fell squarely within the ambit of recital 27 and could be clearly distinguished from the actions of the owners of premises accessible to the public (such as hotel and pub owners) who actively intervene to play radio and TV at the premises. In conclusion, the CJEU held that the defendants’ car-leasing activities did not amount to a ‘communication to the public’. In light of its answer to the first question raised by the Swedish Supreme Court, the CJEU held that there was no need to answer the second question regarding the relevance of the number of recipients of the communication.
In so far as the CJEU decided that car-rental companies should not be required to purchase annual licences from musical rights associations solely because their cars are equipped with radio receivers, its ruling is in alignment not only with the Opinion of the Advocate General, but also with common sense. From that point of view, the decision is to be welcomed.
At the same time, it is hardly surprising that nearly twenty years after the adoption of the Information Society Directive, national courts are still referring questions regarding the interpretation of its provisions on ‘communication to the public’ for clarification by the CJEU. As the Swedish Supreme Court emphasised in its request for preliminary ruling, whilst the CJEU has been consistent in summarising the applicable legal principles, it has reached opposing conclusions when applying them to strikingly similar sets of facts. The Swedish court asked the CJEU to clarify its position as to why, on the one hand, hotel owners equipping their rooms with radios and TVs do perform an act of ‘communication to the public’, whilst a dentist playing the radio in the waiting room of his practice does not. By emphasising the importance of the user’s ‘deliberate intervention’ in enabling the communication, the CJEU fell short of explaining this inconsistency. After all, the dentist in Società Consortile Fonografici (SCF) v Marco Del Corso (C‑135/10) did press the ‘play’ button on the radio in his dental practice, whereas the hotel owners in SGAE and PPL v Ireland did not enter their guests’ hotel rooms to switch on their TVs.
The argument about the importance of the user’s conscious intervention therefore seems overly abstract and artificial as it fails to explain the difference in the outcomes reached in each case. It could be that the crucial consideration that actually underlies the CJEU’s judgments is whether businesses playing TV or the radio at their premises without a licence make an additional profit as a result of that. Some might argue that owners of hotels and pubs are able to attract additional customers or charge higher prices by being able to offer TV services, whereas car-leasing companies and dentists do not generate extra revenue as a result of allowing access to the radio. However, in the case, the CJEU did not take the opportunity to clarify whether or not additional revenue generation is a relevant factor. At most, the CJEU has admitted that this consideration is ‘not irrelevant’ to its assessment (C‑135/10, at ).
As a result, absent any further legislative intervention to clarify matters, we anticipate more cases regarding this issue in the future.
Co-authored by Kamen Stoilov.