JUDGMENT OF THE COURT (Third Chamber)

7 December 2006 (*)

(Copyright and related rights in the information society – Directive 2001/29/EC – Article 3 – Concept of communication to the public – Works communicated by means of television sets installed in hotel rooms)

In Case C-306/05,

REFERENCE for a preliminary ruling under Article 234 EC from the Audiencia Provincial de Barcelona (Spain), made by decision of 7 June 2005, received at the Court on 3 August 2005, in the proceedings

Sociedad General de Autores y Editores de España (SGAE)

v

Rafael Hoteles SA,

THE COURT (Third Chamber),

composed of A. Rosas, President of the Chamber, A. Borg Barthet, J. Malenovský (Rapporteur), U. Lõhmus and A. Ó Caoimh, Judges,

Advocate General: E. Sharpston,

Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 4 May 2006,

after considering the observations submitted on behalf of:

–        the Sociedad General de Autores y Editores de España (SGAE), by R. Gimeno-Bayón Cobos and P. Hernández Arroyo, abogados,

–        Rafael Hoteles SA, by R. Tornero Moreno, abogado,

–        the French Government, by G. de Bergues and J.‑C. Niollet, acting as Agents,

–        Ireland, by D.J. O’Hagan, acting as Agent, assisted by N. Travers BL,

–        the Austrian Government, by C. Pesendorfer, acting as Agent,

–        the Polish Government, by K. Murawski, U. Rutkowska and P. Derwicz, acting as Agents,

–        the Commission of the European Communities, by J.R. Vidal Puig and W. Wils, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 13 July 2006,

gives the following

Judgment

1        The reference for a preliminary ruling concerns the interpretation of Article 3 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10).

2        This reference was made in the context of proceedings between the Sociedad General de Autores y Editores de España (SGAE) and Rafael Hoteles SA (‘Rafael’), concerning the alleged infringement, by the latter, of intellectual property rights managed by SGAE.

 Legal context

 Applicable international law

3        The Agreement on Trade-Related Aspects of Intellectual Property Rights (‘the TRIPs Agreement’), as set out in Annex 1C to the Marrakesh Agreement establishing the World Trade Organisation, was approved on behalf of the European Community by Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (OJ 1994 L 336, p. 1).

4        Article 9(1) of the TRIPs Agreement provides:

‘Members shall comply with Articles 1 through 21 of the Berne Convention (1971) and the Appendix thereto. However, Members shall not have rights or obligations under this Agreement in respect of the rights conferred under Article 6bis of that Convention or of the rights derived therefrom.’

5        Article 11 of the Berne Convention for the Protection of Literary and Artistic Works (Paris Act of 24 July 1971), as amended on 28 September 1979 (‘the Berne Convention’) provides:

‘1.      Authors of dramatic, dramatico-musical and musical works shall enjoy the exclusive right of authorising:

(i)      the public performance of their works, including such public performance by any means or process;

(ii)      any communication to the public of the performance of their works.

2.      Authors of dramatic or dramatico-musical works shall enjoy, during the full term of their rights in the original works, the same rights with respect to translations thereof.’

6        Article 11bis(1) of the Berne Convention provides:

‘Authors of literary and artistic works shall enjoy the exclusive right of authorising:

(i)      the broadcasting of their works or the communication thereof to the public by any other means of wireless diffusion of signs, sounds or images;

(ii)      any communication to the public by wire or by rebroadcasting of the broadcast of the work, when this communication is made by an organization other than the original one;

(iii) the public communication by loudspeaker or any other analogous instrument transmitting, by signs, sounds or images, the broadcast of the work.’

7        The World Intellectual Property Organisation (WIPO) adopted in Geneva, on 20 December 1996, the WIPO Performances and Phonograms Treaty and the WIPO Copyright Treaty. Those two treaties were approved on behalf of the Community by Council Decision 2000/278/EC of 16 March 2000 (OJ 2000 L 89, p. 6).

8        Article 8 of the WIPO Copyright Treaty provides:

‘Without prejudice to the provisions of Articles 11(1)(ii), 11bis(1)(i) and (ii), 11ter(1)(ii), 14(1)(ii) and 14bis(1) of the Berne Convention, authors of literary and artistic works shall enjoy the exclusive right of authorising any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them.’

9        Joint declarations concerning the WIPO Copyright Treaty were adopted by the Diplomatic Conference on 20 December 1996.

10      The joint declaration concerning Article 8 of that Treaty provides:

‘It is understood that the mere provision of physical facilities for enabling or making a communication does not in itself amount to communication within the meaning of this Treaty or the Berne Convention. It is further understood that nothing in Article 8 precludes a Contracting Party from applying Article 11bis(2).’

 Community legislation

11      The ninth recital in the preamble to Directive 2001/29 states:

‘Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation. Their protection helps to ensure the maintenance and development of creativity in the interests of authors, performers, producers, consumers, culture, industry and the public at large. Intellectual property has therefore been recognised as an integral part of property.’

12      The 10th recital in the preamble to that directive states:

‘If authors or performers are to continue their creative and artistic work, they have to receive an appropriate reward for the use of their work, as must producers in order to be able to finance this work. The investment required to produce products such as phonograms, films or multimedia products, and services such as “on-demand” services, is considerable. Adequate legal protection of intellectual property rights is necessary in order to guarantee the availability of such a reward and provide the opportunity for satisfactory returns on this investment.’

13      The 15th recital in the preamble to that directive states:

‘The Diplomatic Conference held under the auspices of the [WIPO] in December 1996 led to the adoption of two new Treaties, the [WIPO Copyright Treaty] and the [WIPO Performances and Phonograms Treaty], dealing respectively with the protection of authors and the protection of performers and phonogram producers. Those Treaties update the international protection for copyright and related rights significantly, not least with regard to the so-called “digital agenda”, and improve the means to fight piracy world-wide. The Community and a majority of Member States have already signed the Treaties and the process of making arrangements for the ratification of the Treaties by the Community and the Member States is under way. This Directive also serves to implement a number of the new international obligations.’

14      The 23rd recital in the preamble to that directive states:

‘This Directive should harmonise further the author’s right of communication to the public. This right should be understood in a broad sense covering all communication to the public not present at the place where the communication originates. This right should cover any such transmission or retransmission of a work to the public by wire or wireless means, including broadcasting. This right should not cover any other acts.’

15      The 27th recital in the preamble to Directive 2001/29 states:

‘The mere provision of physical facilities for enabling or making a communication does not in itself amount to communication within the meaning of this Directive.’

16      Article 3 of that directive provides:

‘1.      Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them. 

2.      Member States shall provide for the exclusive right to authorise or prohibit the making available to the public, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them:

(a)      for performers, of fixations of their performances;

(b)      for phonogram producers, of their phonograms;

(c)      for the producers of the first fixations of films, of the original and copies of their films;

(d)      for broadcasting organisations, of fixations of their broadcasts, whether these broadcasts are transmitted by wire or over the air, including by cable or satellite.

3.      The rights referred to in paragraphs 1 and 2 shall not be exhausted by any act of communication to the public or making available to the public as set out in this Article.’

 National legislation

17      The codified text of the Law on intellectual property, which rectifies, clarifies and harmonises the legislative provisions in force in that area (‘the LIP’), was approved by Royal Legislative Decree No 1/1996 of 12 April 1996 (BOE No 97 of 22 April 1996).

18      Article 17 of the LIP provides:

‘The author has the exclusive rights of exploitation of his works regardless of their form and, inter alia, the exclusive rights of reproduction, distribution, public communication and conversion which cannot be exercised without his permission except in circumstances laid down in this Law.’

19      Article 20(1) of the LIP provides:

‘Public communication shall mean any act by which a number of persons can have access to the work without prior distribution of copies to each of those persons.

Communication which takes place within a strictly domestic location which is not integrated into or connected to a distribution network of any kind shall not be classified as public.’

 The main proceedings and the questions referred for a preliminary ruling

20      SGAE is the body responsible for the management of intellectual property rights in Spain.

21      SGAE took the view that the use of television sets and the playing of ambient music within the hotel owned by Rafael, during the period from June 2002 to March 2003, involved communication to the public of works belonging to the repertoire which it manages. Considering that those acts were carried out in breach of the intellectual property rights attached to the works, SGAE brought an action for compensation against Rafael before the Juzgado de Primera Instancia (Court of First Instance) No 28, Barcelona (Spain).

22      By decision of 6 June 2003, that court partially rejected the claim. It took the view that the use of television sets in the hotel’s rooms did not involve communication to the public of works managed by SGAE. It considered, on the other hand, that the claim was well founded as regards the well-known existence in hotels of communal areas with television sets and where ambient music is played.

23      SGAE and Rafael both brought appeals before the Audiencia Provincial (Provincial Court) de Barcelona, which decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1)      Does the installation in hotel rooms of television sets to which a satellite or terrestrial television signal is sent by cable constitute an act of communication to the public which is covered by the harmonisation of national laws protecting copyright provided for in Article 3 of Directive [2001/29]?

(2)      Is the fact of deeming a hotel room to be a strictly domestic location, so that communication by means of television sets to which is fed a signal previously received by the hotel is not regarded as communication to the public, contrary to the protection of copyright pursued by Directive [2001/29]?

(3)      For the purposes of protecting copyright in relation to acts of communication to the public provided for in Directive [2001/29], can a communication that is effected through a television set inside a hotel bedroom be regarded as public because successive viewers have access to the work?’

 The request to have the oral procedure reopened

24      By letter received at the Court of Justice on 12 September 2006, Rafael requested the reopening of the oral procedure, pursuant to Article 61 of the Rules of Procedure of the Court of Justice.

25      That request is based on the alleged inconsistency of the Advocate General’s Opinion. Rafael submits that the negative response in the Opinion to the first question unavoidably implies a negative response to the second and third questions, whereas the Advocate General suggests that the answer to the latter questions should be in the affirmative.

26      On that point, it is appropriate to recall that neither the Statute of the Court of Justice nor the Rules of Procedure make provision for the parties to submit observations in response to the Advocate General’s Opinion (see, in particular, Case C-259/04 Emanuel [2006] ECR I‑3089, paragraph 15).

27      The Court may, certainly, of its own motion, on a proposal from the Advocate General or at the request of the parties, order that the oral procedure should be reopened in accordance with Article 61 of its Rules of Procedure, if it considers that it lacks sufficient information or that the case must be dealt with on the basis of an argument which has not been debated between the parties (see, in particular, Case C-209/01 Schilling and Fleck-Schilling [2003] ECR I‑13389, paragraph 19, and Case C-30/02 Recheio – Cash & Carry [2004] ECR I‑6051, paragraph 12).

28      However, the Court finds that in the present case it has all the information necessary to give judgment.

29      Consequently, there is no need to order the reopening of the oral procedure.

 The questions

 Preliminary observations

30      It should be stated at the outset that, contrary to Rafael’s submissions, the situation at issue in the main proceedings does not fall within Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission (OJ 1993 L 248, p. 15), but within Directive 2001/29. The latter applies to all communications to the public of protected works, whereas Directive 93/83 only provides for minimal harmonisation of certain aspects of protection of copyright and related rights in the case of communication to the public by satellite or cable retransmission of programmes from other Member States. As the Court has already held, unlike Directive 2001/29, this minimal harmonisation does not provide information to enable the Court to reply to a question concerning a situation similar to that which is the subject of the questions referred for a preliminary ruling (see, to that effect, Case C-293/98 Egeda [2000] ECR I‑629, paragraphs 25 et 26).

31      Next, it should be noted that the need for uniform application of Community law and the principle of equality require that where provisions of Community law make no express reference to the law of the Member States for the purpose of determining their meaning and scope, as is the case with Directive 2001/29/EC, they must normally be given an autonomous and uniform interpretation throughout the Community (see, in particular, Case C-357/98 Yiadom [2000] ECR I‑9265, paragraph 26, and Case C-245/00 SENA [2003] ECR I‑1251, paragraph 23). It follows that the Austrian Government cannot reasonably maintain that it is for the Member States to provide the definition of ‘public’ to which Directive 2001/29 refers but does not define.

 The first and third questions

32      By its first and third questions, which it is appropriate to examine together, the referring court asks, essentially, whether the distribution of a signal through television sets to customers in hotel rooms constitutes communication to the public within the meaning of Article 3(1) of Directive 2001/29, and whether the installation of television sets in hotel rooms constitutes, in itself, an act of that nature.

33      In that respect, it should be noted that that Directive does not define ‘communication to the public’.

34      According to settled case-law, in interpreting a provision of Community law it is necessary to consider not only its wording, but also the context in which it occurs and the objectives pursued by the rules of which it is part (see, in particular, Case C‑156/98 Germany vCommission [2000] ECR I‑6857, paragraph 50, and Case C‑53/05 Commission v Portugal [2006] ECR I-0000, paragraph 20).

35      Moreover, Community legislation must, so far as possible, be interpreted in a manner that is consistent with international law, in particular where its provisions are intended specifically to give effect to an international agreement concluded by the Community (see, in particular, Case C‑341/95 Bettati [1998] ECR I‑4355, paragraph 20 and the case-law cited).

36      It follows from the 23rd recital in the preamble to Directive 2001/29 that ‘communication to the public’ must be interpreted broadly. Such an interpretation is moreover essential to achieve the principal objective of that directive, which, as can be seen from its ninth and tenth recitals, is to establish a high level of protection of, inter alios, authors, allowing them to obtain an appropriate reward for the use of their works, in particular on the occasion of communication to the public.

37      The Court has held that, in the context of this concept, the term ‘public’ refers to an indeterminate number of potential television viewers (Case C‑89/04 Mediakabel [2005] ECR I‑4891, paragraph 30, and Case C-192/04 Lagardère Active Broadcast [2005] ECR I‑7199, paragraph 31).

38      In a context such as that in the main proceedings, a general approach is required, making it necessary to take into account not only customers in hotel rooms, such customers alone being explicitly mentioned in the questions referred for a preliminary ruling, but also customers who are present in any other area of the hotel and able to make use of a television set installed there. It is also necessary to take into account the fact that, usually, hotel customers quickly succeed each other. As a general rule, a fairly large number of persons are involved, so that they may be considered to be a public, having regard to the principal objective of Directive 2001/29, as referred to in paragraph 36 of this judgment.

39      In view, moreover, of the cumulative effects of making the works available to such potential television viewers, the latter act could become very significant in such a context. It matters little, accordingly, that the only recipients are the occupants of rooms and that, taken separately, they are of limited economic interest for the hotel.

40      It should also be pointed out that a communication made in circumstances such as those in the main proceedings constitutes, according to Article 11bis(1)(ii) of the Berne Convention, a communication made by a broadcasting organisation other than the original one. Thus, such a transmission is made to a public different from the public at which the original act of communication of the work is directed, that is, to a new public.

41      As is explained in the Guide to the Berne Convention, an interpretative document drawn up by the WIPO which, without being legally binding, nevertheless assists in interpreting that Convention, when the author authorises the broadcast of his work, he considers only direct users, that is, the owners of reception equipment who, either personally or within their own private or family circles, receive the programme. According to the Guide, if reception is for a larger audience, possibly for profit, a new section of the receiving public hears or sees the work and the communication of the programme via a loudspeaker or analogous instrument no longer constitutes simple reception of the programme itself but is an independent act through which the broadcast work is communicated to a new public. As the Guide makes clear, such public reception falls within the scope of the author’s exclusive authorisation right.

42      The clientele of a hotel forms such a new public. The transmission of the broadcast work to that clientele using television sets is not just a technical means to ensure or improve reception of the original broadcast in the catchment area. On the contrary, the hotel is the organisation which intervenes, in full knowledge of the consequences of its action, to give access to the protected work to its customers. In the absence of that intervention, its customers, although physically within that area, would not, in principle, be able to enjoy the broadcast work.

43      It follows from Article 3(1) of Directive 2001/29 and Article 8 of the WIPO Copyright Treaty that for there to be communication to the public it is sufficient that the work is made available to the public in such a way that the persons forming that public may access it. Therefore, it is not decisive, contrary to the submissions of Rafael and Ireland, that customers who have not switched on the television have not actually had access to the works.

44      Moreover, it is apparent from the documents submitted to the Court that the action by the hotel by which it gives access to the broadcast work to its customers must be considered an additional service performed with the aim of obtaining some benefit. It cannot be seriously disputed that the provision of that service has an influence on the hotel’s standing and, therefore, on the price of rooms. Therefore, even taking the view, as does the Commission of the European Communities, that the pursuit of profit is not a necessary condition for the existence of a communication to the public, it is in any event established that the communication is of a profit-making nature in circumstances such as those in the main proceedings.

45      With reference to the question whether the installation of television sets in hotel rooms constitutes, in itself, a communication to the public within the meaning of Article 3(1) of Directive 2001/29, it should be pointed out that the 27th recital in the preamble to that directive states, in accordance with Article 8 of the WIPO Copyright Treaty, that ‘[t]he mere provision of physical facilities for enabling or making a communication does not in itself amount to communication within the meaning of [that] Directive.’

46      While the mere provision of physical facilities, usually involving, besides the hotel, companies specialising in the sale or hire of television sets, does not constitute, as such, a communication within the meaning of Directive 2001/29, the installation of such facilities may nevertheless make public access to broadcast works technically possible. Therefore, if, by means of television sets thus installed, the hotel distributes the signal to customers staying in its rooms, then communication to the public takes place, irrespective of the technique used to transmit the signal.

47      Consequently, the answer to the first and second questions is that, while the mere provision of physical facilities does not as such amount to a communication within the meaning of Directive 2001/29, the distribution of a signal by means of television sets by a hotel to customers staying in its rooms, whatever technique is used to transmit the signal, constitutes communication to the public within the meaning of Article 3(1) of that directive.

 The second question

48      By its second question, the referring court asks, essentially, whether the private nature of hotel rooms precludes the communication of a work to those rooms by means of television sets from constituting communication to the public within the meaning of Article 3(1) of Directive 2001/29.

49      In that respect, Ireland submits that communication or making available of works in the private context of hotel rooms should be distinguished from the same acts which take place in public areas of the hotel. This argument cannot however be accepted.

50      It is apparent from both the letter and the spirit of Article 3(1) of Directive 2001/29 and Article 8 of the WIPO Copyright Treaty – both of which require authorisation by the author not for retransmissions in a public place or one which is open to the public but for communications by which the work is made accessible to the public – that the private or public nature of the place where the communication takes place is immaterial.

51      Moreover, according to the provisions of Directive 2001/29 and of the WIPO Copyright Treaty, the right of communication to the public covers the making available to the public of works in such a way that they may access them from a place and at a time individually chosen by them. That right of making available to the public and, therefore, of communication to the public would clearly be meaningless if it did not also cover communications carried out in private places.

52      In support of the argument concerning the private nature of hotel rooms, Ireland also invokes the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950 (‘the ECHR’), and in particular its Article 8, which prohibits any arbitrary or disproportionate interference by a public authority in the sphere of private activity. However, this argument cannot be accepted either.

53      In that respect, it should be pointed out that Ireland does not make clear who, in a context such as that of the main proceedings, would be the victim of such an arbitrary or disproportionate intervention. Ireland can hardly have in mind the customers who benefit from the signal which they receive and who are under no obligation to pay the authors. Nor can the victim be the hotel since, even though it must be concluded that the hotel is obliged to make such payment, it cannot claim to be a victim of an infringement of Article 8 of the ECHR in so far as the rooms, once made available to its customers, cannot be considered as coming within its private sphere.

54      Having regard to all of the foregoing considerations, the answer to the second question is that the private nature of hotel rooms does not preclude the communication of a work by means of television sets from constituting communication to the public within the meaning of Article 3(1) of Directive 2001/29.

 Costs

55      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Third Chamber) hereby rules:

1.      While the mere provision of physical facilities does not as such amount to communication within the meaning of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of copyright and related rights in the information society, the distribution of a signal by means of television sets by a hotel to customers staying in its rooms, whatever technique is used to transmit the signal, constitutes communication to the public within the meaning of Article 3(1) of that directive.

2.      The private nature of hotel rooms does not preclude the communication of a work by means of television sets from constituting communication to the public within the meaning of Article 3(1) of Directive 2001/29.

