Judgment of the Court of Justice of 10 July 2025, DADA (C-37/24)
1. Facts
The ruling stems from a preliminary question raised by the Curtea de Apel București (hereinafter, the High Court of Bucharest, Romania) in the context of a dispute between the Uniunea Producătorilor de Fonograme din România (hereinafter, UPFR), a collective management entity representing phonogram producers, and DADA Music SRL, a Romanian radio broadcaster, in relation to the broadcasting of phonograms for commercial purposes.
On October 20, 2011, both parties entered into a non-exclusive license agreement granting DADA Music the right to broadcast phonograms for commercial use, undertaking to pay equitable remuneration determined according to the prevailing methodology. This methodology established remuneration based on the station's income or expenses and also included a minimum lump sum remuneration in Roman leus (250 euros per quarter for local stations and 500 euros for national stations) as a guaranteed minimum amount.
Law No. 74/2018, subsequently published, abolished the provisions relating to this minimum remuneration, effective ninety days after its publication, without providing for transitional measures or new calculation criteria. Following its entry into force, DADA Music ceased paying the minimum amount, citing the immediate application of the new regulations and limiting payments to remuneration proportional to its actual income.
The UPFR maintained that the previous methodology should continue to be applied until a new one was approved, arguing that the immediate elimination of the minimum violated the 2006 / 115 / CE Directive, the Directive 2014 / 26 / EU and Articles 17 and 52 of the Charter of Fundamental Rights of the European UnionOn June 24, 2019, UPFR filed a lawsuit before the Bucharest Courtști (hereinafter, Bucharest District Court), against DADA Music.
The Court, in its judgment of 28 January 2022, partially upheld the claim and ordered DADA Music to pay a symbolic sum, considering that, after the repeal of the provisions on minimum remuneration, it was only appropriate to pay an amount proportional to the income obtained.
Both parties filed an appeal with the High Court of Bucharest, which decided to refer a preliminary question to the Court of Justice of the European Union (hereinafter, CJEU) on the compatibility of Law No. 74/2018 with the right to fair remuneration recognized in Union law.
2. Pronouncements
In its first preliminary question, the referring body asks, in essence, whether Articles 8.2 of the 2006 / 115 / CE Directive and 16.2 of the Directive 2014 / 26 / EU, in relation to Articles 17.2 and 52.1 of the PaperThey oppose a national regulation that does not guarantee a minimum lump-sum remuneration for phonogram producers for the broadcasting of phonograms published for commercial purposes. They also question whether this regulation can temporarily repeal the provisions that established it, without modifying the calculation criteria or providing a new method of determination.
The Court of Justice declared that Article 8.2 of Directive 2006/115 imposes on Member States the obligation to guarantee artists and producers fair and single remuneration for the broadcasting or communication to the public of phonograms, without specifying the form or the concrete criteria for calculation. For its part, Article 16.2 of Directive 2014/26 requires that the tariffs of collecting societies be fair and reasonable, leaving Member States some discretion in their practical application.
On this basis, the CJEU considers that these provisions do not require the maintenance of a statutory minimum or lump-sum remuneration, and therefore do not preclude a national law that abolishes it, even immediately, provided that fair or adequate remuneration is guaranteed and the principle of proportionality is respected, preserving the essential content of the intellectual property right recognized in Article 17.2 of the Charter. The concepts of “equitable remuneration"And"adequate remuneration"must be interpreted consistently, in accordance with the objectives of both Directives, which seek a fair balance between owners and users."
The second preliminary question referred to the CJEU examines the role of the national court in verifying the fairness or appropriateness of the remuneration resulting from the national system. The Court concludes that it is for the national court to determine whether the remuneration retains its fairness, taking into account factors such as the economic value of the use, its nature and scope, and the value of the service provided by the collecting society. The Directives do not establish a single method for determining remuneration, but they require that the national system maintain a fair balance between the interests of rights holders and those of users, so that the remuneration is neither insignificant nor disproportionate.
Furthermore, the CJEU reiterates that the principle of interpretation in conformity with EU law obliges the judge to apply domestic law in a manner consistent with EU law. If this is not possible, the judge must disapply the conflicting national rule, by virtue of the primacy of EU law. All of this is without the need for a prior declaration of unconstitutionality, provided that the legal system of the Member State recognizes the competence of the ordinary courts to guarantee this primacy.
Consequently, the CJEU declares that it is for the national court to verify the fairness or appropriateness of the resulting remuneration, interpreting domestic law in accordance with Union law and, if that is not possible, leaving the national provision inapplicable.
With regard to questions three and four, the Court clarifies the guiding criteria that national courts may take into account when assessing the fairness or appropriateness of the remuneration. These include: (i) the economic value of the use of the phonograms, considering the reach of the public and the benefit obtained; (ii) the nature, frequency, and territorial extent of the use; (iii) the effectiveness of the collecting society in collection and distribution; (iv) comparable tariffs in other sectors or Member States; and (v) the proportionality between the interests of rights holders and users.
In light of all the foregoing considerations, the CJEU clarifies that these criteria are merely indicative and not exhaustive, and that it is for the national court to assess, based on the factual and legal elements of the main proceedings, whether the remuneration meets the requirements of fairness and proportionality under EU law. Furthermore, the Court adds that the court cannot substitute the criteria established by the national legislature by directly applying the Directives, but may only interpret national law in accordance with them, to the extent permitted by its legal system.
3. Comment
This ruling emphasizes the interpretation of the concept of “equitable remuneration"provided for in article 8.2 of the 2006 / 115 / CE Directive and from the one of “adequate remuneration"of article 16.2 of the Directive 2014 / 26 / EUThe Court reaffirms that both concepts must be understood autonomously and uniformly within the Union, taking into account the real economic value of the use of phonograms and the necessary balance between the interests of rights holders and those of users.
The ruling also underscores that the notion of “equitable remuneration"Equity is an autonomous concept of EU law, the interpretation of which does not depend exclusively on the national legislator. This limits the scope of state discretion, since national rules cannot render the equity standard meaningless by introducing mechanisms that, although seemingly neutral, produce manifestly insufficient remuneration."
Furthermore, the Court emphasizes that Article 17.2 of the Charter of Fundamental Rights of the European UnionThe EU Convention, which enshrines the protection of intellectual property, does not grant absolute status to this right, which may be subject to limitations provided that the principles of proportionality and the essential content of the right are respected. In this context, national legislation that eliminates minimum lump-sum remuneration is not contrary to EU law, provided that it guarantees the fairness or adequacy of the remuneration and does not deprive rights holders of the effective protection of their intellectual property.
In short, the Court's decision confirms the regulatory flexibility of Member States regarding remuneration for related rights, but this flexibility is not absolute: it is conditional upon the chosen system ensuring a level of protection materially adequate for phonogram producers. The CJEU avoids imposing uniform models and respects legislative diversity, but requires substantive homogeneity: remuneration must be fair, proportionate, and sufficiently compensatory.
Mabel Klimt, Managing Partner of the Legal Department.
