Judgment of the Court of Justice of July 10, 2025, DADA (C-37/24)
1. Facts
The judgment stems from a request for a preliminary ruling submitted by the Curtea de ApelBucurești (hereinafter, the Bucharest Court of Appeals, Romania) in the context of a dispute between the Uniunea Producătorilor de Fonograme din România (hereinafter, UPFR), a collective management organization representing phonogram producers, and DADA Music SRL, a Romanian radio broadcaster, concerning 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 purposes, under which DADA Music agreed to pay equitable remuneration determined in accordance with the methodology in effect at the time. That methodology established remuneration based on the broadcaster’s revenue or expenses and also included a minimum lump-sum payment in Roman leus (250 euros per quarter for local broadcasters and 500 euros for national broadcasters) as a guaranteed minimum amount.
Law No. 74/2018, published subsequently, repealed the provisions regarding that minimum remuneration, effective ninety days after its publication, without providing for transitional measures or new calculation criteria. After the law took effect, DADA Music stopped paying the minimum amount, citing the immediate application of the new regulations and limiting payment to remuneration proportional to its actual revenue.
The UPFR argued that the previous methodology should continue to apply until a new one was approved, contending that the immediate elimination of the minimum threshold violated Directive 2006/115/EC, Directive 2014/26/EU, and Articles 17 and 52 of the Charter of Fundamental Rights of the European Union. On June 24, 2019, the UPFR filed a lawsuit with the TribunalulBucurești (hereinafter, the Bucharest District Court) against DADA Music.
In its January 28, 2022, ruling, the Court partially granted the claim and ordered DADA Music to pay a symbolic sum, finding that, following the repeal of the provisions on minimum remuneration, only an amount proportional to the revenue earned was required to be paid.
Both parties filed an appeal with the Bucharest High Court, which decided to refer a question for a preliminary ruling to the Court of Justice of the European Union (hereinafter, the CJEU) regarding the compatibility of Law No. 74/2018 with the right to equitable remuneration recognized under European Union law.
2. Statements
In its first question referred for a preliminary ruling, the referring court asks, in essence, whether Article 8(2) of Directive 2006/115/EC and Article 16(2) of Directive 2014/26/EU, in conjunction with Articles 17(2) and 52(1) of the Charter, preclude national legislation that does not guarantee a minimum lump-sum remuneration to phonogram producers for the broadcasting of phonograms published for commercial purposes. It also raises the question of whether such legislation may repeal, with limited temporal effect, the provisions that established it, without modifying the calculation criteria or providing for a new method of determination.
The Court of Justice holds that Article 8(2) of Directive 2006/115 imposes on Member States the obligation to ensure that artists and producers receive equitable and one-time remuneration for the broadcasting or communication to the public of phonograms, without specifying the form or the specific criteria for calculation. For its part, Article 16(2) of Directive 2014/26 requires that the rates charged by collecting societies be fair and reasonable, leaving Member States a margin of discretion regarding their practical application.
On this basis, the CJEU considers that those provisions do not require the maintenance of a statutory minimum or flat-rate remuneration; therefore, they do not preclude a national rule that abolishes such remuneration—even with immediate effect—provided that fair or adequate remuneration is guaranteed and the principle of proportionality is respected, thereby 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 to strike a fair balance between rights holders and users.
The second preliminary ruling referred to the Court of Justice examines the role of the national court in verifying whether the remuneration resulting from the domestic system is fair or adequate. The Court concludes that it is incumbent upon the national court to verify whether the remuneration remains fair, 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 Court of Justice recalls that the principle of interpretation in conformity requires judges to apply domestic law in a manner consistent with Union law. If this is not possible, the judge must set aside the conflicting national provision, by virtue of the primacy of Union law. All of this may be done without the need for a prior declaration of unconstitutionality, provided that the legal system of the Member State grants ordinary courts the authority to ensure such primacy.
Consequently, the Court of Justice holds that it is for the national court to determine whether the resulting remuneration is fair or appropriate, by interpreting domestic law in accordance with Union law and, if that is not possible, by setting aside the national provision.
With regard to the third and fourth questions, the Court sets forth the guiding criteria that national courts may take into account when assessing the fairness or adequacy of the remuneration. Among these, it mentions: (i) the economic value of the use of the phonograms, taking into account the size of the audience and the profit made; (ii) the nature, frequency, and territorial scope of the use; (iii) the effectiveness of the collecting society in collecting and distributing royalties; (iv) comparable rates in other sectors or Member States; and (v) the balance between the interests of rights holders and users.
In light of all the foregoing considerations, the Court of Justice clarifies that these criteria are merely indicative and not exhaustive, and that it is for the national court to determine, based on the factual and legal elements of the main proceedings, whether the remuneration meets the requirements of fairness and adequacy arising from Union law. Furthermore, the Court adds that the national court may not substitute the criteria established by the national legislature by directly applying the Directives, but may only interpret domestic law in accordance with them, to the extent permitted by its legal system.
3. Comment
This judgment emphasizes the interpretation of the concept of“equitable remuneration”set forth in Article 8(2) of Directive 2006/115/EC and that of“adequate remuneration”in Article 16(2) of Directive 2014/26/EU. The Court reaffirms that both concepts must be understood autonomously and uniformly within the Union, taking into account the actual economic value of the use of phonograms and the necessary balance between the interests of rights holders and those of users.
The ruling also emphasizes that the notion of“equitable remuneration”is an autonomous concept under EU law, the interpretation of which does not depend exclusively on the national legislature. This limits the scope of national discretion, since national regulations cannot render the standard of equity meaningless by introducing mechanisms that, although neutral in appearance, result in manifestly insufficient remuneration.
Furthermore, the Court emphasizes that Article 17(2) of the Charter of Fundamental Rights of the European Union, which enshrines the protection of intellectual property, does not confer an absolute nature on that 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 abolishes flat-rate minimum remuneration is not contrary to Union law, provided that it ensures that the remuneration is fair or adequate and does not deprive rights holders of 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 that flexibility is not absolute: it is contingent on the chosen system ensuring a level of protection that is materially adequate for phonogram producers. The Court of Justice avoids imposing uniform models and respects legislative diversity, but requires consistent substantive outcomes: remuneration must be fair, proportionate, and sufficiently compensatory.
Mabel Klimt, Managing Partner of the Legal Department.