JUDGMENT OF THE COURT (Third Chamber)

15 March 2012 (*)

(Copyright and related rights — Directive 2006/115/EC — Articles 8 and 10 — Concepts of ‘user’ and ‘communication to the public’ — Installation in hotel bedrooms of televisions and/or radios to which the hotelier distributes a broadcast signal)

In Case C‑162/10,

REFERENCE for a preliminary ruling under Article 267 TFEU, from the High Court (Commercial Division) (Ireland), made by decision of 23 March 2010, received at the Court on 7 April 2010, in the proceedings

Phonographic Performance (Ireland) Limited

v

Ireland,

Attorney General,

THE COURT (Third Chamber),

composed of K. Lenaerts, President of the Chamber, J. Malenovský (Rapporteur), E. Juhász, G. Arestis and T. von Danwitz, Judges,

Advocate General: V. Trstenjak,

Registrar: A. Impellizzeri, Administrator,

having regard to the written procedure and further to the hearing on 7 April 2011,

after considering the observations submitted on behalf of:

–        Phonographic Performance (Ireland) Limited, by H. Sheehy, solicitor, and J. Newman, BL,

–        Ireland, by D. O’Hagan, acting as Agent, and E. Fitzsimons and J. Jeffers, BL,

–        the Greek Government, by G. Papadaki, M. Germani and G. Alexaki, acting as Agents,

–        the Italian Government, by P. Gentili, acting as Agent,

–        the French Government, by J. Gstalter, acting as Agent,

–        European Commission, by J. Samnadda and S. La Pergola, acting as Agents.

after hearing the Opinion of the Advocate General at the sitting on 29 June 2011

gives the following

Judgment

1        This reference for a preliminary ruling relates to the interpretation of Articles 8 and 10 of Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ 2006 L 376, p. 28).

2        The reference has been made in the course of proceedings between Phonographic Performance (Ireland) Limited (‘PPL’) and Ireland.

 Legal context

 International law

3        The World Intellectual Property Organisation (‘WIPO’) adopted in Geneva, on 20 December 1996, the WIPO Performances and Phonograms Treaty (‘the WPPT’) and the WIPO Copyright Treaty. Those two treaties were approved on behalf of the European Community by Council Decision 2000/278/EC of 16 March 2000 (OJ 2000 L 89, p. 6).

4        Under Article 2(b), (d) and (g) of the WPPT:

‘For the purposes of this Treaty:

(b)      “phonogram” means the fixation of the sounds of a performance or of other sounds, or of a representation of sounds, other than in the form of a fixation incorporated in a cinematographic or other audiovisual work;

...

(d)      “producer of a phonogram” means the person, or the legal entity, who or which takes the initiative and has the responsibility for the first fixation of the sounds of a performance or other sounds, or the representations of sounds.

...

(g)      “communication to the public” of a performance or a phonogram means the transmission to the public by any medium, otherwise than by broadcasting, of sounds of a performance or the sounds or the representations of sounds fixed in a phonogram. For the purposes of Article 15, “communication to the public” includes making the sounds or representations of sounds fixed in a phonogram audible to the public.’

5        Article 15 of the WPPT reads:

‘(1)      Performers and producers of phonograms shall enjoy the right to a single equitable remuneration for the direct or indirect use of phonograms published for commercial purposes for broadcasting or for any communication to the public.

(2)      Contracting Parties may establish in their national legislation that the single equitable remuneration shall be claimed from the user by the performer or by the producer of a phonogram or by both. Contracting Parties may enact national legislation that, in the absence of an agreement between the performer and the producer of a phonogram, sets the terms according to which performers and producers of phonograms shall share the single equitable remuneration.

(3)      Any Contracting Party may, in a notification deposited with the Director-General of WIPO, declare that it will apply the provisions of paragraph (1) only in respect of certain uses, or that it will limit their application in some other way, or that it will not apply these provisions at all.

(4)      For the purposes of this Article, phonograms made available to the public by wire or wireless means in such a way that members of the public may access them from a place and at a time individually chosen by them shall be considered as if they had been published for commercial purposes.’

 European Union law

6        According to recitals 5, 7 and 16 of the preamble to Directive 2006/115:

‘(5)      The creative and artistic work of authors and performers necessitates an adequate income as a basis for further creative and artistic work, and the investments required particularly for the production of phonograms and films are especially high and risky. The possibility of securing that income and recouping that investment can be effectively guaranteed only through adequate legal protection of the rightholders concerned.

…

(7)      The legislation of the Member States should be approximated in such a way as not to conflict with the international conventions on which the copyright and related rights laws of many Member States are based.

…

(16)      Member States should be able to provide for more far-reaching protection for owners of rights related to copyright than that required by the provisions laid down in this Directive in respect of broadcasting and communication to the public.’

7        Article 7 of Directive 2006/115 provides:

‘1.      Member States shall provide for performers the exclusive right to authorise or prohibit the fixation of their performances.

2.      Member States shall provide for broadcasting organisations the exclusive right to authorise or prohibit the fixation of their broadcasts, whether these broadcasts are transmitted by wire or over the air, including by cable or satellite.

3.      A cable distributor shall not have the right provided for in paragraph 2 where it merely retransmits by cable the broadcasts of broadcasting organisations.’

8        Article 8(2) of that directive provides:

‘Member States shall provide a right in order to ensure that a single equitable remuneration is paid by the user, if a phonogram published for commercial purposes, or a reproduction of such phonogram, is used for broadcasting by wireless means or for any communication to the public, and to ensure that this remuneration is shared between the relevant performers and phonogram producers. Member States may, in the absence of agreement between the performers and phonogram producers, lay down the conditions as to the sharing of this remuneration between them.’

9        Article 10 of that directive is worded as follows:

‘1.      Member States may provide for limitations to the rights referred to in this Chapter in respect of:

(a)      private use;

…

2.      Irrespective of paragraph 1, any Member State may provide for the same kinds of limitations with regard to the protection of performers, producers of phonograms, broadcasting organisations and of producers of the first fixations of films, as it provides for in connection with the protection of copyright in literary and artistic works.

However, compulsory licences may be provided for only to the extent to which they are compatible with the Rome Convention.

3.      The limitations referred to in paragraphs 1 and 2 shall be applied only in certain special cases which do not conflict with a normal exploitation of the subject matter and do not unreasonably prejudice the legitimate interests of the rightholder.’

10      Directive 2006/115 codified and repealed Council Directive 92/100/EEC of 19 November 1992 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ 1992 L 346, p. 61).

11      According to recital 9 of the preamble to Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10):

‘Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation. Their protection helps to ensure the maintenance and development of creativity in the interests of authors, performers, producers, consumers, culture, industry and the public at large. Intellectual property has therefore been recognised as an integral part of property.’

12      Article 3 of that directive states:

‘1.      Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them.

2.      Member States shall provide for the exclusive right to authorise or prohibit the making available to the public, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them:

(a)      for performers, of fixations of their performances;

(b)      for phonogram producers, of their phonograms;

(c)       for the producers of the first fixations of films, of the original and copies of their films;

(d)      for broadcasting organisations, of fixations of their broadcasts, whether these broadcasts are transmitted by wire or over the air, including by cable or satellite.

3.      The rights referred to in paragraphs 1 and 2 shall not be exhausted by any act of communication to the public or making available to the public as set out in this Article.’

 National law

13      The Copyright and Related Rights Act 2000, (‘the 2000 Act’) provides in Section 97:

‘1.       Subject to subsection (2), it is not an infringement of the copyright in a sound recording, broadcast or cable programme to cause a sound recording, broadcast or cable programme to be heard or viewed where it is heard or viewed:

(a)       in part of the premises where sleeping accommodation is provided for the residents or inmates, and

(b)      as part of the amenities provided exclusively or mainly for residents or inmates.

2.      Subsection (1) does not apply in respect of any part of premises to which subsection (1) applies where there is a discrete charge made for admission to the part of the premises where a sound recording, broadcast or cable programme is to be heard or viewed.’

 The dispute in the main proceedings and the questions referred for a preliminary ruling

14      PPL is a collecting society which represents the rights which phonogram producers hold over sound recordings or phonograms in Ireland.

15      The main proceedings concern an action brought by PPL against Ireland for a declaration that Ireland, in adopting and maintaining in force Section 97 of the Act of 2000, has acted in breach of Article 4 TEU and for damages for that breach.

16      PPL alleges that it was on the ground of the exemption from liability provided for by Section 97(1) of the Act of 2000 that the operators of hotels and guesthouses (collectively ‘hotels’) did not pay equitable remuneration to it for the use, in hotel bedrooms in Ireland, of phonograms included amongst those made available under licence to PPL, by means of apparatus provided by persons responsible for the operation of those hotels as part of the service they provide.

17      The exemption from liability for hoteliers broadcasting protected phonograms infringes certain European directives adopted in the area of rights related to copyright, which provide for the right of phonogram producers to equitable remuneration when their phonograms are used under certain circumstances.

18      The High Court (Commercial Division) makes clear that the main proceedings concern only sound recordings or phonograms heard by guests in hotel bedrooms in Ireland and not in other parts of those establishments. Nor do the proceedings concern the use by hotel guests of transmissions which are interactive or on-demand.

19      Moreover, according to the referring court, if a hotel in Ireland provides televisions or radios in its bedrooms and, by cable or other technology, distributes to those televisions and radios a signal received centrally, then that hotel is not required by reason of Section 97(1) of the Act of 2000 to make any payment of equitable remuneration to phonogram producers for sound recordings included in TV or radio broadcasts.

20      Similarly, if a hotel places in its bedrooms other apparatus and makes available sound recordings in physical or digital form which may be played by guests thereon, that hotel is, likewise, not obliged to pay equitable remuneration to phonogram producers by reason of Section 97(1) of the Act of 2000.

21      Moreover, whilst the claim in the main proceedings only relates to use of sound recordings in hotel bedrooms, the referring court points out that Section 97(1) of the Act of 2000 also has the effect of removing the requirement of equitable remuneration for such use in hospitals, nursing homes, residential care facilities, prisons and all other similar institutions.

22      Finally, it makes clear that the sound recordings at issue in the proceedings are phonograms published for commercial purposes.

23      Against that background, the referring court took the view that, having regard to the differences between the rights protected by Article 3(1) of Directive 2001/29 and Article 8(2) of Directive 2006/115, to the context in which the phrase ‘communication to the public’ is used in each, and the purpose of the respective provisions, that court should not apply to the concept ‘communication to the public’ the same meaning as the Court of Justice gave it in Case C‑306/05 SGAE [2006] ECR I‑11519).

24      It is in those circumstances that the High Court (Commercial Division) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

‘(1)      Is a hotel operator which provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal a “user” making a “communication to the public” of a phonogram which may be played in a broadcast for the purposes of Article 8(2) of Codified Directive 2006/115/EC …?

(2)      If the answer to paragraph (1) is in the affirmative, does Article 8(2) of Directive 2006/115/EC … oblige Member States to provide a right to payment of equitable remuneration from the hotel operator in addition to equitable remuneration from the broadcaster for the playing of the phonogram?

(3)      If the answer to paragraph (1) is in the affirmative, does Article 10 of Directive 2006/115/EC … permit Member States to exempt hotel operators from the obligation to pay “single equitable remuneration” on the grounds of “private use” within the meaning of Article 10(1)(a)?

(4)      Is a hotel operator which provides in a guest bedroom apparatus (other than a television or radio) and phonograms in physical or digital form which may be played on or heard from such apparatus a “user” making a “communication to the public” of the phonograms within the meaning of Article 8(2) of Directive 2006/115/EC …?

(5)      If the answer to paragraph (4) is in the affirmative, does Article 10 of Directive 2006/115/EC … permit Member States to exempt hotel operators from the obligation to pay “a single equitable remuneration” on the grounds of “private use” within the meaning of Article 10(1)(a) of Directive 2006/115/EC?’

 The questions referred for a preliminary ruling

 The first question

25      By its first question, the referring court essentially wishes to know whether a hotel operator which provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal a ‘user’ making a ‘communication to the public’ of a broadcast phonogram for the purposes of Article 8(2) of Directive 2006/115/EC.

26      As a preliminary point, it must be borne in mind that, under Article 8(2) of Directive 2006/115, Member States are to provide a right in order to ensure that a single equitable remuneration is paid by the user, if a phonogram published for commercial purposes, or a reproduction of such phonogram, is used for broadcasting by wireless means or for any communication to the public.

27      It follows from that provision that anyone who uses a phonogram for a broadcast or for communication to the public must be considered to be a ‘user’ for the purposes of that provision.

28      In those circumstances, it must be assessed whether, in a case such as that at issue in the main proceedings, there has been ‘communication to the public’.

29      As regards the concept of ‘communication to the public’ within the meaning of Article 8(2) of Directive 92/100, codified by Directive 2006/115, the Court held in Case C‑135/10 SCF ECR [2012], paragraph 76, that it requires an individual assessment. The same applies as regards the identity of the user and the question of the use of the phonogram at issue (SCF, paragraph 78).

30      Moreover, the Court made clear that, for the purposes of such an assessment, account has to be taken of several complementary criteria, which are not autonomous and are interdependent. Consequently, they must be applied individually and in their interaction with one another, given that they may, in different situations, be present to widely varying degrees (see SCF, paragraph 79).

31      Of those criteria, the Court emphasised, first and foremost, the indispensable role played by the user. The user makes an act of communication when it intervenes, in full knowledge of the consequences of its action, to give access to a broadcast containing the protected work to its customers. In the absence of that intervention, its customers, although physically within the area covered by the broadcast, would not, in principle, be able to enjoy the broadcast work (SCF, paragraph 82).

32      Second, the Court clarified certain aspects of the concept of ‘public’.

33      According to the Court, the term ‘public’ refers to an indeterminate number of potential listeners and a fairly large number of people (see, to that effect, SCF, paragraph 84).

34      As regards, to begin with, the ‘indeterminate’ nature of the public, the Court has observed that, according to the definition of the concept of ‘communication to the public’ given by the WIPO glossary, which, while not legally binding, none the less sheds light on the interpretation of the concept of public, it means ‘making a work … perceptible in any appropriate manner to persons in general, that is, not restricted to specific individuals belonging to a private group’ (SCF, paragraph 85).

35      Next, as regards, the criterion of ‘a fairly large number of people’, the Court has made clear that this is intended to indicate that, on the one hand, the concept of public encompasses a certain de minimis threshold, which excludes from the concept groups of persons which are too small, or insignificant (SCF, paragraph 86). On the other hand, in order to determine that number, account must be taken of the cumulative effects of making works available to potential audiences. In that connection, not only is it relevant to know how many persons have access to the same work at the same time but it is also necessary to know how many of them have access to it in succession (SCF, paragraphs 86 and 87).

36      Third, the Court has held that if it is relevant that a ‘communication’ within the meaning of Article 3(1) of Directive 2001/29 is of a profit-making nature, this must be all the more true in the case of the essentially economic right to equitable remuneration of the performers and phonogram producers under Article 8(2) of Directive 2006/115 (see, to that effect, SCF, paragraphs 88 and 89).

37      According to the Court, it is thus understood that the public which is the subject of the communication is both targeted by the user and receptive, in one way or another, to that communication, and not merely ‘caught’ by chance (SCF, paragraph 91).

38      It is in the light, inter alia, of those criteria and in accordance with the need for an individual assessment established in paragraph 29 of this judgment that it must be assessed whether, in a case such as that at issue in the main proceedings, a hotel operator which provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal is making a communication to the public within the meaning of Article 8(2) of Directive 2006/115.

39      Although it is, in principle, for the national courts to determine whether that is the situation in a particular case and to make all definitive findings of fact in that regard, it must none the less be held that the Court has all the evidence necessary in relation to the case in the main proceedings to assess whether there is such an act of communication to the public.

40      It must be observed, first, that in the situation contemplated by the referring court, in which a hotel operator provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal, just as in the case leading to the judgment in SGAE (paragraph 42), although the guests of a hotel are in the area covered by the signal conveying the phonograms, they are able to listen to those phonograms only as a result of the deliberate intervention of that operator. Its role is thus indispensable, within the meaning of paragraph 31 of the present judgment.

41      As regards, next, the guests of a hotel such as those at issue in the main proceedings, it must be observed that they constitute an indeterminate number of potential listeners, insofar as the access of those guests to the services of that establishment is the result of their own choice and is limited only by the capacity of the establishment in question. In such a situation they are thus ‘persons in general’ in the sense of paragraph 34 of this judgment.

42      As regards, further, the number of potential listeners referred to in paragraph 33 of the present judgment, it must be observed that the Court has held that the guests of a hotel constitute a fairly large number of persons, such that they must be considered to be a public (SGAE, paragraph 38).

43      Finally, as regards the profit-making nature of the broadcast referred to in paragraphs 36 and 37 of this judgment, it must be held that the guests of a hotel may be described as ‘targeted’ and ‘receptive’.

44      Indeed, the action of the hotel by which it gives access to the broadcast work to its customers constitutes an additional service which has an influence on the hotel’s standing and, therefore, on the price of rooms (see, to that effect, SGAE, paragraph 44). Moreover, it is likely to attract additional guests who are interested in that additional service (see, by analogy, Joined Cases C‑403/08 and C‑429/08 Football Association Premier League and Others [2011] ECR I‑9083, paragraph 205).

45      It follows that, in the present case, the broadcasting of phonograms by a hotel operator is of a profit-making nature.

46      It follows from the foregoing considerations that, in a case such as that in the main proceedings, a hotel operator is making a ‘communication to the public’ within the meaning of Article 8(2) of Directive 2006/115.

47      Having regard to the foregoing, the answer to the first question is that a hotel operator which provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal is a ‘user’ making a ‘communication to the public’ of a phonogram which may be played in a broadcast for the purposes of Article 8(2) of Directive 2006/115.

 The second question

48      By its second question the referring court asks, essentially, whether a hotel operator which provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal is obliged to pay equitable remuneration under Article 8(2) of Directive 2006/115 in addition to that paid by the broadcaster.

49      It should be recalled, at the outset, that the Court has already made clear, as regards the concept of ‘communication to the public’ for the purposes of Article 3(1) of Directive 2001/29, that a hotel operator which carries out an act of communication to the public transmits a protected work to a new public, that is to say, to a public which was not taken into account by the authors of the protected work when they authorised its use by communication to the original public (see, to that effect, SGAE paragraphs 40 and 42).

50      It must be pointed out that the notion of ‘new public’ derived from the case‑law cited in the previous paragraph must also be taken into account in the context of the application of Article 8(2) of Directive 2006/115.

51      When a hotel operator communicates a broadcast phonogram in its guest bedrooms, it is using that phonogram in an autonomous way and transmitting it to a public which is distinct from and additional to the one targeted by the original act of communication. Moreover, as observed in paragraph 45 of the present judgment, the hotel operator derives economic benefits from that transmission which are independent of those obtained by the broadcaster or the producer of the phonograms.

52      Consequently, in such a situation, a hotel operator is required, under Article 8(2) of Directive 2006/115, to pay equitable remuneration for the communication to the public of that phonogram in addition to that paid by the broadcaster.

53      In that respect, Ireland’s argument that it follows from the words ‘or’ and ‘single’ in Article 8(2) of Directive 2006/115 that a hotel operator is not required to pay any remuneration for the indirect communication of phonograms to the public if a radio or television broadcaster has already paid equitable remuneration for the use of the phonograms in its broadcasts cannot succeed.

54      By using the word ‘single’ in that provision, the European Union legislature merely wished to make clear that it is not necessary for the Member States to make provision for the user to pay separate remuneration several times for the same act of communication to the public, as that single remuneration will, as is clear from the second sentence of that provision, be shared amongst the different beneficiaries of the equitable remuneration, that is to say, the performers and the phonogram producers. The conjunction ‘or’ in the expression ‘by wireless means or for any communication to the public’ must be interpreted as meaning that remuneration is due both in the case of a broadcast and in the case of communication to the public.

55      Having regard to the foregoing observations, the answer to the second question is that a hotel operator which provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal is obliged to pay equitable remuneration under Article 8(2) of Directive 2006/115 for the broadcast of a phonogram, in addition to that paid by the broadcaster.

