On September 8, 2020, the Court of Justice of the European Union (CJEU) issued a ruling in Case C-265/19, involving the Irish collecting societies RAAP and PPI, the former representing artists and the latter representing producers.
The two entities had reached an agreement whereby PPI would be responsible for collecting and subsequently distributing the amounts obtained from the public communication of phonograms via wireless broadcasting, remuneration that is based on Article 8(2) of Directive 2006/115/EC on rental and lending rights (the “Directive”).
The dispute arises from PPI’s refusal to pay RAAP its share of this remuneration, on the grounds that Irish copyright law (CRRA) excludes from this remuneration artists who are neither nationals nor residents of the European Economic Area (EEA) and whose performances “do not originate from a sound recording made in the EEA.” PPI argues that paying artists from certain countries would violate the principle of reciprocity established in the CRRA—in particular, paying U.S. artists, since the United States only partially recognizes this right to remuneration for Irish artists.
Of course, RAAP objected to this interpretation, arguing that the artist’s nationality and place of residence are irrelevant when it comes to the distribution of these amounts, since Article 8.2 of the Directive contains no specific provisions in this regard.
In this context, the CJEU ruled on four preliminary rulings.
The CJEU combines the first two questions and reformulates them by asking whether Article 8(2) of the Directive, in light of the Rome Convention or the World Intellectual Property Organization (WIPO) on Performances and Phonograms (WPPT), precludes a Member State from excluding artists who are not nationals or residents of a Member State from the remuneration described above.
The Court first notes that Article 8(2) of the Directive does not establish any limitation in that regard, adding that it follows from recitals 5 through 7 of the same text that these provisions must be interpreted “in accordance with applicable international conventions.” This requires interpreting the provision in accordance with the WPPT, which obligates signatory states to remunerate national artists and producers from any of the contracting parties; therefore, the CJEU concludes that the right to equitable and one-time remuneration cannot be reserved by the national legislature solely for nationals of EEA Member States, thereby disadvantaging nationals of third countries.
The court then proceeds to rule on the third preliminary question, which asks whether reservations made by third countries that affect the rights of nationals of a Member State permit the exclusion of nationals of those third countries from the rights recognized in Article 8(2) of the Directive.
The CJEU acknowledges that these reservations may affect the position of artists and producers from Member States vis-à-vis those from third countries, raising the possibility of applying the principle of reciprocity established in international treaties, since “preserving equitable conditions for participation in the trade in recorded music constitutes an objective of general interest that may justify a limitation on the right related to copyright.”
However, while acknowledging that this is reasonable, the CJEU notes that these limitations cannot be established by the Member States, but rather by the EU, pursuant to Article 52(1) of the Charter of Fundamental Rights of the European Union.
Thus, a Member State may not limit the right to fair compensation even if third countries have reservations in this regard, as the Union legislature is the only body authorized to make such a decision.
The fourth preliminary ruling asks whether Article 8(2) of the Directive precludes equitable remuneration from being limited solely to the producer, to the exclusion of the artist. The court briefly addresses this issue, stating that this provision does indeed preclude such a limitation.
In my opinion, this ruling yields some important conclusions. First, the existence of a provision such as the articles of the Irish CRRA at issue in this dispute reveals the limited harmonization of European intellectual property laws, since only in an environment with little standardization can there be provisions so diametrically opposed to a provision of a directive.
Second, it highlights some of the causes of inequality in the recorded music market. Although the CJEU’s interpretation does not appear to be open to debate, it is difficult to imagine that the European legislature will undertake a legislative reform that would impose limitations on the remuneration of third-country nationals such as those discussed here. If this continues, the EU will remain in an asymmetrical position relative to countries such as the United States in this area. While it is true that in a global market such as the music industry, these types of restrictions may be questionable, the application of the principle of reciprocity could serve as a temporary solution to this inequality.
Author: Martín Bello
Previously published in Economist & Jurist