Must car-rental companies pay royalties to collective management organisations?
If a rental car is equipped with a radio, should the rental company pay royalties to a collective rights management organisation? The Court of Justice recently addressed this issue.
Stim v Fleetmanager Sweden AB, Case C-753/18, judgment of 2 April 2020
Authors are entitled to remuneration for public communication of their works. That is why, among other things, radio and television broadcasters pay fees to collective rights management organisations for broadcasting works such as music and TV programmes. It is similar with institutions such as hotels showing TV programmes or playing music recordings.
(Under Art. 3(1) of the Information Society Directive (2001/29/EC), authors have the exclusive right to authorise any communication to the public of their works, while under Art. 8(2) of the Rental Directive (2006/115/EC), performers are entitled to share in a single equitable remuneration paid by users for the use of phonograms for communication to the public. It is recognised in the case law that communication of works to the public has the same legal meaning in these two directives.)
Must comparable fees be paid to collective management organisations by entities renting out automobiles equipped with radio receivers? In a request for a preliminary ruling, this interesting issue was recently addressed by the Court of Justice in C-753/18, Stim.
Communication to the public
To answer this question, it should be determined whether there is communication of works to the public. The issue of communication to the public has been the subject of numerous rulings by the Court of Justice of the European Union, which has analysed varied states of facts on this issue.
The key distinction is between communication to the public, which includes making a work accessible to audiences in a different location (e.g. through transmission, retransmission or broadcast), and mere provision of physical facilities for enabling or making a communication of works. The first is subject to a copyright monopoly (the author decides how and to whom a work may be communicated) and the second is not (Directive 2001/29/EC, recital 27).
In assessing whether there is communication to the public, the CJEU considers the behaviour and aim of the entity providing equipment used to access works. This entity is referred to in the CJEU case law as a “user.” The user in this sense would thus be, for example, a hotel, restaurant, or car rental agency. The assessment of whether the user is making a communication to the public will depend on whether its role is limited to merely providing the equipment, or is broader, i.e. the user facilitates access to protected works by persons using the equipment. This could be done by interfering with the equipment, but also without such interference, e.g. merely by providing works fixed on carriers (e.g. CDs or tapes).
Below we highlight some actions by users previously held by the Court of Justice to constitute communication of works to the public:
Thus there is communication to the public when a supplier of apparatus intends to share access to protected works with its own customers and also facilitates access to the works by the users of the apparatus. Without that action, the customers would not have access to the works. Under the case law of the Court of Justice, the occurrence of two cumulative factors must be considered, namely (i) an “act of communication” of a work and (ii) the communication of that work to a “public.”
Car rentals and communication to the public
Returning to car rentals, under the facts presented in C-753/18, Stim, the vehicles were equipped with multimedia devices enabling access to radio broadcasts. The Swedish collective management organisations known by the acronyms Stim and SAMI (comparable to Polish organisations such as ZAiKS) took action against Swedish car rental companies, whose business involving hiring out of vehicles, directly or through professional intermediaries, equipped with radio receivers. The maximum rental period was 29 days. According to Stim and SAMI, the business of these firms led to copyright infringement by renting vehicles with radios to third parties. The car rental companies did not agree and commenced litigation against Stim and SAMI. In the litigation, the Supreme Court of Sweden applied to the Court of Justice for a preliminary ruling on whether hiring out of motor vehicles equipped with radio receivers constitutes a communication to the public of copyrighted works.
The Court of Justice cited its earlier rulings that the concept of “communication to the public” includes two cumulative criteria, namely an “act of communication” of a work and the communication of that work to a “public.” In determining whether these criteria are met, “it is necessary to carry out an individual assessment, in the light of a number of complementary criteria, which are not autonomous and are interdependent.” The court found that hiring out vehicles equipped with radio receivers does not constitute communication to the public, as “the supply of a radio receiver forming an integral part of a hired motor vehicle … makes it possible to receive, without any additional intervention by the leasing company, the terrestrial radio broadcasts available in the area in which the vehicle is located.” Communication to the public in that situation is made by the radio broadcasters, and not by the owners of the car rental companies, which have no influence over which programmes its renters listen to while driving. The choice of programme is determined by the driver’s musical taste and the location of the vehicle, i.e. within the range of the broadcaster’s radio waves. The rental companies’ role in that case is limited to supplying devices for receiving communication of works to the public, which does not constitute an “act of communication” of protected works.
In short, in C-753/18, Stim, the user did not intervene in the radio in any way and thus there was no communication of works, but only supply of facilities. In that situation, there was no basis for demanding fees for communication of works to the public. But if the same user equipped the rental vehicles not only with a receiver, but also for example music CDs, then the situation could be regarded as a communication to the public and it could not be excluded that the right holders might seek fees for communicating works to the public.
Dr Monika A. Górska, attorney-at-law, Sandra Lipińska, Intellectual Property practice, Wardyński & Partners