 The fourth question

56      By its fourth question, which should be examined third, the referring court asks, essentially, whether a hotel operator which provides in guest bedrooms, not televisions and/or radios, but other apparatus and phonograms in physical or digital format capable of being broadcast or heard by means of that apparatus, is a ‘user’ making a ‘communication to the public’ of a phonogram, for the purposes of Article 8(2) of Directive 2006/115.

57      In those circumstances, the Court is required to verify that the considerations underlying its reply to the first question are still relevant even in a situation where a hotel operator provides apparatus for his clients other than a television or radio, and phonograms in a physical or digital format capable of being broadcast or heard by means of that apparatus.

58      In that regard, it must be pointed out that the concept of ‘communication to the public’ in Article 8(2) of Directive 2006/115 must be interpreted with due regard for the equivalent concepts used, inter alia, by the WPPT, and in a manner compatible with those concepts, and taking account of the context in which they are used and the objective pursued by the relevant provisions of conventions (SCF, paragraph 55).

59      Article 2(g) of the WPPT, concerning communication to the public and referring to Article 15 of the WPPT stipulates that such communication includes making the sounds or representations of sounds fixed in a phonogram audible to the public.

60      In those circumstances, the concept of ‘communication to the public’ in Article 8(2) of Directive 2006/115 must be interpreted as meaning that it also includes making the sounds or representations of sounds fixed in a phonogram audible to the public.

61      Moreover, that finding is borne out by the wording itself of Article 8(2) of Directive 2006/115 which states that it concerns ‘any’ communication to the public, and thus all forms of communication which can be envisaged and carried out.

62      So, a hotel operator which provides in guest bedrooms apparatus other than a television or radio, and phonograms in a physical or digital format capable of being broadcast or heard by means of that apparatus, is providing the two elements making it possible to make the sounds or representations of sounds fixed in a phonogram audible to the public, that is to say, phonograms.

63      Consequently, that form of communication falls within the scope of Article 8(2) of Directive 2006/115 interpreted in the light of Articles 2(g) and 15 of the WPPT read together.

64      Since, as is clear from paragraph 57 of this judgment, the fourth question differs from the first only as regards the form of transmission of the phonograms, it may be inferred that the operator and his customers are the same for the purposes of those two questions.

65      It may thus be presumed, first, that the operator of that hotel must be considered to be the ‘user’ for the purposes of Article 8(2) of Directive 2006/115 and, second, that the customers of that establishment must be considered to be a ‘public’ for the purposes of that provision, unless there is specific evidence which is such as to lead the Court to a different conclusion.

66      In that regard it must be assessed whether the particular form of transmission, by apparatus and by phonograms in physical or digital form which can be broadcast or heard by means of that apparatus, is such as to lead to a different conclusion from that reached in paragraph 40 of this judgment.

67      That is not the case. Since a hotel operator which installs such apparatus and such phonograms in the bedrooms of its hotel thereby provides its customers with the two elements necessary to enjoy the works in question, it follows that, without its intervention, the customers would not have access to those works. The role of that hotel operator is thus indispensable.

68      In the absence of any other specific evidence requiring examination, it must be concluded that, in a situation like that at issue in the main proceedings, there has been an act of ‘communication to the public’ of a phonogram, for the purposes of Article 8(2) of Directive 2006/115.

69      Having regard to the foregoing, the answer to the fourth question is that a hotel operator which provides in guest bedrooms, not televisions and/or radios to which it distributes a broadcast signal, but other apparatus and phonograms in physical or digital form which may be played on or heard from such apparatus, is a ‘user’ making a ‘communication to the public’ of a phonogram within the meaning of Article 8(2) of Directive 2006/115/EC. It is therefore obliged to pay ‘equitable remuneration’ under that provision for the transmission of those phonograms.

 The third and fifth questions

70      By its third and fifth questions, which should be examined together, the referring court asks, essentially, whether Article 10(1)(a) of Directive 2006/115, which provides for a limitation of the right to equitable remuneration in the case of ‘private use’, allows the Member States to exempt a hotel operator who makes a ‘communication to the public’ of a phonogram, within the meaning of Article 8(2) of that directive, from the obligation to pay such remuneration.

71      As a preliminary point, it must be made clear that, as the Advocate General observed in point 153 of her Opinion, it is not the private nature or otherwise of the use of the work by guests of a hotel which is relevant in order to determine whether a hotel operator may rely on the limitation based on ‘private use’ within the meaning of Article 10(1)(a) of Directive 2006/115, but whether the use made of the work by the operator himself is private or not.

72      However, the ‘private use’ of a protected work communicated to the public by its user constitutes a contradiction in terms, since ‘public’ is, by definition, ‘not private’.

73      Accordingly, in the case of a communication to the public within the meaning of Article 8(2) of Directive 2006/115, the limitation based on ‘private use’ within the meaning of Article 10(1)(a) of that directive, cannot apply.

74      However, that interpretation is not such as to deprive that provision of all practical effect. Rather, that provision retains a wider scope by covering uses other than communication to the public, such as ‘fixation’ within the meaning of Article 7 of that directive.

75      Moreover, to allow the user to benefit from the limitation referred to in Article 10(1)(e) of Directive 2006/115, when he makes a communication such as that at issue in the case in the main proceedings, would run counter to the provisions of Article 10(3) of that directive under which that limitation is applicable only in certain special cases which do not prejudice the normal exploitation of the work or other protected object or cause unjustified harm to the legitimate interests of the rightholder.

76      Such an interpretation would allow the user to evade the obligation to pay equitable remuneration for forms of use of the work which amount to commercial exploitation of it, which would cause unjustified harm to the legitimate interests of protected artists or performers precisely as a result of the right to equitable remuneration.

77      Having regard to the foregoing, the answer to the third and fifth questions is that Article 10(1)(a) of Directive 2006/115, which provides for a limitation to the right to equitable remuneration provided for by Article 8(2) of that directive in the case of ‘private use’, does not allow Member States to exempt a hotel operator which makes a ‘communication to the public’ of a phonogram, within the meaning of Article 8(2) of that directive, from the obligation to pay such remuneration.

 Costs

78      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Third Chamber) hereby rules:

1.      A hotel operator which provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal is a ‘user’ making a ‘communication to the public’ of a phonogram which may be played in a broadcast for the purposes of Article 8(2) of Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property.

2.      A hotel operator which provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal is obliged to pay equitable remuneration under Article 8(2) of Directive 2006/115 for the broadcast of a phonogram, in addition to that paid by the broadcaster.

3.      A hotel operator which provides in guest bedrooms, not televisions and/or radios to which it distributes a broadcast signal, but other apparatus and phonograms in physical or digital form which may be played on or heard from such apparatus, is a ‘user’ making a ‘communication to the public’ of a phonogram within the meaning of Article 8(2) of Directive 2006/115/EC. It is therefore obliged to pay ‘equitable remuneration’ under that provision for the transmission of those phonograms.

4.      Article 10(1)(a) of Directive 2006/115, which provides for a limitation to the right to equitable remuneration provided for by Article 8(2) of that directive in the case of ‘private use’, does not allow Member States to exempt a hotel operator which makes a ‘communication to the public’ of a phonogram, within the meaning of Article 8(2) of that directive, from the obligation to pay such remuneration.

JUDGMENT OF THE COURT (Fourth Chamber)

13 February 2014 (*)

(Reference for a preliminary ruling – Approximation of laws – Copyright and related rights – Directive 2001/29/EC – Information society – Harmonisation of certain aspects of copyright and related rights – Article 3(1) – Communication to the public – Meaning – Internet links (‘clickable links’) giving access to protected works)

In Case C‑466/12,

REQUEST for a preliminary ruling under Article 267 TFEU from the Svea hovrätt (Sweden), made by decision of 18 September 2012, received at the Court on 18 October 2012, in the proceedings

Nils Svensson,

Sten Sjögren,

Madelaine Sahlman,

Pia Gadd

v

Retriever Sverige AB,

THE COURT (Fourth Chamber),

composed of L. Bay Larsen, President of the Chamber, M. Safjan, J. Malenovský (Rapporteur), A. Prechal and S. Rodin, Judges,

Advocate General: E. Sharpston,

Registrar: C. Strömholm, Administrator,

having regard to the written procedure and further to the hearing on 7 November 2013,

after considering the observations submitted on behalf of:

–        Mr Svensson, Mr Sjögren and Ms Sahlman, by O. Wilöf, förbundsjurist,

–        Ms Gadd, by R. Gómez Cabaleiro, abogado, and M. Wadsted, advokat,

–        Retriever Sverige AB, by J. Åberg, M. Bruder and C. Rockström, advokater,

–        the French Government, by D. Colas, F.-X. Bréchot and B. Beaupère-Manokha, acting as Agents,

–        the Italian Government, by G. Palmieri, acting as Agent, and by S. Fiorentino, avvocato dello Stato,

–        the United Kingdom Government, by J. Beeko, acting as Agent, and by N. Saunders, Barrister,

–        the European Commission, by J. Samnadda and J. Enegren, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1        This request for a preliminary ruling concerns the interpretation of Article 3(1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10).

2        The request has been made in proceedings between Mr Svensson, Mr Sjögren, Ms Sahlman and Ms Gadd, the applicants in the main proceedings, and Retriever Sverige AB (‘Retriever Sverige’) concerning compensation allegedly payable to them for the harm they consider they have suffered as a result of the inclusion on that company’s website of clickable Internet links (hyperlinks) redirecting users to press articles in which the applicants hold the copyright.

 Legal context

 International law

 The WIPO Copyright Treaty

3        The World Intellectual Property Organisation (WIPO) adopted the WIPO Copyright Treaty (‘the WIPO Copyright Treaty’) in Geneva on 20 December 1996. It was approved on behalf of the European Community by Council Decision 2000/278/EC of 16 March 2000 (OJ 2000 L 89, p. 6).

4        Article 1(4) of the WIPO Copyright Treaty provides that the contracting parties are to comply with Articles 1 to 21 of the Convention for the Protection of Literary and Artistic Works, signed at Berne on 9 September 1886 (Paris Act of 24 July 1971), as amended on 28 September 1979 (‘the Berne Convention’).

 The Berne Convention

5        Article 20 of the Berne Convention, entitled ‘Special Agreements Among Countries of the Union’, states:

‘The Governments of the countries of the Union reserve the right to enter into special agreements among themselves, in so far as such agreements grant to authors more extensive rights than those granted by the Convention, or contain other provisions not contrary to this Convention. The provisions of existing agreements which satisfy these conditions shall remain applicable.’

 European Union law

6        Recitals 1, 4, 6, 7, 9 and 19 in the preamble to Directive 2001/29 state:

‘(1)      The Treaty provides for the establishment of an internal market and the institution of a system ensuring that competition in the internal market is not distorted. Harmonisation of the laws of the Member States on copyright and related rights contributes to the achievement of these objectives.

…

(4)      A harmonised legal framework on copyright and related rights, through increased legal certainty and while providing for a high level of protection of intellectual property, will foster substantial investment in creativity and innovation, including network infrastructure, and lead in turn to growth and increased competitiveness of European industry, both in the area of content provision and information technology and more generally across a wide range of industrial and cultural sectors. …

…

(6)      Without harmonisation at Community level, legislative activities at national level which have already been initiated in a number of Member States in order to respond to the technological challenges might result in significant differences in protection and thereby in restrictions on the free movement of services and products incorporating, or based on, intellectual property, leading to a refragmentation of the internal market and legislative inconsistency. The impact of such legislative differences and uncertainties will become more significant with the further development of the information society, which has already greatly increased transborder exploitation of intellectual property. This development will and should further increase. Significant legal differences and uncertainties in protection may hinder economies of scale for new products and services containing copyright and related rights.

(7)      The Community legal framework for the protection of copyright and related rights must, therefore, also be adapted and supplemented as far as is necessary for the smooth functioning of the internal market. To that end, those national provisions on copyright and related rights which vary considerably from one Member State to another or which cause legal uncertainties hindering the smooth functioning of the internal market and the proper development of the information society in Europe should be adjusted, and inconsistent national responses to the technological developments should be avoided, whilst differences not adversely affecting the functioning of the internal market need not be removed or prevented.

…

(9)      Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation. Their protection helps to ensure the maintenance and development of creativity in the interests of authors, performers, producers, consumers, culture, industry and the public at large. …

(19)      The moral rights of rightholders should be exercised according to the legislation of the Member States and the provisions of the Berne Convention …[,] the WIPO Copyright Treaty and of the WIPO Performances and Phonograms Treaty. …’

7        Article 3 of Directive 2001/29 provides:

‘1.   Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them.

…

3.      The rights referred to in paragraphs 1 and 2 shall not be exhausted by any act of communication to the public or making available to the public as set out in this Article.’

 The dispute in the main proceedings and the questions referred for a preliminary ruling

8        The applicants in the main proceedings, all journalists, wrote press articles that were published in the Göteborgs-Posten newspaper and on the Göteborgs-Posten website. Retriever Sverige operates a website that provides its clients, according to their needs, with lists of clickable Internet links to articles published by other websites. It is common ground between the parties that those articles were freely accessible on the Göteborgs-Posten newspaper site. According to the applicants in the main proceedings, if a client clicks on one of those links, it is not apparent to him that he has been redirected to another site in order to access the work in which he is interested. By contrast, according to Retriever Sverige, it is clear to the client that, when he clicks on one of those links, he is redirected to another site.

9        The applicants in the main proceedings brought an action against Retriever Sverige before the Stockholms tingsrätt (Stockholm District Court) in order to obtain compensation on the ground that that company had made use, without their authorisation, of certain articles by them, by making them available to its clients.

10      By judgment of 11 June 2010, the Stockholms tingsrätt rejected their application. The applicants in the main proceedings then brought an appeal against that judgment before the Svea hovrätt (Svea Court of Appeal).

11      Before that court, the applicants in the main proceedings claimed, inter alia, that Retriever Sverige had infringed their exclusive right to make their respective works available to the public, in that as a result of the services offered on its website, Retriever Sverige’s clients had access to the applicants’ works.

12      Retriever Sverige contends, in defence, that the provision of lists of Internet links to works communicated to the public on other websites does not constitute an act liable to affect the copyright in those works. Retriever Sverige also contends that it did not carry out any transmission of any protected work; its action is limited to indicating to its clients the websites on which the works that are of interest to them are to be found.

13      In those circumstances, the Svea hovrätt decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1)      If anyone other than the holder of copyright in a certain work supplies a clickable link to the work on his website, does that constitute communication to the public within the meaning of Article 3(1) of Directive [2001/29]?

(2)      Is the assessment under question 1 affected if the work to which the link refers is on a website on the Internet which can be accessed by anyone without restrictions or if access is restricted in some way?

(3)      When making the assessment under question 1, should any distinction be drawn between a case where the work, after the user has clicked on the link, is shown on another website and one where the work, after the user has clicked on the link, is shown in such a way as to give the impression that it is appearing on the same website?

(4)      Is it possible for a Member State to give wider protection to authors’ exclusive right by enabling communication to the public to cover a greater range of acts than provided for in Article 3(1) of Directive 2001/29?’

 Consideration of the questions referred

 The first three questions

14      By its first three questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 3(1) of Directive 2001/29 must be interpreted as meaning that the provision, on a website, of clickable links to protected works available on another website constitutes an act of communication to the public as referred to in that provision, where, on that other site, the works concerned are freely accessible.

15      In this connection, it follows from Article 3(1) of Directive 2001/29 that every act of communication of a work to the public has to be authorised by the copyright holder.

16      It is thus apparent from that provision 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’ (see, to that effect, Case C‑607/11 ITV Broadcasting and Others [2013] ECR, paragraphs 21 and 31).

17      As regards the first of those criteria, that is, the existence of an ‘act of communication’, this must be construed broadly (see, to that effect, Joined Cases C‑403/08 and C‑429/08 Football Association Premier League and Others [2011] ECR I‑9083, paragraph 193), in order to ensure, in accordance with, inter alia, recitals 4 and 9 in the preamble to Directive 2001/29, a high level of protection for copyright holders.

18      In the circumstances of this case, it must be observed that the provision, on a website, of clickable links to protected works published without any access restrictions on another site, affords users of the first site direct access to those works.

19      As is apparent from Article 3(1) of Directive 2001/29, for there to be an ‘act of communication’, it is sufficient, in particular, that a work is made available to a public in such a way that the persons forming that public may access it, irrespective of whether they avail themselves of that opportunity (see, by analogy, Case C‑306/05 SGAE [2006] ECR I‑11519, paragraph 43).

20      It follows that, in circumstances such as those in the case in the main proceedings, the provision of clickable links to protected works must be considered to be ‘making available’ and, therefore, an ‘act of communication’, within the meaning of that provision.

21      So far as concerns the second of the abovementioned criteria, that is, that the protected work must in fact be communicated to a ‘public’, it follows from Article 3(1) of Directive 2001/29 that, by the term ‘public’, that provision refers to an indeterminate number of potential recipients and implies, moreover, a fairly large number of persons (SGAE, paragraphs 37 and 38, and ITV Broadcasting and Others, paragraph 32).

22      An act of communication such as that made by the manager of a website by means of clickable links is aimed at all potential users of the site managed by that person, that is to say, an indeterminate and fairly large number of recipients.

23      In those circumstances, it must be held that the manager is making a communication to a public.

24      None the less, according to settled case-law, in order to be covered by the concept of ‘communication to the public’, within the meaning of Article 3(1) of Directive 2001/29, a communication, such as that at issue in the main proceedings, concerning the same works as those covered by the initial communication and made, as in the case of the initial communication, on the Internet, and therefore by the same technical means, must also be directed at a new public, that is to say, at a public that was not taken into account by the copyright holders when they authorised the initial communication to the public (see, by analogy, SGAE, paragraphs 40 and 42; order of 18 March 2010 in Case C‑136/09 Organismos Sillogikis Diacheirisis Dimiourgon Theatrikon kai Optikoakoustikon Ergon, paragraph 38; and ITV Broadcasting and Others, paragraph 39).

25      In the circumstances of this case, it must be observed that making available the works concerned by means of a clickable link, such as that in the main proceedings, does not lead to the works in question being communicated to a new public.

26      The public targeted by the initial communication consisted of all potential visitors to the site concerned, since, given that access to the works on that site was not subject to any restrictive measures, all Internet users could therefore have free access to them.

27      In those circumstances, it must be held that, where all the users of another site to whom the works at issue have been communicated by means of a clickable link could access those works directly on the site on which they were initially communicated, without the involvement of the manager of that other site, the users of the site managed by the latter must be deemed to be potential recipients of the initial communication and, therefore, as being part of the public taken into account by the copyright holders when they authorised the initial communication.

28      Therefore, since there is no new public, the authorisation of the copyright holders is not required for a communication to the public such as that in the main proceedings.

29      Such a finding cannot be called in question were the referring court to find, although this is not clear from the documents before the Court, that when Internet users click on the link at issue, the work appears in such a way as to give the impression that it is appearing on the site on which that link is found, whereas in fact that work comes from another site.

30      That additional circumstance in no way alters the conclusion that the provision on a site of a clickable link to a protected work published and freely accessible on another site has the effect of making that work available to users of the first site and that it therefore constitutes a communication to the public. However, since there is no new public, the authorisation of the copyright holders is in any event not required for such a communication to the public.

31      On the other hand, where a clickable link makes it possible for users of the site on which that link appears to circumvent restrictions put in place by the site on which the protected work appears in order to restrict public access to that work to the latter site’s subscribers only, and the link accordingly constitutes an intervention without which those users would not be able to access the works transmitted, all those users must be deemed to be a new public, which was not taken into account by the copyright holders when they authorised the initial communication, and accordingly the holders’ authorisation is required for such a communication to the public. This is the case, in particular, where the work is no longer available to the public on the site on which it was initially communicated or where it is henceforth available on that site only to a restricted public, while being accessible on another Internet site without the copyright holders’ authorisation.

32      In those circumstances, the answer to the first three questions referred is that Article 3(1) of Directive 2001/29 must be interpreted as meaning that the provision on a website of clickable links to works freely available on another website does not constitute an act of communication to the public, as referred to in that provision.

