Member Article

In a judgment of 8 September 2020, the Court of Justice of the European Union (“CJEU”) ruled that Member States are not allowed to exclude performers who are nationals of States outside the European Economic Area (“EEA”) from perceiving the equitable remuneration provided by Article 8(2) of the Rental and Lending Rights Directive.

The equitable remuneration

Holders of copyright (for example, authors) and neighbouring rights (for example, performers) enjoy exclusive rights. They have thus the right to decide whether their works/performances may be used or not. However, in some specific cases, rights holders do not have that choice. This is particularly the case with the right to equitable remuneration (“billijke vergoeding” – “rémunération équitable”).

Under Article 8(2) of Directive 2006/115 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (“the Rental and Lending Rights Directive”), European performers and record producers are entitled to an “equitable remuneration” if their music is broadcast or otherwise communicated to the public. Bars, clubs, restaurants, public events, etc. must therefore pay such remuneration when playing such music.

The amount of the equitable remuneration in the EU is set by each Member State in the form of fixed or negotiated tariffs. The collection and distribution of the equitable remuneration is generally managed by collective management organisations (“CMO”). In Belgium, for example, it is collected by PlayRight (for performers) and SIMIM (for producers).

The equitable remuneration right is also recognised in Article 15(1) of the 1996 WIPO Performances and Phonograms Treaty (“WPPT”), to which more than one hundred countries adhere. However, some countries have made reservations concerning this right. China, for instance, has declared that it considers itself not bound by Article 15(1) WPPT. Other countries, like the United States, have declared that will only grant a (very) limited right to an equitable remuneration.  

The dispute’s background

The dispute at hand concerned two Irish CMOs, the Irish equivalents of PlayRight and SIMIM: RAAP (Recorded Artists Actors Performers Ltd) for performers and PPI (Phonographic Performance Ireland Ltd) for producers.

RAAP and PPI entered into an agreement that stipulated how the equitable remuneration would be shared between them after they were paid by the users. However, they disagreed about the fees for performers who were neither a national nor a resident of an EEA Member State, in particular US artists.

PPI considered that it should not share these amounts with RAAP because the Irish Copyright and Related Rights Act 2000 only applied to EEA nationals or residents. It also argued that it was lawful to exclude non-EEA performers from receiving the equitable remuneration because otherwise this would lead to a situation in which United States performers would be paid in Ireland even though the United States do not grant Irish performers an equivalent right.

RAAP took a different view, arguing that the performer’s nationality and the residence was irrelevant, and so brought proceedings before the High Court of Ireland.

The High Court decided to stay the proceedings and to refer four preliminary questions to the CJEU regarding the conformity of the Irish legislation with Article 8(2) of the Rental and Lending Rights  Directive:

• The first and the second questions - which the CJEU treated together - basically concerned whether Article 8(2) precludes a Member State from excluding, non-EEA performers when it transposes into its legislation the words, “relevant performers”, that are contained in that provision;
• The third question was whether the reservations made by non-EEA states as to the right to an equitable remuneration under Article 15 WPPT would allow Member States to restrict the equitable remuneration right for non-EEA performers;
• The fourth question was whether Article 8(2) must be interpreted as precluding the equitable remuneration right from being limited in such a way that only the producer would receive remuneration, without having to share it with the performer.
  
  

 The CJEU's ruling

1. Notion of “relevant performers”

In its judgment of 8 September 2020, the CJEU has stated that the notion of “relevant performers” referred to in Article 8(2) of the Rental and Lending Rights Directive must be given an autonomous and uniform interpretation throughout the EU. Moreover as a reminder, the CJEU has stated that such an interpretation must be made in accordance with the Directive’s objectives and also in light of the WPPT, which provides for the principle of national treatment. Following this principle, Member States are obliged to treat equally their own nationals and those of other contracting parties to the WPPT. Therefore, they are not allowed to limit the equitable remuneration right to solely EEA-performers and so the Irish Copyright and Related Act 2000 is incompatible with Article 8(2).

2. Reservations and their consequences

According to Article 4(2) WPPT, the principle of national treatment does not apply, when contracting states, like the United States, have notified reservations as to the equitable remuneration right on their territories. In that case, the principle of reciprocity applies. So, in theory, Member States could limit the right to the equitable remuneration for non-EEA performers.

Indeed, the CJEU has stated “the European Union and its Member States are not required to grant, without limitation, the right to a single equitable remuneration laid down in Article 15(1) of the WPPT to nationals of a third State which, by means of a reservation notified in accordance with Article 15(3) of that international agreement, excludes or limits the grant of such a right on its territory” (point 80).

However, the CJEU has pointed out that, since the equitable remuneration right is protected by Article 17(2) of the EU Charter (which protects property including intellectual property), any limitation on the exercise of that right must be provided for clearly and precisely by law. According to the CJEU, the mere existence of a reservation under Article 15 WPPT does not fulfil that requirement. The Irish legislature was not allowed to introduce such a limitation. Only the EU legislature could do this, since it has exclusive external competence in the matter.

3. Sharing between performers and producers

Finally, the CJEU has recalled that even if Article 8(2) allows Member States to fix the key for the distribution of equitable remuneration between performers and producers, it precludes Member States from excluding certain performers from the sharing of equitable remuneration.

What’s next?

In our view, the judgment will have important (financial) consequences for EEA CMOs as they are used to keeping the equitable remuneration collected for non-EEA performers as “non-distributable" amounts. In particular, the amounts collected for American performers are very high. It appears that EEA CMOs will now be obliged to pay these amounts to American performers, even though the United States does not grant a similar right to EEA performers. In today's difficult financial context, such a loss of budget could have worrying consequences for the EEA CMOs and, ultimately, for EEA performers (and producers). Such a situation could lead the EU legislature to intervene to guarantee a level playing field.