 The fourth question

33      By its fourth question, the referring court asks, in essence, whether Article 3(1) of Directive 2001/29 must be interpreted as precluding a Member State from giving wider protection to copyright holders by laying down that the concept of communication to the public includes a wider range of activities than those referred to in that provision.

34      In this connection, it is apparent, in particular, from recitals 1, 6 and 7 in the preamble to Directive 2001/29 that the objectives of the directive are, inter alia, to remedy the legislative differences and legal uncertainty that exist in relation to copyright protection. Acceptance of the proposition that a Member State may give wider protection to copyright holders by laying down that the concept of communication to the public also includes activities other than those referred to in Article 3(1) of Directive 2001/29 would have the effect of creating legislative differences and thus, for third parties, legal uncertainty.

35      Consequently, the objective pursued by Directive 2001/29 would inevitably be undermined if the concept of communication to the public were to be construed in different Member States as including a wider range of activities than those referred to in Article 3(1) of that directive.

36      It is true that recital 7 in the preamble to the directive indicates that the directive does not have the objective of removing or preventing differences that do not adversely affect the functioning of the internal market. Nevertheless, it must be observed that, if the Member States were to be afforded the possibility of laying down that the concept of communication to the public includes a wider range of activities than those referred to in Article 3(1) of the directive, the functioning of the internal market would be bound to be adversely affected.

37      It follows that Article 3(1) of Directive 2001/29 cannot be construed as allowing Member States to give wider protection to copyright holders by laying down that the concept of communication to the public includes a wider range of activities than those referred to in that provision.

38      Such a conclusion is not affected by the fact, highlighted by the applicants in the main proceedings in their written observations, that Article 20 of the Berne Convention stipulates that the signatory countries may enter into ‘special agreements’ among themselves with a view to granting copyright holders more extensive rights than those laid down in that Convention.

39      In this connection, suffice it to recall that, when an agreement allows, but does not require, a Member State to adopt a measure which appears to be contrary to Union law, the Member State must refrain from adopting such a measure (Case C‑277/10 Luksan [2012] ECR, paragraph 62).

40      Since the objective of Directive 2001/29 would inevitably be undermined if the concept of communication to the public were construed as including a wider range of activities than those referred to in Article 3(1) of that directive, a Member State must refrain from exercising the right granted to it by Article 20 of the Berne Convention.

41      Therefore, the answer to the fourth question is that Article 3(1) of Directive 2001/29 must be interpreted as precluding a Member State from giving wider protection to copyright holders by laying down that the concept of communication to the public includes a wider range of activities than those referred to in that provision.

 Costs

42      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Fourth Chamber) hereby rules:

1.      Article 3(1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, must be interpreted as meaning that the provision on a website of clickable links to works freely available on another website does not constitute an ‘act of communication to the public’, as referred to in that provision.

2.      Article 3(1) of Directive 2001/29 must be interpreted as precluding a Member State from giving wider protection to copyright holders by laying down that the concept of communication to the public includes a wider range of activities than those referred to in that provision.

Case C‑466/12

Nils Svensson and Others

v

Retriever Sverige AB

(Request for a preliminary ruling from the Svea hovrätt)

(Reference for a preliminary ruling — Approximation of laws — Copyright and related rights — Directive 2001/29/EC — Information society — Harmonisation of certain aspects of copyright and related rights — Article 3(1) — Communication to the public — Meaning — Internet links (‘clickable links’) giving access to protected works)

Summary — Judgment of the Court (Fourth Chamber), 13 February 2014

1.        Approximation of laws — Copyright and related rights — Directive 2001/29 — Harmonisation of certain aspects of copyright and related rights in the information society — Communication to the public — Meaning — Making available to the public, on a website, of clickable links to works freely available on another website — Not included

(European Parliament and Council Directive 2001/29, Art. 3(1))

2.        Approximation of laws — Copyright and related rights — Directive 2001/29 — Harmonisation of certain aspects of copyright and related rights in the information society — Communication to the public — Meaning — Not permissible for Member States to give wider protection to copyright holders by including within the concept of communication to the public a wider range of activities than those referred to in Article 3(1) of Directive 2001/29

(European Parliament and Council Directive 2001/29, Art. 3(1))

3.        International agreements — Agreements concluded by the Member States — Agreements preceding a Member State’s accession to the European Union — Agreement allowing a Member State to adopt a measure contrary to EU law — Obligation on the Member State to refrain from adopting such a measure

(Art. 351 TFEU)

1.        Article 3(1) of Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that the provision on a website of clickable links to works freely available on another website does not constitute an ‘act of communication to the public’, as referred to in that provision.

In this connection, 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’.

The provision, on a website, of clickable links to protected works published without any access restrictions on another site, affords users of the first site direct access to those works and must be considered to be ‘making available’ and, therefore, an ‘act of communication’, within the meaning of Article 3(1) of Directive 2001/29. Such an act of communication is aimed at all potential users of the website, that is to say, an indeterminate and fairly large number of recipients.

None the less, in order to be covered by the concept of ‘communication to the public’, within the meaning of Article 3(1) of Directive 2001/29, a communication concerning the same works as those covered by the initial communication and made, as in the case of the initial communication, on the Internet, and therefore by the same technical means, must also be directed at a new public, that is to say, at a public that was not taken into account by the copyright holders when they authorised the initial communication to the public. Making available the works concerned by means of a clickable link does not lead to the works in question being communicated to a new public.

In those circumstances, where all the users of another site to whom the works at issue have been communicated by means of a clickable link could access those works directly on the site on which they were initially communicated, without the involvement of the manager of that other site, the users of the site managed by the latter must be deemed to be potential recipients of the initial communication and, therefore, as being part of the public taken into account by the copyright holders when they authorised the initial communication.

Therefore, since there is no new public, the authorisation of the copyright holders is not required for such a communication to the public.

(see paras 16, 18, 20, 22, 24, 25, 27, 28, 32, operative part 1)

2.        Article 3(1) of Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as precluding a Member State from giving wider protection to copyright holders by laying down that the concept of communication to the public includes a wider range of activities than those referred to in that provision.

It is apparent, in particular, from recitals 1, 6 and 7 in the preamble to Directive 2001/29 that the objectives of the directive are, inter alia, to remedy the legislative differences and legal uncertainty that exist in relation to copyright protection. Acceptance of the proposition that a Member State may give wider protection to copyright holders by laying down that the concept of communication to the public also includes activities other than those referred to in Article 3(1) of Directive 2001/29 would have the effect of creating legislative differences and thus, for third parties, legal uncertainty. Consequently, the objective pursued by Directive 2001/29 would inevitably be undermined if the concept of communication to the public were to be construed in different Member States as including a wider range of activities than those referred to in Article 3(1) of that directive.

Furthermore, it must be observed that, if the Member States were to be afforded the possibility of laying down that the concept of communication to the public includes a wider range of activities than those referred to in Article 3(1) of the directive, the functioning of the internal market would be bound to be adversely affected.

(see paras 34-36, 41, operative part 2)

3.        See the text of the decision.

(see para. 39)

JUDGMENT OF THE COURT (Fourth Chamber)

5 June 2014 (*)

(Copyright — Information Society — Directive 2001/29/EC — Article 5(1) and (5) — Reproduction — Exceptions and limitations — Creation of copies of an internet site on-screen and in the cache of the hard disk in the course of browsing the internet — Temporary act of reproduction — Transient or incidental act — Integral and essential part of a technological process — Lawful use — Independent economic significance)

In Case C‑360/13,

REQUEST for a preliminary ruling under Article 267 TFEU from the Supreme Court of the United Kingdom (United Kingdom), made by decision of 24 June 2013, received at the Court on 27 June 2013, in the proceedings

Public Relations Consultants Association Ltd

v

Newspaper Licensing Agency Ltd and Others,

THE COURT (Fourth Chamber),

composed of L. Bay Larsen, President of the Chamber, M. Safjan, J. Malenovský (Rapporteur), A. Prechal and K. Jürimäe, Judges,

Advocate General: M. Szpunar,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

–        Public Relations Consultants Association Ltd, by M. Hart, Solicitor,

–        Newspaper Licensing Agency Ltd and Others, by S. Clark, Solicitor,

–        the United Kingdom Government, by L. Christie, acting as Agent,

–        the Italian Government, by G. Palmieri, acting as Agent, and by M. Santoro, avvocato dello Stato,

–        the Polish Government, by B. Majczyna, acting as Agent,

–        the European Commission, by J. Samnadda, acting as Agent,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1        This request for a preliminary ruling concerns the interpretation of Article 5(1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10).

2        The request has been made in proceedings between Public Relations Consultants Association Ltd (‘the PRCA’) and Newspaper Licensing Agency Ltd and Others (‘the NLA’) concerning the obligation to obtain authorisation from the copyright holders for the viewing of websites where this involves copies of those sites being made on the user’s computer screen and in the internet cache of that computer’s hard disk.

 Legal context

 EU law

3        Recitals 5, 9, 31 and 33 in the preamble to Directive 2001/29 are worded as follows:

‘(5)      Technological development has multiplied and diversified the vectors for creation, production and exploitation. While no new concepts for the protection of intellectual property are needed, the current law on copyright and related rights should be adapted and supplemented to respond adequately to economic realities such as new forms of exploitation.

…

(9)      Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation. …

…

(31)      A fair balance of rights and interests between the different categories of rightholders, as well as between the different categories of rightholders and users of protected subject-matter, must be safeguarded. …

…

(33)      The exclusive right of reproduction should be subject to an exception to allow certain acts of temporary reproduction, which are transient or incidental reproductions, forming an integral and essential part of a technological process and carried out for the sole purpose of enabling either efficient transmission in a network between third parties by an intermediary, or a lawful use of a work or other subject-matter to be made. The acts of reproduction concerned should have no separate economic value on their own. To the extent that they meet these conditions, this exception should include acts which enable browsing as well as acts of caching to take place, including those which enable transmission systems to function efficiently, provided that the intermediary does not modify the information and does not interfere with the lawful use of technology, widely recognised and used by industry, to obtain data on the use of the information. A use should be considered lawful where it is authorised by the rightholder or not restricted by law.’

4        Article 2(a) of that directive states:

‘Member States shall provide for the exclusive right to authorise or prohibit direct or indirect, temporary or permanent reproduction by any means and in any form, in whole or in part:

(a)      for authors, of their works …’.

5        Under Article 5(1) and (5) of Directive 2001/29:

‘1.      Temporary acts of reproduction referred to in Article 2, which are transient or incidental, which are an integral and essential part of a technological process and whose sole purpose is to enable:

(a)      a transmission in a network between third parties by an intermediary, or

(b)      lawful use

of a work or other subject-matter to be made, and which have no independent economic significance, shall be exempted from the reproduction right provided for in Article 2.

…

5.      The exceptions and limitations provided for in paragraphs 1, 2, 3 and 4 shall only be applied in certain special cases which do not conflict with a normal exploitation of the work or other subject-matter and do not unreasonably prejudice the legitimate interests of the rightholder.’

 United Kingdom law

6        Article 5(1) of Directive 2001/29 was transposed into national law by section 28A of the Copyright, Designs and Patents Act 1988.

 The dispute in the main proceedings and the question referred for a preliminary ruling

7        The PRCA is an association of public relations professionals. Those professionals use the media monitoring service offered by the Meltwater group of companies (‘Meltwater’), which makes available to them, online, monitoring reports on press articles published on the internet, those reports being compiled on the basis of key words provided by the customers.

8        The NLA is a body set up by the publishers of newspapers in the United Kingdom for the purpose of providing collective licensing of newspaper content.

9        The NLA took the view that Meltwater and its customers were required to obtain authorisation from the copyright holders for, respectively, providing and receiving the media monitoring service.

10      Meltwater agreed to enter into a web database licence. The PRCA, however, maintained that the online receipt of the monitoring reports by Meltwater’s customers not require a licence.

11      Seised of the dispute, the High Court of Justice (England & Wales), Chancery Division, and the Court of Appeal (England & Wales) held that the members of the PRCA were required to obtain a licence or consent from the NLA in order to receive Meltwater’s service.

12      The PRCA brought an appeal against that decision before the Supreme Court of the United Kingdom, claiming, in particular, that its members do not need authorisation from rights holders when they confine themselves to viewing the monitoring reports on Meltwater’s website.

13      The NLA contended that that activity requires the authorisation of the copyright holders, in so far as viewing the website leads to copies being made on the user’s computer screen (‘the on-screen copies’) and in the internet ‘cache’ of that computer’s hard disk (‘the cached copies’). It contends that those copies constitute ‘reproductions’, within the meaning of Article 2 of Directive 2001/29, that do not come within the exemption provided for in Article 5(1) of that directive.

14      The referring court observes that the proceedings before it concern the question whether internet users who view websites on their computers without downloading or printing them out are committing infringements of copyright by reason of the creation of on-screen copies and cached copies, unless they have the authorisation of the rights holders to make such copies.

15      In this connection, the referring court states, first of all, that when an internet user views a website on his computer, without downloading it, the technical processes involved require the copies in question to be made. The creation of those copies is the automatic result of browsing the internet and requires no human intervention other than the decision to access the website in question. The on-screen copies and the cached copies are retained only for the ordinary duration of the processes associated with internet usage. In addition, the deletion of those copies does not require any human intervention. It is true that the cached copies may be deleted deliberately by the internet user concerned. However, if the internet user does not do this, those copies are normally replaced by other content after a certain time, which depends on the capacity of the cache and the extent and frequency of internet usage by the internet user concerned.

16      Next, the referring court states that the on-screen copy is an essential part of the technology involved, without which the website cannot be viewed, and remains on the screen until the internet user moves away from the site in question. The internet cache is a universal feature inherent in current internet-browsing technology, without which the internet would be unable to cope with current volumes of online data transmission and would not function properly. The creation of on-screen copies and cached copies is therefore indispensable to the correct and efficient operation of the technical processes involved in internet browsing.

17      Lastly, the referring court points out that, ordinarily, when an internet user browses the internet, he does not set out to make a copy of the image unless he chooses to download it or to print it out. His aim is to view the content of the website selected. The on-screen copies and the cached copies are therefore merely the incidental consequence of the use of his computer to view a website.

18      In the light of those considerations, the referring court concluded that on-screen copies and cached copies satisfy the conditions laid down in Article 5(1) of Directive 2001/29. None the less, a request for a preliminary ruling to the Court would, it found, be desirable for the purpose of ensuring the uniform application of EU law throughout the territory of the European Union.

19      In this connection, it explains that it is uncertain as to whether those copies are temporary, whether they are transient or incidental in nature and whether they are an integral part of the technological process. By contrast, it takes the view that such copies are bound to satisfy the other conditions laid down in Article 5(1) of Directive 2001/29.

20      In those circumstances, the Supreme Court of the United Kingdom decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘In circumstances where:

–        an end-user views a web-page without downloading, printing or otherwise setting out to make a copy of it;

–        copies of that web-page are automatically made on screen and in the internet “cache” on the end-user’s [computer] hard disk;

–        the creation of those copies is indispensable to the technical processes involved in correct and efficient internet browsing;

–        the screen copy remains on screen until the end-user moves away from the relevant web-page, when it is automatically deleted by the normal operation of the computer;

–        the cached copy remains in the cache until it is overwritten by other material as the end-user views further web-pages, when it is automatically deleted by the normal operation of the computer; and

–        the copies are retained for no longer than the ordinary processes associated with internet use referred to [in the fourth and fifth indents] continue;

are such copies (i) temporary, (ii) transient or incidental and (iii) an integral and essential part of the technological process within the meaning of Article 5(1) of Directive 2001/29/EC?’

 Consideration of the question referred

21      By its question, the referring court asks, in essence, whether Article 5 of Directive 2001/29 must be interpreted as meaning that the on-screen copies and the cached copies made by an end-user in the course of viewing a website satisfy the conditions that those copies must be temporary, that they must be transient or incidental in nature and that they must constitute an integral and essential part of a technological process, and, if so, whether those copies may be made without the authorisation of the copyright holders.

 Preliminary observations

22      Under Article 5(1) of Directive 2001/29, an act of reproduction is exempted from the reproduction right provided for in Article 2 of that directive on condition that:

–        it is temporary;

–        it is transient or incidental;

–        it is an integral and essential part of a technological process;

–        its sole purpose is to enable a transmission in a network between third parties by an intermediary or a lawful use of a work or other subject-matter to be made, and

–        it has no independent economic significance.

23      According to the case-law of the Court, the conditions set out above must be interpreted strictly, because Article 5(1) of Directive 2001/29 is a derogation from the general rule established by that directive that the copyright holder must authorise any reproduction of his protected work (Case C‑5/08 Infopaq International, EU:C:2009:465, paragraphs 56 and 57, and Joined Cases C‑403/08 and C‑429/08 Football Association Premier League and Others, EU:C:2011:631, paragraph 162).

24      None the less, it is apparent from that same case-law that the exemption provided for in that provision must allow and ensure the development and operation of new technologies, and safeguard a fair balance between the rights and interests of rights holders and of users of protected works who wish to avail themselves of those technologies (see Football Association Premier League and Others, EU:C:2011:631, paragraph 164).

 Whether the conditions laid down in Article 5(1) of Directive 2001/29 are satisfied

25      The referring court has stated that the on-screen copies and cached copies satisfy the fourth and fifth conditions set out in Article 5(1) of Directive 2001/29; accordingly, the present reference relates solely to whether the first three conditions are satisfied.

26      As regards the first condition, under which the act of reproduction must be temporary, it is apparent from the documents before the Court, first, that the on-screen copies are deleted when the internet user moves away from the website viewed. Secondly, the cached copies are normally automatically replaced by other content after a certain time, which depends on the capacity of the cache and on the extent and frequency of internet usage by the internet user concerned. It follows that those copies are temporary in nature.

27      In those circumstances, it must be held that those copies satisfy the first condition set out in Article 5(1) of Directive 2001/29.

28      Under the third condition, which it is appropriate to examine in second place, the acts of reproduction in question must be an integral and essential part of a technological process. That condition requires that two criteria both be fulfilled, namely that, first, the acts of reproduction are carried out entirely in the context of the implementation of a technological process and, secondly, the completion of those acts of reproduction is necessary, in that the technological process could not function correctly and efficiently without those acts (seeInfopaq International, EU:C:2009:465, paragraph 61, and order in Case C‑302/10 Infopaq International, EU:C:2012:16, paragraph 30).

29      Concerning, first of all, the first of those two criteria, it should be pointed out that, in the case in the main proceedings, the on-screen copies and the cached copies are created and deleted by the technological process used for viewing websites, with the result that they are made entirely in the context of that process.

30      It is irrelevant, in this regard, that the process in question is activated by the internet user and that it is terminated by a temporary act of reproduction such as the on-screen copy.

31      It follows from the case-law of the Court that, since Article 5(1) of Directive 2001/29 does not specify at which stage of the technological process the acts of temporary reproduction are deemed to be carried out, it cannot be excluded that such acts can initiate or terminate that process (order Infopaq International, EU:C:2012:16, paragraph 31).

32      Furthermore, it is apparent from the case-law that Article 5(1) of Directive 2001/29 does not preclude the technological process from involving human intervention and, in particular, from being activated or completed manually (see, to that effect, order Infopaq International, EU:C:2012:16, paragraph 32).

33      It follows that the on-screen copies and the cached copies must be regarded as being an integral part of the technological process at issue in the main proceedings.

34      Next, as regards the second of the criteria mentioned in paragraph 28 above, it is apparent from the order for reference that, even if the process at issue in the main proceedings can be implemented without the acts of reproduction concerned taking place, the fact remains that, in those circumstances, the process cannot function correctly and efficiently.

35      According to the order for reference, the cached copies greatly facilitate browsing on the internet, since without those copies, the internet would be unable to cope with current volumes of data transmitted online. Without the creation of such copies, the process used for viewing websites would be considerably less efficient and would not be able to function properly.

36      Concerning the on-screen copies, it has not been disputed that, at present, the technology for the viewing of websites on computers requires such copies to be made if it is to function correctly and efficiently.

37      Consequently, the on-screen copies and the cached copies must be regarded as being an essential part of the technological process at issue in the main proceedings.

38      It follows that the two categories of copies satisfy the third condition laid down in Article 5(1) of Directive 2001/29.

39      The second condition, which it is appropriate to examine in third place, comprises alternative criteria. The act of reproduction must be either transient or incidental.

40      As regards the first of the two criteria, it should be recalled that an act will be held to be ‘transient’, in the light of the technological process used, if its duration is limited to what is necessary for that process to work properly, it being understood that that process must be automated inasmuch as it deletes such an act automatically, without human intervention, once its function of enabling the completion of such a process has come to an end (see, to that effect, Infopaq International, EU:C:2009:465, paragraph 64).

41      Nevertheless, the requirement of automatic deletion does not preclude such a deletion from being preceded by human intervention directed at terminating the use of the technological process. As stated in paragraph 32 above, it is permissible for the technological process at issue in the main proceedings to be activated and completed manually.

42      Therefore, contrary to what the NLA contends, an act of reproduction does not lose its transient nature merely because the deletion by the system of the copy generated is preceded by the intervention of the end-user designed to terminate the technological process concerned.

43      As regards the other criterion mentioned in paragraph 39 above, an act of reproduction can be regarded as ‘incidental’ if it neither exists independently of, nor has a purpose independent of, the technological process of which it forms part.

44      In the case in the main proceedings, as regards, first, the on-screen copies, it should be recalled that these are automatically deleted by the computer at the moment when the internet user moves away from the website concerned and, therefore, at the moment when he terminates the technological process used for viewing that site.

45      In this connection, it is irrelevant, contrary to what the NLA contends, that the on-screen copy remains in existence for as long as the internet user keeps his browser open and stays on the website concerned because, during that period, the technological process used for viewing that site remains active.

46      Accordingly, it must be held that the period during which the on-screen copies remain in existence is limited to what is necessary for the proper functioning of the technological process used for viewing the website concerned. Consequently, those copies must be regarded as ‘transient’.

47      Next, so far as concerns the cached copies, it is true that, unlike the on-screen copies, they are not deleted at the time when the internet user terminates the technological process used for viewing the website concerned, since they are retained in the cache for the purposes of a possible subsequent viewing of that site.

48      However, it is not necessary that such copies be categorised as ‘transient’ once it has been established that they are incidental in nature in the light of the technological process used.

49      In this connection, it should be pointed out, first, that the technological process in question wholly determines the purpose for which those copies are created and used, although, as is apparent from paragraph 34 above, that process can function, albeit less efficiently, without such copies being made. Secondly, it is apparent from the documents before the Court that internet users employing the technological process at issue in the main proceedings cannot create the cached copies outside of that process.

50      It follows that the cached copies neither exist independently of, nor have a purpose independent of, the technological process at issue in the main proceedings and must, for that reason, be regarded as ‘incidental’.

51      In those circumstances, it must be held that the on-screen copies and the cached copies satisfy the second condition laid down in Article 5(1) of Directive 2001/29.

52      In the light of the foregoing, it must be held that the copies at issue in the main proceedings satisfy the first three conditions set out in Article 5(1) of Directive 2001/29.

53      Nevertheless, in order for it to be possible to rely on the exception laid down in that provision, as interpreted in paragraph 52 above, those copies must also satisfy the conditions laid down in Article 5(5) of Directive 2001/29 (see, to that effect, Football Association Premier League and Others, EU:C:2011:631, paragraph 181).

 Whether the conditions laid down in Article 5(5) of Directive 2001/29 are satisfied

54      Under Article 5(5) of Directive 2001/29, the carrying-out of a temporary act of reproduction is exempt from the reproduction right only in certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the rights holders.

55      In this connection, it should be stated, first of all, that, since the on-screen copies and the cached copies are created only for the purpose of viewing websites, they constitute, on that basis, a special case.

56      Next, although the copies make it possible, in principle, for internet users to access works displayed on websites without the authorisation of the copyright holders, the copies do not unreasonably prejudice the legitimate interests of those rights holders.

57      In this connection, it must be pointed out that the works are made available to internet users by the publishers of the websites, those publishers being required, under Article 3(1) of Directive 2001/29, to obtain authorisation from the copyright holders concerned, since that making available constitutes a communication to the public within the meaning of that article.

58      The legitimate interests of the copyright holders concerned are thus properly safeguarded.

59      In those circumstances, there is no justification for requiring internet users to obtain another authorisation allowing them to avail themselves of the same communication as that already authorised by the copyright holder in question.

60      Lastly, it must be held that the creation of the on-screen copies and the cached copies does not conflict with a normal exploitation of the works.

61      In this connection, it should be pointed out that the viewing of websites by means of the technological process at issue represents a normal exploitation of the works which makes it possible for internet users to avail themselves of the communication to the public made by the publisher of the website concerned. Given that the creation of the copies in question forms part of such viewing, it cannot operate to the detriment of such an exploitation of the works.

62      It follows from the foregoing that the on-screen copies and the cached copies satisfy the conditions laid down in Article 5(5) of Directive 2001/29.

63      In those circumstances, the answer to the question referred is that Article 5 of Directive 2001/29 must be interpreted as meaning that the on-screen copies and the cached copies made by an end-user in the course of viewing a website satisfy the conditions that those copies must be temporary, that they must be transient or incidental in nature and that they must constitute an integral and essential part of a technological process, as well as the conditions laid down in Article 5(5) of that directive, and that they may therefore be made without the authorisation of the copyright holders.

 Costs

64      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Fourth Chamber) hereby rules:

Article 5 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that the copies on the user’s computer screen and the copies in the internet ‘cache’ of that computer’s hard disk, made by an end-user in the course of viewing a website, satisfy the conditions that those copies must be temporary, that they must be transient or incidental in nature and that they must constitute an integral and essential part of a technological process, as well as the conditions laid down in Article 5(5) of that directive, and that they may therefore be made without the authorisation of the copyright holders.

JUDGMENT OF THE COURT (Fourth Chamber)

13 February 2014 (*)

(Reference for a preliminary ruling – Approximation of laws – Copyright and related rights – Directive 2001/29/EC – Information society – Harmonisation of certain aspects of copyright and related rights – Article 3(1) – Communication to the public – Meaning – Internet links (‘clickable links’) giving access to protected works)

In Case C‑466/12,

REQUEST for a preliminary ruling under Article 267 TFEU from the Svea hovrätt (Sweden), made by decision of 18 September 2012, received at the Court on 18 October 2012, in the proceedings

Nils Svensson,

Sten Sjögren,

Madelaine Sahlman,

Pia Gadd

v

Retriever Sverige AB,

THE COURT (Fourth Chamber),

composed of L. Bay Larsen, President of the Chamber, M. Safjan, J. Malenovský (Rapporteur), A. Prechal and S. Rodin, Judges,

Advocate General: E. Sharpston,

Registrar: C. Strömholm, Administrator,

having regard to the written procedure and further to the hearing on 7 November 2013,

after considering the observations submitted on behalf of:

–        Mr Svensson, Mr Sjögren and Ms Sahlman, by O. Wilöf, förbundsjurist,

–        Ms Gadd, by R. Gómez Cabaleiro, abogado, and M. Wadsted, advokat,

–        Retriever Sverige AB, by J. Åberg, M. Bruder and C. Rockström, advokater,

–        the French Government, by D. Colas, F.-X. Bréchot and B. Beaupère-Manokha, acting as Agents,

–        the Italian Government, by G. Palmieri, acting as Agent, and by S. Fiorentino, avvocato dello Stato,

–        the United Kingdom Government, by J. Beeko, acting as Agent, and by N. Saunders, Barrister,

–        the European Commission, by J. Samnadda and J. Enegren, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1        This request for a preliminary ruling concerns the interpretation of Article 3(1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10).

2        The request has been made in proceedings between Mr Svensson, Mr Sjögren, Ms Sahlman and Ms Gadd, the applicants in the main proceedings, and Retriever Sverige AB (‘Retriever Sverige’) concerning compensation allegedly payable to them for the harm they consider they have suffered as a result of the inclusion on that company’s website of clickable Internet links (hyperlinks) redirecting users to press articles in which the applicants hold the copyright.

 Legal context

 International law

 The WIPO Copyright Treaty

3        The World Intellectual Property Organisation (WIPO) adopted the WIPO Copyright Treaty (‘the WIPO Copyright Treaty’) in Geneva on 20 December 1996. It was approved on behalf of the European Community by Council Decision 2000/278/EC of 16 March 2000 (OJ 2000 L 89, p. 6).

4        Article 1(4) of the WIPO Copyright Treaty provides that the contracting parties are to comply with Articles 1 to 21 of the Convention for the Protection of Literary and Artistic Works, signed at Berne on 9 September 1886 (Paris Act of 24 July 1971), as amended on 28 September 1979 (‘the Berne Convention’).

 The Berne Convention

5        Article 20 of the Berne Convention, entitled ‘Special Agreements Among Countries of the Union’, states:

‘The Governments of the countries of the Union reserve the right to enter into special agreements among themselves, in so far as such agreements grant to authors more extensive rights than those granted by the Convention, or contain other provisions not contrary to this Convention. The provisions of existing agreements which satisfy these conditions shall remain applicable.’

 European Union law

6        Recitals 1, 4, 6, 7, 9 and 19 in the preamble to Directive 2001/29 state:

‘(1)      The Treaty provides for the establishment of an internal market and the institution of a system ensuring that competition in the internal market is not distorted. Harmonisation of the laws of the Member States on copyright and related rights contributes to the achievement of these objectives.

…

(4)      A harmonised legal framework on copyright and related rights, through increased legal certainty and while providing for a high level of protection of intellectual property, will foster substantial investment in creativity and innovation, including network infrastructure, and lead in turn to growth and increased competitiveness of European industry, both in the area of content provision and information technology and more generally across a wide range of industrial and cultural sectors. …

…

(6)      Without harmonisation at Community level, legislative activities at national level which have already been initiated in a number of Member States in order to respond to the technological challenges might result in significant differences in protection and thereby in restrictions on the free movement of services and products incorporating, or based on, intellectual property, leading to a refragmentation of the internal market and legislative inconsistency. The impact of such legislative differences and uncertainties will become more significant with the further development of the information society, which has already greatly increased transborder exploitation of intellectual property. This development will and should further increase. Significant legal differences and uncertainties in protection may hinder economies of scale for new products and services containing copyright and related rights.

(7)      The Community legal framework for the protection of copyright and related rights must, therefore, also be adapted and supplemented as far as is necessary for the smooth functioning of the internal market. To that end, those national provisions on copyright and related rights which vary considerably from one Member State to another or which cause legal uncertainties hindering the smooth functioning of the internal market and the proper development of the information society in Europe should be adjusted, and inconsistent national responses to the technological developments should be avoided, whilst differences not adversely affecting the functioning of the internal market need not be removed or prevented.

…

(9)      Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation. Their protection helps to ensure the maintenance and development of creativity in the interests of authors, performers, producers, consumers, culture, industry and the public at large. …

(19)      The moral rights of rightholders should be exercised according to the legislation of the Member States and the provisions of the Berne Convention …[,] the WIPO Copyright Treaty and of the WIPO Performances and Phonograms Treaty. …’

7        Article 3 of Directive 2001/29 provides:

‘1.   Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them.

…

3.      The rights referred to in paragraphs 1 and 2 shall not be exhausted by any act of communication to the public or making available to the public as set out in this Article.’

 The dispute in the main proceedings and the questions referred for a preliminary ruling

8        The applicants in the main proceedings, all journalists, wrote press articles that were published in the Göteborgs-Posten newspaper and on the Göteborgs-Posten website. Retriever Sverige operates a website that provides its clients, according to their needs, with lists of clickable Internet links to articles published by other websites. It is common ground between the parties that those articles were freely accessible on the Göteborgs-Posten newspaper site. According to the applicants in the main proceedings, if a client clicks on one of those links, it is not apparent to him that he has been redirected to another site in order to access the work in which he is interested. By contrast, according to Retriever Sverige, it is clear to the client that, when he clicks on one of those links, he is redirected to another site.

9        The applicants in the main proceedings brought an action against Retriever Sverige before the Stockholms tingsrätt (Stockholm District Court) in order to obtain compensation on the ground that that company had made use, without their authorisation, of certain articles by them, by making them available to its clients.

10      By judgment of 11 June 2010, the Stockholms tingsrätt rejected their application. The applicants in the main proceedings then brought an appeal against that judgment before the Svea hovrätt (Svea Court of Appeal).

11      Before that court, the applicants in the main proceedings claimed, inter alia, that Retriever Sverige had infringed their exclusive right to make their respective works available to the public, in that as a result of the services offered on its website, Retriever Sverige’s clients had access to the applicants’ works.

12      Retriever Sverige contends, in defence, that the provision of lists of Internet links to works communicated to the public on other websites does not constitute an act liable to affect the copyright in those works. Retriever Sverige also contends that it did not carry out any transmission of any protected work; its action is limited to indicating to its clients the websites on which the works that are of interest to them are to be found.

13      In those circumstances, the Svea hovrätt decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1)      If anyone other than the holder of copyright in a certain work supplies a clickable link to the work on his website, does that constitute communication to the public within the meaning of Article 3(1) of Directive [2001/29]?

(2)      Is the assessment under question 1 affected if the work to which the link refers is on a website on the Internet which can be accessed by anyone without restrictions or if access is restricted in some way?

(3)      When making the assessment under question 1, should any distinction be drawn between a case where the work, after the user has clicked on the link, is shown on another website and one where the work, after the user has clicked on the link, is shown in such a way as to give the impression that it is appearing on the same website?

(4)      Is it possible for a Member State to give wider protection to authors’ exclusive right by enabling communication to the public to cover a greater range of acts than provided for in Article 3(1) of Directive 2001/29?’

 Consideration of the questions referred

 The first three questions

14      By its first three questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 3(1) of Directive 2001/29 must be interpreted as meaning that the provision, on a website, of clickable links to protected works available on another website constitutes an act of communication to the public as referred to in that provision, where, on that other site, the works concerned are freely accessible.

15      In this connection, it follows from Article 3(1) of Directive 2001/29 that every act of communication of a work to the public has to be authorised by the copyright holder.

16      It is thus apparent from that provision 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’ (see, to that effect, Case C‑607/11 ITV Broadcasting and Others [2013] ECR, paragraphs 21 and 31).

17      As regards the first of those criteria, that is, the existence of an ‘act of communication’, this must be construed broadly (see, to that effect, Joined Cases C‑403/08 and C‑429/08 Football Association Premier League and Others [2011] ECR I‑9083, paragraph 193), in order to ensure, in accordance with, inter alia, recitals 4 and 9 in the preamble to Directive 2001/29, a high level of protection for copyright holders.

18      In the circumstances of this case, it must be observed that the provision, on a website, of clickable links to protected works published without any access restrictions on another site, affords users of the first site direct access to those works.

19      As is apparent from Article 3(1) of Directive 2001/29, for there to be an ‘act of communication’, it is sufficient, in particular, that a work is made available to a public in such a way that the persons forming that public may access it, irrespective of whether they avail themselves of that opportunity (see, by analogy, Case C‑306/05 SGAE [2006] ECR I‑11519, paragraph 43).

20      It follows that, in circumstances such as those in the case in the main proceedings, the provision of clickable links to protected works must be considered to be ‘making available’ and, therefore, an ‘act of communication’, within the meaning of that provision.

21      So far as concerns the second of the abovementioned criteria, that is, that the protected work must in fact be communicated to a ‘public’, it follows from Article 3(1) of Directive 2001/29 that, by the term ‘public’, that provision refers to an indeterminate number of potential recipients and implies, moreover, a fairly large number of persons (SGAE, paragraphs 37 and 38, and ITV Broadcasting and Others, paragraph 32).

22      An act of communication such as that made by the manager of a website by means of clickable links is aimed at all potential users of the site managed by that person, that is to say, an indeterminate and fairly large number of recipients.

23      In those circumstances, it must be held that the manager is making a communication to a public.

24      None the less, according to settled case-law, in order to be covered by the concept of ‘communication to the public’, within the meaning of Article 3(1) of Directive 2001/29, a communication, such as that at issue in the main proceedings, concerning the same works as those covered by the initial communication and made, as in the case of the initial communication, on the Internet, and therefore by the same technical means, must also be directed at a new public, that is to say, at a public that was not taken into account by the copyright holders when they authorised the initial communication to the public (see, by analogy, SGAE, paragraphs 40 and 42; order of 18 March 2010 in Case C‑136/09 Organismos Sillogikis Diacheirisis Dimiourgon Theatrikon kai Optikoakoustikon Ergon, paragraph 38; and ITV Broadcasting and Others, paragraph 39).

25      In the circumstances of this case, it must be observed that making available the works concerned by means of a clickable link, such as that in the main proceedings, does not lead to the works in question being communicated to a new public.

26      The public targeted by the initial communication consisted of all potential visitors to the site concerned, since, given that access to the works on that site was not subject to any restrictive measures, all Internet users could therefore have free access to them.

27      In those circumstances, it must be held that, where all the users of another site to whom the works at issue have been communicated by means of a clickable link could access those works directly on the site on which they were initially communicated, without the involvement of the manager of that other site, the users of the site managed by the latter must be deemed to be potential recipients of the initial communication and, therefore, as being part of the public taken into account by the copyright holders when they authorised the initial communication.

28      Therefore, since there is no new public, the authorisation of the copyright holders is not required for a communication to the public such as that in the main proceedings.

29      Such a finding cannot be called in question were the referring court to find, although this is not clear from the documents before the Court, that when Internet users click on the link at issue, the work appears in such a way as to give the impression that it is appearing on the site on which that link is found, whereas in fact that work comes from another site.

30      That additional circumstance in no way alters the conclusion that the provision on a site of a clickable link to a protected work published and freely accessible on another site has the effect of making that work available to users of the first site and that it therefore constitutes a communication to the public. However, since there is no new public, the authorisation of the copyright holders is in any event not required for such a communication to the public.

31      On the other hand, where a clickable link makes it possible for users of the site on which that link appears to circumvent restrictions put in place by the site on which the protected work appears in order to restrict public access to that work to the latter site’s subscribers only, and the link accordingly constitutes an intervention without which those users would not be able to access the works transmitted, all those users must be deemed to be a new public, which was not taken into account by the copyright holders when they authorised the initial communication, and accordingly the holders’ authorisation is required for such a communication to the public. This is the case, in particular, where the work is no longer available to the public on the site on which it was initially communicated or where it is henceforth available on that site only to a restricted public, while being accessible on another Internet site without the copyright holders’ authorisation.

32      In those circumstances, the answer to the first three questions referred is that Article 3(1) of Directive 2001/29 must be interpreted as meaning that the provision on a website of clickable links to works freely available on another website does not constitute an act of communication to the public, as referred to in that provision.

 The fourth question

33      By its fourth question, the referring court asks, in essence, whether Article 3(1) of Directive 2001/29 must be interpreted as precluding a Member State from giving wider protection to copyright holders by laying down that the concept of communication to the public includes a wider range of activities than those referred to in that provision.

34      In this connection, it is apparent, in particular, from recitals 1, 6 and 7 in the preamble to Directive 2001/29 that the objectives of the directive are, inter alia, to remedy the legislative differences and legal uncertainty that exist in relation to copyright protection. Acceptance of the proposition that a Member State may give wider protection to copyright holders by laying down that the concept of communication to the public also includes activities other than those referred to in Article 3(1) of Directive 2001/29 would have the effect of creating legislative differences and thus, for third parties, legal uncertainty.

35      Consequently, the objective pursued by Directive 2001/29 would inevitably be undermined if the concept of communication to the public were to be construed in different Member States as including a wider range of activities than those referred to in Article 3(1) of that directive.

36      It is true that recital 7 in the preamble to the directive indicates that the directive does not have the objective of removing or preventing differences that do not adversely affect the functioning of the internal market. Nevertheless, it must be observed that, if the Member States were to be afforded the possibility of laying down that the concept of communication to the public includes a wider range of activities than those referred to in Article 3(1) of the directive, the functioning of the internal market would be bound to be adversely affected.

37      It follows that Article 3(1) of Directive 2001/29 cannot be construed as allowing Member States to give wider protection to copyright holders by laying down that the concept of communication to the public includes a wider range of activities than those referred to in that provision.

38      Such a conclusion is not affected by the fact, highlighted by the applicants in the main proceedings in their written observations, that Article 20 of the Berne Convention stipulates that the signatory countries may enter into ‘special agreements’ among themselves with a view to granting copyright holders more extensive rights than those laid down in that Convention.

39      In this connection, suffice it to recall that, when an agreement allows, but does not require, a Member State to adopt a measure which appears to be contrary to Union law, the Member State must refrain from adopting such a measure (Case C‑277/10 Luksan [2012] ECR, paragraph 62).

40      Since the objective of Directive 2001/29 would inevitably be undermined if the concept of communication to the public were construed as including a wider range of activities than those referred to in Article 3(1) of that directive, a Member State must refrain from exercising the right granted to it by Article 20 of the Berne Convention.

41      Therefore, the answer to the fourth question is that Article 3(1) of Directive 2001/29 must be interpreted as precluding a Member State from giving wider protection to copyright holders by laying down that the concept of communication to the public includes a wider range of activities than those referred to in that provision.

 Costs

42      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Fourth Chamber) hereby rules:

1.      Article 3(1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, must be interpreted as meaning that the provision on a website of clickable links to works freely available on another website does not constitute an ‘act of communication to the public’, as referred to in that provision.

2.      Article 3(1) of Directive 2001/29 must be interpreted as precluding a Member State from giving wider protection to copyright holders by laying down that the concept of communication to the public includes a wider range of activities than those referred to in that provision.

JUDGMENT OF THE COURT (Fourth Chamber)

7 March 2013 (*)

(Directive 2001/29/EC — Article 3(1) — Broadcasting by a third party over the internet of signals of commercial television broadcasters — ‘Live streaming’ — Communication to the public)

In Case C‑607/11,

REQUEST for a preliminary ruling under Article 267 TFEU from the High Court of Justice (England and Wales) (Chancery Division) (United Kingdom), made by decision of 17 November 2011, received at the Court on 28 November 2011, in the proceedings

ITV Broadcasting Ltd,

ITV 2 Ltd,

ITV Digital Channels Ltd,

Channel 4 Television Corporation,

4 Ventures Ltd,

Channel 5 Broadcasting Ltd,

ITV Studios Ltd

v

TVCatchup Ltd,

THE COURT (Fourth Chamber),

composed of L. Bay Larsen, President of the Chamber, K. Lenaerts, Vice-President of the Court, acting as Judge of the Fourth Chamber, J. Malenovský (Rapporteur), U. Lõhmus and M. Safjan, Judges,

Advocate General: Y. Bot,

Registrar: K. Malacek, Administrator,

having regard to the written procedure and further to the hearing on 19 November 2012,

after considering the observations submitted on behalf of:

–        ITV Broadcasting Ltd, ITV 2 Ltd, ITV Digital Channels Ltd, Channel 4 Television Corporation, 4 Ventures Ltd, Channel 5 Broadcasting Ltd and ITV Studios Ltd, by J. Mellor, QC, J. Bowhill, Barrister, and P. Stevens and J. Vertes, Solicitors,

–        TVCatchup Ltd, by L. Gilmore, Solicitor, and M. Howe, QC,

–        the United Kingdom Government, by S. Ossowski and L. Christie, acting as Agents, and by C. May, Barrister,

–        the French Government, by G. de Bergues and M. Perrot, acting as Agents,

–        the Italian Government, by G. Palmieri, acting as Agent, and by M. Russo, avvocato dello Stato,

–        the Polish Government, by M. Szpunar and B. Majczyna, acting as Agents,

–        the Portuguese Government, by L. Inez Fernandes and N. Conde, acting as Agents,

–        the European Commission, by J. Samnadda and F. Wilman, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1        This request for a preliminary ruling concerns the interpretation of Article 3(1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10).

2        The request has been made in proceedings between, on the one hand, ITV Broadcasting Ltd, ITV 2 Ltd, ITV Digital Channels Ltd, Channel 4 Television Corporation, 4 Ventures Ltd, Channel 5 Broadcasting Ltd and ITV Studios Ltd and, on the other, TVCatchup Ltd (‘TVC’) concerning the distribution by TVC over the internet, substantially in real time, of television broadcasts transmitted by the claimants in the main proceedings.

 Legal context

 European Union law

3        Recitals 23 and 27 in the preamble to Directive 2001/29 state:

‘(23) This Directive should harmonise further the author’s right of communication to the public. This right should be understood in a broad sense covering all communication to the public not present at the place where the communication originates. This right should cover any such transmission or retransmission of a work to the public by wire or wireless means, including broadcasting. This right should not cover any other acts.

...

(27)      The mere provision of physical facilities for enabling or making a communication does not in itself amount to communication within the meaning of this Directive.’

4        Article 3 of that directive, entitled ‘Right of communication to the public of works and right of making available to the public other subject-matter’, provides:

‘1.      Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them.

...

3.      The rights referred to in paragraphs 1 and 2 shall not be exhausted by any act of communication to the public or making available to the public as set out in this Article.’

5        Article 2 of Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission (OJ 1993 L 248, p. 15) provides:

‘Member States shall provide an exclusive right for the author to authorise the communication to the public by satellite of copyright works ...’.

6        Article 8(1) of that directive states:

‘Member States shall ensure that when programmes from other Member States are retransmitted by cable in their territory the applicable copyright and related rights are observed and that such retransmission takes place on the basis of individual or collective contractual agreements between copyright owners, holders of related rights and cable operators.’

 English law

7        Section 20 of the Copyright, Designs and Patents Act 1988, in the version applicable to the facts in the main proceedings, entitled ‘Infringement by communication to the public’, provides:

‘1.      The communication to the public of the work is an act restricted by the copyright in –

(a)      a literary, dramatic, musical or artistic work,

(b)      a sound recording or film, or

(c)      a broadcast.

2.      References in this Part to communication to the public are to communication to the public by electronic transmission, and in relation to a work include –

(a)      the broadcasting of the work;

(b)      the making available to the public of the work by electronic transmission in such a way that members of the public may access it from a place and at a time individually chosen by them.’

 The dispute in the main proceedings and the questions referred for a preliminary ruling

8        The claimants in the main proceedings are commercial television broadcasters who own copyright under national law in the television broadcasts themselves and in films and other items which are included in their broadcasts. They are funded by advertising carried in their broadcasts.

9        TVC offers an internet television broadcasting service. The service permits its users to receive, via the internet, ‘live’ streams of free-to-air television broadcasts, including television broadcasts transmitted by the claimants in the main proceedings.

10      TVC ensures that those using its service can obtain access only to content which they are already legally entitled to watch in the United Kingdom by virtue of their television licence. The terms to which users must agree thus include the possession of a valid TV licence and a restriction of use of TVC services to the United Kingdom. The TVC website has the facility to authenticate the user’s location and to refuse access where the conditions imposed on users are not satisfied.

11      The TVC service is funded by advertising. Audiovisual advertising is shown before the user is able to view the live stream. The advertisements already contained in the original broadcasts are left unchanged and sent to the user as part of the stream. There is also ‘in-skin’ advertising, which appears on the user’s computer or other equipment.

12      For its activities, TVC uses four groups of servers, namely, (i) acquisition, (ii) encoding, (iii) origin and (iv) edge servers.

13      The input signals used by TVC are the normal terrestrial and satellite broadcast signals transmitted by the claimants in the main proceedings. The signals are captured via an aerial and then passed to the acquisition servers, which extract individual video streams from the received signal without altering them. The encoding servers then convert the incoming streams into a different compression standard. Next, the origin servers prepare streams of video for sending over the internet in a variety of formats. Beyond that point, the channels offered by TVC are processed further only if at least one TVC subscriber has requested that channel. If there is no request for a given channel, the signal is discarded.

14      Edge servers connect with a user’s computer or mobile telephone using the internet. When an edge server receives a request for a channel from a user, then, unless it is already streaming that channel to a different user, the edge server connects to the origin server which streams that channel. The software on the edge server creates a separate stream for each user who requests a channel through it. An individual packet of data leaving the edge server is thus addressed to an individual user, not to a class of users.

15      The streams provided by the edge servers can be in a variety of different formats. The formats used are: Adobe Flash streams (for computers), HTTP streams (for Apple mobile devices) and RTSP streams (for Android and Blackberry mobile telephones).

16      The claimants in the main proceedings instituted proceedings against TVC before the High Court of Justice (England and Wales) (Chancery Division) for breach of their copyright in their broadcasts and films, alleging, inter alia, that there is a communication of the works to the public prohibited by section 20 of the Copyright, Designs and Patents Act 1988, in the version applicable to the facts in the main proceedings, and by Article 3(1) of Directive 2001/29.

17      The High Court takes the view that it is not clear from the judgments in Case C‑306/05 SGAE [2006] ECR I‑11519 and in Joined Cases C‑431/09 and C‑432/09 Airfield NV and Canal Digitaal [2011] ECR I‑9363 whether there is a ‘communication to the public’ within the meaning of Article 3(1) of Directive 2001/29 in the case where an organisation such as TVC, in full knowledge of the consequences of its acts and in order to attract an audience to its own transmissions and advertisements, streams over the internet broadcasts to members of the public who would have been entitled to access the original broadcast signal using their own television sets or laptops in their own homes.

18      In those circumstances the High Court of Justice (England and Wales) (Chancery Division) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

‘1.      Does the right to authorise or prohibit a “communication to the public of their works by wire or wireless means” in Article 3(1) of [Directive 2001/29] extend to a case where:

(a)      Authors authorise the inclusion of their works in a terrestrial free-to-air television broadcast which is intended for reception either throughout the territory of a Member State or within a geographical area within a Member State;

(b)      A third party ([that is to say,] an organisation other than the original broadcaster) provides a service whereby individual subscribers within the intended area of reception of the broadcast who could lawfully receive the broadcast on a television receiver in their own homes may log on to the third party’s server and receive the content of the broadcast by means of an internet stream?

2.      Does it make any difference to the answer to the above question if:

(a)      The third party’s server allows only a “one-to-one” connection for each subscriber whereby each individual subscriber establishes his or her own internet connection to the server and every data packet sent by the server onto the internet is addressed to only one individual subscriber?

(b)      The third party’s service is funded by advertising which is presented “pre-roll” ([that is to say,] during the period of time after a subscriber logs on but before he or she begins to receive the broadcast content) or “in-skin” ([that is to say,] within the frame of the viewing software which displays the received programme on the subscriber’s viewing device but outside the programme picture) but the original advertisements contained within the broadcast are presented to the subscriber at the point where they are inserted in the programme by the broadcaster?

(c)      The intervening organisation is:

(i)      providing an alternative service to that of the original broadcaster, thereby acting in direct competition with the original broadcaster for viewers; or

(ii)      acting in direct competition with the original broadcaster for advertising revenues?’

 Consideration of the questions referred

 Question 1 and Question 2(a)

19      By Question 1 and Question 2(a), the referring court asks, in essence, whether the concept of ‘communication to the public’, within the meaning of Article 3(1) of Directive 2001/29, must be interpreted as meaning that it covers a retransmission of the works included in a terrestrial television broadcast:

–        where the retransmission is made by an organisation other than the original broadcaster,

–        by means of an internet stream made available to the subscribers of that other organisation who may receive the retransmission by logging on to its server,

–        on the assumption that those subscribers are within the area of reception of the terrestrial television broadcast and may lawfully receive the broadcast on a television receiver.

20      First of all, it is to be noted that the principal objective of Directive 2001/29 is to establish a high level of protection of authors, allowing them to obtain an appropriate reward for the use of their works, including on the occasion of communication to the public. It follows that ‘communication to the public’ must be interpreted broadly, as recital 23 in the preamble to the directive indeed expressly states (SGAE, paragraph 36, and Joined Cases C-403/08 and C-429/08 Football Association Premier League and Others [2011] ECR I-9083, paragraph 186).

21      In the first place, it is necessary to determine the meaning of the concept of ‘communication’ and reply to the question whether the activity at issue in the main proceedings comes within its scope.

22      In that connection, the Court notes that Directive 2001/29 does not define the concept of ‘communication’ exhaustively. Thus, the meaning and scope of that concept must be defined in the light of the context in which it occurs and also in the light of the objective referred to in paragraph 20 above.

23      It follows, in particular, from recital 23 in the preamble to Directive 2001/29 that the author’s right of communication to the public covers any transmission or retransmission of a work to the public not present at the place where the communication originates, by wire or wireless means, including broadcasting. In addition, it is apparent from Article 3(3) of that directive that authorising the inclusion of protected works in a communication to the public does not exhaust the right to authorise or prohibit other communications of those works to the public.

24      If follows that, by regulating the situations in which a given work is put to multiple use, the European Union legislature intended that each transmission or retransmission of a work which uses a specific technical means must, as a rule, be individually authorised by the author of the work in question.

25      Those findings are, moreover, supported by Articles 2 and 8 of Directive 93/83, which require fresh authorisation for a simultaneous, unaltered and unabridged retransmission by satellite or cable of an initial transmission of television or radio programmes containing protected works, even though those programmes may already be received in their catchment area by other technical means, such as by wireless means or terrestrial networks.

26      Given that the making of works available through the retransmission of a terrestrial television broadcast over the internet uses a specific technical means different from that of the original communication, that retransmission must be considered to be a ‘communication’ within the meaning of Article 3(1) of Directive 2001/29. Consequently, such a retransmission cannot be exempt from authorisation by the authors of the retransmitted works when these are communicated to the public.

27      That conclusion cannot be undermined by TVC’s objection that the making of the works available over the internet, as was done in the case in the main proceedings, is merely a technical means to ensure or improve reception of the terrestrial television broadcast in its catchment area.

28      Admittedly, it follows from the case-law of the Court that a mere technical means to ensure or improve reception of the original transmission in its catchment area does not constitute a ‘communication’ within the meaning of Article 3(1) of Directive 2001/29 (see, to that effect, Football Association Premier League and Others, paragraph 194, and Airfield and Canal Digitaal, paragraphs 74 and 79).

29      Thus, the intervention of such a technical means must be limited to maintaining or improving the quality of the reception of a pre-existing transmission and cannot be used for any other transmission.

30      In the present case, however, the intervention by TVC consists in a transmission of the protected works at issue which is different from that of the broadcasting organisation concerned. TVC’s intervention is in no way intended to maintain or improve the quality of the transmission by that other broadcasting organisation. In those circumstances, that intervention cannot be considered to be a mere technical means within the meaning specified in paragraph 28 above.

31      In the second place, in order to be categorised as a ‘communication to the public’ within the meaning of Article 3(1) of Directive 2001/29, the protected works must also in fact be communicated to a ‘public’.

32      In that connection, it follows from the case-law of the Court that the term ‘public’ in Article 3(1) of Directive 2001/29 refers to an indeterminate number of potential recipients and implies, moreover, a fairly large number of persons (see, to that effect, SGAE, paragraphs 37 and 38 and the case‑law cited).

33      As regards that last criterion specifically, the cumulative effect of making the works available to potential recipients should be taken into account. In that connection, it is in particular relevant to ascertain the number of persons who have access to the same work at the same time and successively (SGAE, paragraph 39).

34      In that context, it is irrelevant whether the potential recipients access the communicated works through a one-to-one connection. That technique does not prevent a large number of persons having access to the same work at the same time.

35      In the present case, it should be noted that the retransmission of the works over the internet at issue in the main proceedings is aimed at all persons resident in the United Kingdom who have an internet connection and who claim to hold a television licence in that State. Those people may access the protected works at the same time, in the context of the ‘live streaming’ of television programmes on the internet.

36      Thus, the retransmission in question is aimed at an indeterminate number of potential recipients and implies a large number of persons. Consequently, it must be held that, by the retransmission in question, the protected works are indeed communicated to a ‘public’ within the meaning of Article 3(1) of Directive 2001/29.

37      However, TVC contends that the retransmission at issue in the main proceedings does not satisfy the requirement that there must be a new public, which is none the less necessary within the meaning of the judgments in SGAE (paragraph 40), Football Association Premier League and Others (paragraph 197), and Airfield and Canal Digitaal (paragraph 72). The recipients of the retransmission effected by TVC are, it submits, entitled to follow the televised broadcast, identical in content, using their own television sets.

38      In that connection, it should be noted that the situations examined in the cases which gave rise to the abovementioned judgments differ clearly from the situation at issue in the case in the main proceedings. In those cases, the Court examined situations in which an operator had made accessible, by its deliberate intervention, a broadcast containing protected works to a new public which was not considered by the authors concerned when they authorised the broadcast in question.

39      By contrast, the main proceedings in the present case concern the transmission of works included in a terrestrial broadcast and the making available of those works over the internet. As is apparent from paragraphs 24 to 26 above, each of those two transmissions must be authorised individually and separately by the authors concerned given that each is made under specific technical conditions, using a different means of transmission for the protected works, and each is intended for a public. In those circumstances, it is no longer necessary to examine below the requirement that there must be a new public, which is relevant only in the situations on which the Court of Justice had to rule in the cases giving rise to the judgments in SGAE, Football Association Premier League and Others and Airfield and Canal Digitaal.

40      In the light of the foregoing, the answer to Question 1 and Question 2(a) is that the concept of ‘communication to the public’, within the meaning of Article 3(1) of Directive 2001/29, must be interpreted as meaning that it covers a retransmission of the works included in a terrestrial television broadcast

–        where the retransmission is made by an organisation other than the original broadcaster,

–        by means of an internet stream made available to the subscribers of that other organisation who may receive that retransmission by logging on to its server,

–        even though those subscribers are within the area of reception of that terrestrial television broadcast and may lawfully receive the broadcast on a television receiver.

 Question 2(b)

41      By Question 2(b), the referring court asks, in essence, whether the answer to Question 1 is influenced by the fact that a retransmission, such as that at issue in the main proceedings, is funded by advertising and is therefore of a profit-making nature.

42      In that connection, the Court has indeed held that it is not irrelevant that a ‘communication’ within the meaning of Article 3(1) of Directive 2001/29 is of a profit-making nature (Football Association Premier League and Others, paragraph 204). However, it has acknowledged that a profit-making nature is not necessarily an essential condition for the existence of a communication to the public (see, to that effect, SGAE, paragraph 44).

43      Consequently, a profit-making nature does not determine conclusively whether a retransmission, such as that at issue in the main proceedings, is to be categorised as a ‘communication’ within the meaning of Article 3(1) of Directive 2001/29.

44      The answer to Question 2(b) is therefore that the answer to Question 1 is not influenced by the fact that a retransmission, such as that at issue in the main proceedings, is funded by advertising and is therefore of a profit-making nature.

 Question 2(c)

45      By Question 2(c), the referring court asks in, essence, whether the answer to Question 1 is influenced by the fact that a retransmission, such as that at issue in the main proceedings, is made by an organisation which is acting in direct competition with the original broadcaster.

46      In that connection, it suffices to note that it follows neither from Directive 2001/29 nor from the case-law of the Court that a competitive relationship between the organisations making real-time broadcasts of works protected by copyright or subsequent retransmissions of those works is relevant for the purpose of categorising a transmission as a ‘communication to the public’ within the meaning of Article 3(1) of Directive 2001/29.

47      Consequently, the answer to Question 2(c) is that the answer to Question 1 is not influenced by the fact that a retransmission, such as that at issue in the main proceedings, is made by an organisation which is acting in direct competition with the original broadcaster.

 Costs

48      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Fourth Chamber) hereby rules:

1.      The concept of ‘communication to the public’, within the meaning of Article 3(1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, must be interpreted as meaning that it covers a retransmission of the works included in a terrestrial television broadcast

–        where the retransmission is made by an organisation other than the original broadcaster,

–        by means of an internet stream made available to the subscribers of that other organisation who may receive that retransmission by logging on to its server,

–        even though those subscribers are within the area of reception of that terrestrial television broadcast and may lawfully receive the broadcast on a television receiver.

2.      The answer to Question 1 is not influenced by the fact that a retransmission, such as that at issue in the main proceedings, is funded by advertising and is therefore of a profit-making nature.

3.      The answer to Question 1 is not influenced by the fact that a retransmission, such as that at issue in the main proceedings, is made by an organisation which is acting in direct competition with the original broadcaster.

Case C‑466/12

Nils Svensson and Others

v

Retriever Sverige AB

(Request for a preliminary ruling from the Svea hovrätt)

(Reference for a preliminary ruling — Approximation of laws — Copyright and related rights — Directive 2001/29/EC — Information society — Harmonisation of certain aspects of copyright and related rights — Article 3(1) — Communication to the public — Meaning — Internet links (‘clickable links’) giving access to protected works)

Summary — Judgment of the Court (Fourth Chamber), 13 February 2014

1.        Approximation of laws — Copyright and related rights — Directive 2001/29 — Harmonisation of certain aspects of copyright and related rights in the information society — Communication to the public — Meaning — Making available to the public, on a website, of clickable links to works freely available on another website — Not included

(European Parliament and Council Directive 2001/29, Art. 3(1))

2.        Approximation of laws — Copyright and related rights — Directive 2001/29 — Harmonisation of certain aspects of copyright and related rights in the information society — Communication to the public — Meaning — Not permissible for Member States to give wider protection to copyright holders by including within the concept of communication to the public a wider range of activities than those referred to in Article 3(1) of Directive 2001/29

(European Parliament and Council Directive 2001/29, Art. 3(1))

3.        International agreements — Agreements concluded by the Member States — Agreements preceding a Member State’s accession to the European Union — Agreement allowing a Member State to adopt a measure contrary to EU law — Obligation on the Member State to refrain from adopting such a measure

(Art. 351 TFEU)

1.        Article 3(1) of Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that the provision on a website of clickable links to works freely available on another website does not constitute an ‘act of communication to the public’, as referred to in that provision.

In this connection, 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’.

The provision, on a website, of clickable links to protected works published without any access restrictions on another site, affords users of the first site direct access to those works and must be considered to be ‘making available’ and, therefore, an ‘act of communication’, within the meaning of Article 3(1) of Directive 2001/29. Such an act of communication is aimed at all potential users of the website, that is to say, an indeterminate and fairly large number of recipients.

None the less, in order to be covered by the concept of ‘communication to the public’, within the meaning of Article 3(1) of Directive 2001/29, a communication concerning the same works as those covered by the initial communication and made, as in the case of the initial communication, on the Internet, and therefore by the same technical means, must also be directed at a new public, that is to say, at a public that was not taken into account by the copyright holders when they authorised the initial communication to the public. Making available the works concerned by means of a clickable link does not lead to the works in question being communicated to a new public.

In those circumstances, where all the users of another site to whom the works at issue have been communicated by means of a clickable link could access those works directly on the site on which they were initially communicated, without the involvement of the manager of that other site, the users of the site managed by the latter must be deemed to be potential recipients of the initial communication and, therefore, as being part of the public taken into account by the copyright holders when they authorised the initial communication.

Therefore, since there is no new public, the authorisation of the copyright holders is not required for such a communication to the public.

(see paras 16, 18, 20, 22, 24, 25, 27, 28, 32, operative part 1)

2.        Article 3(1) of Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as precluding a Member State from giving wider protection to copyright holders by laying down that the concept of communication to the public includes a wider range of activities than those referred to in that provision.

It is apparent, in particular, from recitals 1, 6 and 7 in the preamble to Directive 2001/29 that the objectives of the directive are, inter alia, to remedy the legislative differences and legal uncertainty that exist in relation to copyright protection. Acceptance of the proposition that a Member State may give wider protection to copyright holders by laying down that the concept of communication to the public also includes activities other than those referred to in Article 3(1) of Directive 2001/29 would have the effect of creating legislative differences and thus, for third parties, legal uncertainty. Consequently, the objective pursued by Directive 2001/29 would inevitably be undermined if the concept of communication to the public were to be construed in different Member States as including a wider range of activities than those referred to in Article 3(1) of that directive.

Furthermore, it must be observed that, if the Member States were to be afforded the possibility of laying down that the concept of communication to the public includes a wider range of activities than those referred to in Article 3(1) of the directive, the functioning of the internal market would be bound to be adversely affected.

(see paras 34-36, 41, operative part 2)

3.        See the text of the decision.

(see para. 39)

[See also summary of the case from IPKat]

JUDGMENT OF THE COURT (Fourth Chamber)

22 January 2015 (*)

(Reference for a preliminary ruling — Intellectual property — Copyright and related rights — Directive 2001/29/EC — Article 4 — Distribution right — Exhaustion rule — Concept of ‘object’ — Transfer of the image of a protected work from a paper poster to a painter’s canvas — Replacement of the medium — Impact on exhaustion)

In Case C‑419/13,

REQUEST for a preliminary ruling under Article 267 TFEU from the Hoge Raad der Nederlanden (Netherlands), made by decision of 12 July 2013, received at the Court on 24 July 2013, in the proceedings

Art & Allposters International BV

v

Stichting Pictoright,

THE COURT (Fourth Chamber),

composed of L. Bay Larsen, President of the Chamber, K. Lenaerts, Vice-President of the Court, acting as a Judge of the Fourth Chamber, K. Jürimäe (Rapporteur), M. Safjan and A. Prechal, Judges,

Advocate General: P. Cruz Villalón,

Registrar: C. Strömholm, Administrator,

having regard to the written procedure and further to the hearing on 22 May 2014,

after considering the observations submitted on behalf of:

–        Art & Allposters International BV, by T. Cohen Jehoram and P.N.A.M. Claassen, advocaten,

–        Stichting Pictoright, by M. van Heezik, A.M. van Aerde and E.J. Hengeveld, advocaten,

–        the French Government, by D. Colas and F.-X. Bréchot, acting as Agents,

–        the United Kingdom Government, by V. Kaye, acting as Agent, assisted by N. Saunders, Barrister,

–        the European Commission, by J. Samnadda and F. Wilman, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 11 September 2014,

gives the following

Judgment

1        This request for a preliminary ruling concerns the interpretation of Article 4 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10).

2        The request has been made in proceedings between Art & Allposters International BV (‘Allposters’) and Stichting Pictoright (‘Pictoright’) regarding a possible infringement, by Allposters, of copyright exploited by Pictoright, resulting from the transfer of images of protected works from a paper poster to a painter’s canvas and the sale of those images on that new medium.

 Legal context

 International law

 WIPO Copyright Treaty

3        The World Intellectual Property Organization (WIPO) adopted the WIPO Copyright Treaty in Geneva on 20 December 1996. That Treaty was approved on behalf of the European Community by Council Decision 2000/278/EC of 16 March 2000 (OJ 2000 L 89, p. 6).

4        The Treaty provides, in Article 1(4) thereof, that the Contracting Parties are to comply with Articles 1 to 21 and the Appendix of the Convention for the Protection of Literary and Artistic Works, signed at Berne on 9 September 1886 (Paris Act of 24 July 1971), as amended on 28 September 1979 (‘the Berne Convention’).

5        Article 6 of the WIPO Copyright Treaty, entitled ‘Right of distribution’, provides:

‘(1)      Authors of literary and artistic works shall enjoy the exclusive right of authorising the making available to the public of the original and copies of their works through sale or other transfer of ownership.

(2)       Nothing in this Treaty shall affect the freedom of Contracting Parties to determine the conditions, if any, under which the exhaustion of the right in paragraph 1 applies after the first sale or other transfer of ownership of the original or a copy of the work with the authorisation of the author.’

 Berne Convention

6        Article 12 of the Berne Convention, entitled ‘Right of Adaptation, Arrangement and Other Alteration’, provides:

‘Authors of literary or artistic works shall enjoy the exclusive right of authorising adaptations, arrangements and other alterations of their works.’

 EU law

7        Recitals 9, 10, 28 and 31 of Directive 2001/29 state:

‘(9)      Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation. …

(10)      If authors or performers are to continue their creative and artistic work, they have to receive an appropriate reward for the use of their work. …

…

(28)      Copyright protection under this Directive includes the exclusive right to control distribution of the work incorporated in a tangible article. The first sale in the Community of the original of a work or copies thereof by the rightholder or with his consent exhausts the right to control resale of that object in the Community. This right should not be exhausted in respect of the original or of copies thereof sold by the rightholder or with his consent outside the Community. …

…

(31)      A fair balance of rights and interests between the different categories of rightholders, as well as between the different categories of rightholders and users of protected subject-matter must be safeguarded. The existing exceptions and limitations to the rights as set out by the Member States have to be reassessed in the light of the new electronic environment. Existing differences in the exceptions and limitations to certain restricted acts have direct negative effects on the functioning of the internal market of copyright and related rights. Such differences could well become more pronounced in view of the further development of transborder exploitation of works and cross-border activities. In order to ensure the proper functioning of the internal market, such exceptions and limitations should be defined more harmoniously. The degree of their harmonisation should be based on their impact on the smooth functioning of the internal market.’

8        Article 2 of that directive, entitled ‘Reproduction right’, is worded as follows:

‘Member States shall provide for the exclusive right to authorise or prohibit direct or indirect, temporary or permanent reproduction by any means and in any form, in whole or in part:

(a)      for authors, of their works;

…’

9        Article 4 of the same directive, entitled ‘Distribution right’, provides:

‘(1)      Member States shall provide for authors, in respect of the original of their works or of copies thereof, the exclusive right to authorise or prohibit any form of distribution to the public by sale or otherwise.

(2)      The distribution right shall not be exhausted within the Community in respect of the original or copies of the work, except where the first sale or other transfer of ownership in the Community of that object is made by the rightholder or with his consent.’

 Netherlands law

10      Article 4(1) of Directive 2001/29 was transposed into national law by Articles 1 and 12(1)(1) of the Law on copyright of 23 September 1912 (Auteurswet; ‘Law on copyright’).

11      Article 1 of the Law on Copyright provides:

‘Copyright is the exclusive right of the author of a literary, scientific or artistic work or his successors in title, to publish it and to reproduce it, subject to the limitations laid down by law.’

12      Article 12(1) of that law provides:

‘Publication of a literary, scientific or artistic work shall include:

1      the publication of a reproduction of the work, in full or in part …’

13      Article 12b of the Law, which is intended to transpose Article 4(2) of Directive 2001/29 into national law, is worded as follows:

‘If a copy of a literary, scientific or artistic work has been distributed by transfer of ownership for the first time in one of the Member States of the European Union or in a State which is a party to the European Economic Area [(EEA)] by its author or his successor in title or with his consent, the distribution of that copy in another manner, with the exception of renting or lending, does not constitute an infringement of copyright.’

 The dispute in the main proceedings and the questions referred for a preliminary ruling

14      Pictoright is a Netherlands copyright collecting society which looks after the interests of copyright owners affiliated to it. It also safeguards, in the Netherlands, the interests of foreign artists and their heirs on the basis of agreements concluded with foreign entities with the same purpose. Pictoright is mandated to exploit copyright on behalf of the rightholders in particular by licensing and by taking action against infringements of that copyright.

15      Allposters, through its websites, markets posters and other reproductions depicting the works of famous painters, which are covered by the copyright exploited by Pictoright. Among other products, Allposters offers its clients reproductions in the form of posters, framed posters, posters on wood and images on canvases. In order to produce an image on canvas, a synthetic coating (laminate) is first applied to a paper poster depicting the chosen work. Next, the image on the poster is transferred from the paper to a canvas by means of a chemical process. Finally, that canvas is stretched over a wooden frame. The image of the work disappears from the paper backing during the process. Allposters refers to both it and its result as ‘canvas transfer’.

16      Pictoright opposed the sale of canvas transfers reproducing works protected by copyright without the consent of its clients, the holders of that copyright, calling on Allposters to cease that activity and threatening legal proceedings.

17      As Allposters refused to respond to that request, Pictoright brought an action against it before the Rechtbank Roermond (Roermond District Court) seeking that it be ordered to cease all infringement, direct or indirect, of the rightholders’ copyright and moral rights.

18      By decision of 22 September 2010, the Rechtbank Roermond dismissed that action. Pictoright then appealed against that decision before the Gerechtshof te ’s-Hertogenbosch (Regional Court of Appeal, ’s-Hertogenbosch) which, by judgment of 3 January 2012, annulled the decision and upheld most of Pictoright’s claims.

19      In the latter court’s view, the sale of a poster or canvas which reproduces an artistic work constitutes a publication within the meaning of Netherlands law. It followed from the judgment of the Hoge Raad der Nederlanden of 19 January 1979 (NJ 1979/412, Poortvliet) that there is a new publication, within the meaning of Article 12 of the Law on copyright, where the copy of a work placed on the market by the rightholder is distributed to the public under another form, to the extent that whoever markets that new form of that copy has new opportunities for exploitation (‘the Poortvliet doctrine’). Taking the view that the paper poster, marketed with the copyright holder’s consent, underwent a major alteration offering Allposters new opportunities for exploitation, in so far as that alteration allows it to charge higher prices and to target a different group, the Gerechtshof te ’s-Hertogenbosch found that the marketing of canvas transfers constituted a publication which was prohibited under national law and rejected Allposters’ argument that the distribution right had been exhausted.

20      Allposters brought an appeal in cassation before the referring court. It challenges inter alia the relevance of the Poortvliet doctrine and the interpretation given to the concepts of ‘exhaustion’ and ‘publication’, which, it submits, are harmonised within the European Union. Allposters considers that there is exhaustion of the distribution right, within the meaning of Article 4(2) of Directive 2001/29, upon distribution of a work incorporated into a tangible object if it has been offered for sale by the copyright holder or with his consent. Any subsequent alteration to that object has no impact on exhaustion of the distribution right. Pictoright maintains, on the other hand, that, in the absence of harmonisation of the adaptation right in EU law in the field of copyright, the Poortvliet doctrine remains valid or is at least in compliance with EU law.

21      In those circumstances, the Hoge Raad der Nederlanden decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

‘(1)      Does Article 4 of Directive 2001/29 govern the answer to the question whether the distribution right of the copyright holder may be exercised with regard to the reproduction of a copyright-protected work which has been sold and delivered within the [EEA] by or with the consent of the rightholder in the case where that reproduction had subsequently undergone an alteration in respect of its form and is again brought into circulation in that form?

(2)      (a)   If the answer to Question 1 is in the affirmative, does the fact that there has been an alteration as referred to in Question 1 have any bearing on the answer to the question whether exhaustion within the terms of Article 4(2) of [Directive 2001/29] is hindered or interrupted?

(b)      If the answer to Question 2(a) is in the affirmative, what criteria should then be applied in order to determine whether an alteration exists in respect of the form of the reproduction which hinders or interrupts exhaustion within the terms of Article 4(2) of [Directive 2001/29]?

(c)      Do those criteria leave room for the criterion developed in Netherlands national law to the effect that there is no longer any question of exhaustion on the sole ground that the reseller has given the reproductions a different form and has disseminated them among the public in that form (judgment of the Hoge Raad of 19 January 1979 in Poortvliet, NJ 1979/412)?’

 Consideration of the questions referred for a preliminary ruling

22      The jurisdiction of the Court, in the procedure laid down in Article 267 TFEU, is confined to considering provisions of EU law only and it has no jurisdiction to rule on the compatibility of national law, including the case-law of the Member States, with EU law (see, to that effect,Triveneta Zuccheri and Others v Commission, C‑347/87, EU:C:1990:129, paragraph 16, and Schwarz, C‑321/07, EU:C:2009:104, paragraph 48).

23      In those circumstances, the questions referred, which should be considered together, must be understood to mean that the referring court is asking, in essence, whether the rule of exhaustion of the distribution right set out in Article 4(2) of Directive 2001/29 applies in a situation where a reproduction of a protected work, after having been marketed in the European Union with the copyright holder’s consent, has undergone an alteration of its medium, such as the transfer of that reproduction from a paper poster onto a canvas, and is placed on the market again in its new form.

24      As a preliminary matter, it should be noted that Pictoright is of the view that, owing to the significant alteration undergone by the posters in the process of transfer onto the canvases of reproductions of protected works, those canvases are adaptations of those works, which are not covered by the distribution right. It submits that the adaptation right in the field of copyright is not harmonised in EU law but is governed by Article 12 of the Berne Convention.

25      It should therefore be assessed whether the facts at issue in the main proceedings fall within the scope of Directive 2001/29.

26      With regard to the adaptation right, it is true that Article 12 of the Berne Convention confers on authors of literary or artistic works an exclusive right of authorising adaptations, arrangements and other alterations of their works and that there is no equivalent provision in Directive 2001/29.

27      However, and without having to interpret the concept of ‘adaptation’ within the meaning of Article 12, it is sufficient to state that both the paper poster and the canvas transfer contain the image of a protected artistic work and thus fall within the scope of Article 4(1) of Directive 2001/29 as copies of a protected work marketed within the European Union. That provision recognises the exclusive right of authors, in respect of the original of their works or of copies thereof, to authorise or prohibit any form of distribution to the public by sale or otherwise.

28      It must therefore be held that the facts at issue in the main proceedings fall within the scope of Article 4 of Directive 2001/29.

29      With regard to the conditions of application of the exhaustion rule, it follows from Article 4(2) of Directive 2001/29 that the distribution right is not exhausted in respect of the original or copies of a work, except where the first sale or other transfer of ownership in the European Union of that object is made by the rightholder or with his consent.

30      Moreover, according to the case-law of the Court, Article 4(2) does not leave it open to the Member States to provide for an exhaustion rule other than that set out in that provision, to the extent that, as follows from recital 31 of Directive 2001/29, differences in the national laws governing exhaustion of the right of distribution are likely to affect directly the smooth functioning of the internal market (see, to that effect, judgment in Laserdisken, C‑479/04, EU:C:2006:549, paragraphs 24 and 56).

31      Taking the wording of that article as a basis, the Court found that for the distribution right to be exhausted, two conditions must be fulfilled: first, the original of a work or copies thereof must have been placed on the market by the rightholder or with his consent and, second, they must have been placed on the market in the European Union (see judgment in Laserdisken, EU:C:2006:549, paragraph 21).

32      In the case in the main proceedings, it is undisputed that posters reproducing works of famous painters, which are covered by the copyright the holders of which are represented by Pictoright, have been placed on the market in the EEA with the consent of those rightholders.

33      However, the parties in the main proceedings are in disagreement, first, as to whether exhaustion of the distribution right covers the tangible object into which a work or its copy is incorporated or the author’s own intellectual creation and, secondly, as to whether the alteration of the medium, as undertaken by Allposters, has an impact on exhaustion of the exclusive distribution right.

34      With regard, first, to the purpose of the distribution right, Article 4(2) of Directive 2001/29 refers to the first sale or other transfer of ownership of ‘that object’.

35      In addition, according to recital 28 to Directive 2001/28, ‘[c]opyright protection under [that directive] includes the exclusive right to control distribution of the work incorporated in a tangible article’. According to that recital, the ‘first sale in the [European Union] of the original of a work or copies thereof by the rightholder or with his consent exhausts the right to control resale of that object in the [European Union]’.

36      Similarly, according to settled case-law of the Court, literary and artistic works may be the subject of commercial exploitation, whether by way of public performance or of the reproduction and marketing of the recordings made of them (judgment in FDV, C‑61/97, EU:C:1998:422, paragraph 14 and the case-law cited).

37      It follows from the foregoing considerations that the EU legislature, by using the terms ‘tangible article’ and ‘that object’, wished to give authors control over the initial marketing in the European Union of each tangible object incorporating their intellectual creation.

38      That finding, as the European Commission correctly states, is supported by international law, and in particular by the WIPO Copyright Treaty, in the light of which Directive 2001/29 must be interpreted as far as possible (see, to that effect, judgments in Laserdisken, EU:C:2006:549, paragraphs 39 and 40; Peek & Cloppenburg, C‑456/06, EU:C:2008:232, paragraphs 30 and 31; Football Association Premier League and Others, C‑403/08 and C‑429/08, EU:C:2011:631, paragraph 189; and Donner, C‑5/11, EU:C:2012:370, paragraph 23).

39      Article 6(1) of that Treaty provides that authors of literary and artistic works are to enjoy the exclusive right of authorising the making available to the public of the original and copies of their works through sale or other transfer of ownership. In that regard, the significance of the term ‘copy’ was explained by the Contracting Parties by an agreed statement concerning Articles 6 and 7 of the Treaty adopted by the Diplomatic Conference of 20 December 1996, at which the Treaty itself was also adopted. According to that statement, ‘the expressions “copies” and “original and copies” being subject to the right of distribution and the right of rental under the said Articles, refer exclusively to fixed copies that can be put into circulation as tangible objects’.

40      Accordingly, it should be found that exhaustion of the distribution right applies to the tangible object into which a protected work or its copy is incorporated if it has been placed onto the market with the copyright holder’s consent.

41      In the second place, it must be assessed whether the fact that the object, which was marketed with the copyright holder’s consent, has undergone subsequent alterations to its physical medium has an impact on exhaustion of the distribution right within the meaning of Article 4(2) of Directive 2001/29.

42      In the case in the main proceedings, the alteration carried out consists in a transfer of the image of an artistic work from a paper poster onto a painter’s canvas, by means of the process described in paragraph 15 of this judgment, resulting in the replacement of the paper medium by a canvas. It follows from the observations of the parties in the main proceedings that that technique increases the durability of the reproduction, improves the quality of the image in comparison with the poster and provides a result closer to the original of the work.

43      In that regard, it must be held that, as the French Government correctly argues, a replacement of the medium, as was carried out in the case in the main proceedings, results in the creation of a new object incorporating the image of the protected work, whereas the poster itself ceases to exist. Such an alteration of the copy of the protected work, which provides a result closer to the original, is actually sufficient to constitute a new reproduction of that work, within the meaning of Article 2(a) of Directive 2001/29, which is covered by the exclusive right of the author and requires his authorisation.

44      Allposters nevertheless maintains that the transfer onto canvas cannot be categorised as reproduction on the ground that there is no multiplication of copies of the protected work since the image is transferred and no longer appears on the poster. It explains that the ink which reproduces the work is not altered and that the work itself is not affected in any way.

45      That argument cannot be accepted. The fact that the ink is saved during the transfer cannot affect the finding that the image’s medium has been altered. What is important is whether the altered object itself, taken as a whole, is, physically, the object that was placed onto the market with the consent of the rightholder. That does not appear to be the case in the dispute in the main proceedings.

46      Consequently, the consent of the copyright holder does not cover the distribution of an object incorporating his work if that object has been altered after its initial marketing in such a way that it constitutes a new reproduction of that work. In such an event, the distribution right of such an object is exhausted only upon the first sale or transfer of ownership of that new object with the consent of the rightholder.

47      That interpretation is supported by the principal objective of Directive 2001/29 which, according to recitals 9 and 10 of that directive, is to establish a high level of protection of, inter alia, authors, allowing them to obtain an appropriate reward for the use of their works (see judgments in SGAE, C‑306/05, EU:C:2006:764, paragraph 36; Peek & Cloppenburg, EU:C:2008:232, paragraph 37; and Football Association Premier League and Others, EU:C:2011:631, paragraph 186).

48      However, it follows from the arguments advanced before the Court by the parties in the main proceedings that the copyright holders did not consent to the distribution of the canvas transfers, at least not expressly. Accordingly, applying the rule of exhaustion of the distribution right would deprive those rightholders of the possibility of prohibiting those objects from being distributed or, in the event of distribution, of requiring appropriate reward for the commercial exploitation of their works. In that regard, the Court has already held that, in order to be appropriate, such remuneration must be reasonable in relation to the economic value of the exploitation of the protected work (see, by analogy, judgment in Football Association Premier League and Others, EU:C:2011:631, paragraphs 107 to 109). As regards canvas transfers, the parties in the main proceedings acknowledge that their economic value significantly exceeds that of posters.

49      Having regard to all the foregoing considerations, the answer to the questions asked is that Article 4(2) of Directive 2001/29 must be interpreted as meaning that the rule of exhaustion of the distribution right set out in Article 4(2) of Directive 2001/29 does not apply in a situation where a reproduction of a protected work, after having been marketed in the European Union with the copyright holder’s consent, has undergone an alteration of its medium, such as the transfer of that reproduction from a paper poster onto a canvas, and is placed on the market again in its new form.

 Costs

50      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Fourth Chamber) hereby rules:

Article 4(2) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that the rule of exhaustion of the distribution right set out in Article 4(2) of Directive 2001/29 does not apply in a situation where a reproduction of a protected work, after having been marketed in the European Union with the copyright holder’s consent, has undergone an alteration of its medium, such as the transfer of that reproduction from a paper poster onto a canvas, and is placed on the market again in its new form.

JUDGMENT OF THE COURT (Grand Chamber)

3 July 2012 (*)

(Legal protection of computer programs — Marketing of used licences for computer programs downloaded from the internet — Directive 2009/24/EC — Articles 4(2) and 5(1) — Exhaustion of the distribution right — Concept of lawful acquirer)

In Case C‑128/11,

REFERENCE for a preliminary ruling under Article 267 TFEU from the Bundesgerichtshof (Germany), made by decision of 3 February 2011, received at the Court on 14 March 2011, in the proceedings

UsedSoft GmbH

v

Oracle International Corp.,

THE COURT (Grand Chamber),

composed of V. Skouris, President, A. Tizzano, J.N. Cunha Rodrigues, K. Lenaerts (Rapporteur), J.‑C. Bonichot and A. Prechal, Presidents of Chambers, K. Schiemann, E. Juhász, A. Borg Barthet, D. Šváby and M. Berger, Judges,

Advocate General: Y. Bot,

Registrar: K. Malacek, Administrator,

having regard to the written procedure and further to the hearing on 6 March 2012,

after considering the observations submitted on behalf of:

–        UsedSoft GmbH, by B. Ackermann and A. Meisterernst, Rechtsanwälte,

–        Oracle International Corp., by T. Heydn and U. Hornung, Rechtsanwälte,

–        Ireland, by D. O’Hagan, acting as Agent,

–        the Spanish Government, by N. Díaz Abad, acting as Agent,

–        the French Government, by J. Gstalter, acting as Agent,

–        the Italian Government, by G. Palmieri, acting as Agent, and S. Fiorentino, avvocato dello Stato,

–        the European Commission, by J. Samnadda and F.W. Bulst, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 24 April 2012,

gives the following

Judgment

1        This reference for a preliminary ruling concerns the interpretation of Articles 4(2) and 5(1) of Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs (OJ 2009 L 111, p. 16).

2        The reference has been made in proceedings between UsedSoft GmbH (‘UsedSoft’) and Oracle International Corp. (‘Oracle’) concerning the marketing by UsedSoft of used licences for Oracle computer programs.

 Legal context

 International law

3        The World Intellectual Property Organisation (WIPO) adopted the WIPO Copyright Treaty (‘the Copyright Treaty’) in Geneva on 20 December 1996. That treaty was approved on behalf of the European Community by Council Decision 2000/278/EC of 16 March 2000 (OJ 2000 L 89, p. 6).

4        Article 4 of the Copyright Treaty, ‘Computer programs’, reads as follows:

‘Computer programs are protected as literary works within the meaning of Article 2 of the Berne Convention. Such protection applies to computer programs, whatever may be the mode or form of their expression.’

5        Article 6 of the Copyright Treaty, ‘Right of distribution’, provides:

‘1.      Authors of literary and artistic works shall enjoy the exclusive right of authorising the making available to the public of the original and copies of their works through sale or other transfer of ownership.

2.      Nothing in this Treaty shall affect the freedom of Contracting Parties to determine the conditions, if any, under which the exhaustion of the right in paragraph 1 applies after the first sale or other transfer of ownership of the original or a copy of the work with the authorisation of the author.’

6        Article 8 of the Copyright Treaty provides:

‘… authors of literary and artistic works shall enjoy the exclusive right of authorising any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them’.

7        In the agreed statements concerning Articles 6 and 7 of the Copyright Treaty, it is declared that:

‘As used in these Articles, the expressions “copies” and “original and copies” being subject to the right of distribution and the right of rental under the said Articles, refer exclusively to fixed copies that can be put into circulation as tangible objects.’

 European Union law

 Directive 2001/29

8        Recitals 28 and 29 in the preamble to Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10) state:

‘(28) Copyright protection under this Directive includes the exclusive right to control distribution of the work incorporated in a tangible article. The first sale in the Community of the original of a work or copies thereof by the rightholder or with his consent exhausts the right to control resale of that object in the Community. This right should not be exhausted in respect of the original or of copies thereof sold by the rightholder or with his consent outside the Community. Rental and lending rights for authors have been established in Directive 92/100/EEC. The distribution right provided for in this Directive is without prejudice to the provisions relating to the rental and lending rights contained in Chapter I of that Directive.

(29)      The question of exhaustion does not arise in the case of services and on-line services in particular. This also applies with regard to a material copy of a work or other subject-matter made by a user of such a service with the consent of the rightholder. Therefore, the same applies to rental and lending of the original and copies of works or other subject-matter which are services by nature. Unlike CD‑ROM or CD-I, where the intellectual property is incorporated in a material medium, namely an item of goods, every on-line service is in fact an act which should be subject to authorisation where the copyright or related right so provides.’

9        In accordance with Article 1(2)(a) of Directive 2001/29, the directive ‘shall leave intact and shall in no way affect existing Community provisions relating to … the legal protection of computer programs’.

10      Article 3 of Directive 2001/29 provides:

‘1.      Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them.

…

3.      The rights referred to in paragraphs 1 and 2 shall not be exhausted by any act of communication to the public or making available to the public as set out in this Article.’

11      Article 4 of Directive 2001/29, ‘Distribution right’, provides:

‘1.      Member States shall provide for authors, in respect of the original of their works or of copies thereof, the exclusive right to authorise or prohibit any form of distribution to the public by sale or otherwise.

2.      The distribution right shall not be exhausted within the Community in respect of the original or copies of the work, except where the first sale or other transfer of ownership in the Community of that object is made by the rightholder or with his consent.’

 Directive 2009/24

12      According to recital 1 in the preamble to Directive 2009/24, that directive codifies Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs (OJ 1991 L 122, p. 42).

13      According to recital 7 in that preamble, ‘[f]or the purpose of this Directive, the term “computer program” shall include programs in any form, including those which are incorporated into hardware.’

14      According to recital 13 in that preamble, ‘the acts of loading and running necessary for the use of a copy of a program which has been lawfully acquired, and the act of correction of its errors, may not be prohibited by contract’.

15      Article 1(1) of Directive 2009/24 provides that ‘Member States shall protect computer programs, by copyright, as literary works within the meaning of the Berne Convention for the Protection of Literary and Artistic Works’.

16      Under Article 1(2) of that directive, ‘[p]rotection in accordance with this Directive shall apply to the expression in any form of a computer program’.

17      Article 4 of the directive, ‘Restricted acts’, provides:

‘1.      Subject to the provisions of Articles 5 and 6, the exclusive rights of the rightholder within the meaning of Article 2 shall include the right to do or to authorise:

(a)      the permanent or temporary reproduction of a computer program by any means and in any form, in part or in whole; in so far as loading, displaying, running, transmission or storage of the computer program necessitate such reproduction, such acts shall be subject to authorisation by the rightholder;

(b)      the translation, adaptation, arrangement and any other alteration of a computer program and the reproduction of the results thereof, without prejudice to the rights of the person who alters the program;

(c)      any form of distribution to the public, including the rental, of the original computer program or of copies thereof.

2.      The first sale in the Community of a copy of a program by the rightholder or with his consent shall exhaust the distribution right within the Community of that copy, with the exception of the right to control further rental of the program or a copy thereof.’

18      Article 5 of the directive, ‘Exceptions to the restricted acts’, provides in paragraph 1:

‘In the absence of specific contractual provisions, the acts referred to in points (a) and (b) of Article 4(1) shall not require authorisation by the rightholder where they are necessary for the use of the computer program by the lawful acquirer in accordance with its intended purpose, including for error correction.’

 German law

19      Paragraphs 69c and 69d of the Law on copyright and related rights (Gesetz über Urheberrecht und verwandte Schutzrechte (Urheberrechtsgesetz)) of 9 September 1965, as amended (‘the UrhG’), transpose Articles 4 and 5 of Directive 2009/24 into national law.

 Facts of the main proceedings and questions referred for a preliminary ruling

20      Oracle develops and markets computer software. It is the proprietor of the exclusive user rights under copyright law in those programs. It is also the proprietor of the German and Community word marks Oracle, which are registered inter alia for computer software.

21      Oracle distributes the software at issue in the main proceedings, namely databank software, in 85% of cases by downloading from the internet. The customer downloads a copy of the software directly to his computer from Oracle’s website. The software is what is known as ‘client-server-software’. The user right for such a program, which is granted by a licence agreement, includes the right to store a copy of the program permanently on a server and to allow a certain number of users to access it by downloading it to the main memory of their work-station computers. On the basis of a maintenance agreement, updated versions of the software (‘updates’) and programs for correcting faults (‘patches’) can be downloaded from Oracle’s website. At the customer’s request, the programs are also supplied on CD‑ROM or DVD.

22      Oracle offers group licences for the software at issue in the main proceedings for a minimum of 25 users each. An undertaking requiring licences for 27 users thus has to acquire two licences.

23      Oracle’s licence agreements for the software at issue in the main proceedings contain the following term, under the heading ‘Grant of rights’:

‘With the payment for services you receive, exclusively for your internal business purposes, for an unlimited period a non-exclusive non-transferable user right free of charge for everything that Oracle develops and makes available to you on the basis of this agreement.’

24      UsedSoft markets used software licences, including user licences for the Oracle computer programs at issue in the main proceedings. For that purpose UsedSoft acquires from customers of Oracle such user licences, or parts of them, where the original licences relate to a greater number of users than required by the first acquirer.

25      In October 2005 UsedSoft promoted an ‘Oracle Special Offer’ in which it offered for sale ‘already used’ licences for the Oracle programs at issue in the main proceedings. In doing so it pointed out that the licences were all ‘current’ in the sense that the maintenance agreement concluded between the original licence holder and Oracle was still in force, and that the lawfulness of the original sale was confirmed by a notarial certificate.

26      Customers of UsedSoft who are not yet in possession of the Oracle software in question download a copy of the program directly from Oracle’s website, after acquiring such a used licence. Customers who already have that software and then purchase further licences for additional users are induced by UsedSoft to copy the program to the work stations of those users.

27      Oracle brought proceedings in the Landgericht München I (Regional Court, Munich I) seeking an order that UsedSoft cease the practices described in paragraphs 24 to 26 above. That court allowed Oracle’s application. UsedSoft’s appeal against the decision was dismissed. UsedSoft thereupon appealed on a point of law to the Bundesgerichtshof (Federal Court of Justice).

28      According to the Bundesgerichtshof, the actions of UsedSoft and its customers infringe Oracle’s exclusive right of permanent or temporary reproduction of computer programs within the meaning of Article 4(1)(a) of Directive 2009/24. UsedSoft’s customers cannot, in that court’s view, rely on a right validly transferred to them by Oracle to reproduce the computer programs. Oracle’s licence agreements state that the right to use the programs is ‘non-transferable’. Oracle’s customers are not therefore entitled to transfer to third parties the right of reproduction of those programs.

29      The outcome of the dispute depends, according to that court, on whether the customers of UsedSoft can successfully rely on Paragraph 69d(1) of the UrhG, which transposes Article 5(1) of Directive 2009/24 into German law.

30      The question arises, first, whether a person who, like UsedSoft’s customers, does not hold a user right in the computer program granted by the rightholder, but relies on the exhaustion of the right to distribute a copy of the computer program, is a ‘lawful acquirer’ of that copy within the meaning of Article 5(1) of Directive 2009/24. The referring court considers that that is the case. It explains that the marketability of a copy of the computer program which arises from the exhaustion of the distribution right would be largely meaningless if the acquirer of such a copy did not have the right to reproduce the program. The use of a computer program, unlike the use of other works protected by copyright, generally requires its reproduction. Article 5(1) of Directive 2009/24 thus serves to safeguard the exhaustion of the distribution right under Article 4(2) of Directive 2009/24.

31      Next, the referring court considers whether, in a case such as that in the main proceedings, the right to distribute a copy of a computer program is exhausted under the second sentence of Paragraph 69c(3) of the UrhG, which transposes Article 4(2) of Directive 2009/24.

32      There are several possible interpretations. First, Article 4(2) of Directive 2009/24 could be applicable if the rightholder allows a customer, after the conclusion of a licence agreement, to make a copy of a computer program by downloading that program from the internet and storing it on a computer. That provision attaches the legal consequence of exhaustion of the distribution right to the first sale of a copy of the program and does not necessarily presuppose the putting into circulation of a physical copy of the program. Secondly, Article 4(2) of Directive 2009/24 could be applicable by analogy in the case of the sale of a computer program by means of on-line transmission. According to the supporters of that view, there is an unintended lacuna in the law (‘planwidrige Regelungslücke’) because the authors of the directive did not regulate or contemplate on-line transmission of computer programs. Thirdly, Article 4(2) of Directive 2009/24 is inapplicable because the exhaustion of the distribution right under that provision always presupposes the putting into circulation of a physical copy of the program by the rightholder or with his consent. The authors of the directive deliberately refrained from extending the rule on exhaustion to the on-line transmission of computer programs.

33      Finally, the referring court raises the question whether a person who has acquired a used licence may, for making a copy of the program (as UsedSoft’s customers do in the dispute in the main proceedings by downloading a copy of Oracle’s program onto a computer from Oracle’s website or uploading it to the main memory of other work stations), rely on exhaustion of the right of distribution of the copy of the program made by the first acquirer, with the consent of the rightholder, by downloading it from the internet, if the first acquirer has deleted his copy or no longer uses it. The referring court considers that the application by analogy of Articles 5(1) and 4(2) of Directive 2009/24 can be ruled out. Exhaustion of the distribution right is intended solely to guarantee the marketability of a copy of a program which is incorporated in a particular data carrier and sold by the rightholder or with his consent. The effect of exhaustion should not therefore be extended to the non-physical data transmitted on-line.

34      In those circumstances the Bundesgerichtshof decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

‘1.      Is the person who can rely on exhaustion of the right to distribute a copy of a computer program a “lawful acquirer” within the meaning of Article 5(1) of Directive 2009/24?

2.      If the reply to the first question is in the affirmative: is the right to distribute a copy of a computer program exhausted in accordance with the first half-sentence of Article 4(2) of Directive 2009/24 when the acquirer has made the copy with the rightholder’s consent by downloading the program from the internet onto a data carrier?

3.      If the reply to the second question is also in the affirmative: can a person who has acquired a “used” software licence for generating a program copy as “lawful acquirer” under Article 5(1) and the first half-sentence of Article 4(2) of Directive 2009/24 also rely on exhaustion of the right to distribute the copy of the computer program made by the first acquirer with the rightholder’s consent by downloading the program from the internet onto a data carrier if the first acquirer has erased his program copy or no longer uses it?’

 Consideration of the questions referred

 Question 2

35      By its second question, which should be addressed first, the referring court essentially seeks to know whether and under what conditions the downloading from the internet of a copy of a computer program, authorised by the copyright holder, can give rise to exhaustion of the right of distribution of that copy in the European Union within the meaning of Article 4(2) of Directive 2009/24.

36      It should be recalled that under Article 4(2) of Directive 2009/24 the first sale in the European Union of a copy of a computer program by the rightholder or with his consent exhausts the distribution right within the European Union of that copy.

37      According to the order for reference, the copyright holder itself, in this case Oracle, makes available to its customers in the European Union who wish to use its computer program a copy of that program which can be downloaded from its website.

38      To determine whether, in a situation such as that at issue in the main proceedings, the copyright holder’s distribution right is exhausted, it must be ascertained, first, whether the contractual relationship between the rightholder and its customer, within which the downloading of a copy of the program in question has taken place, may be regarded as a ‘first sale … of a copy of a program’ within the meaning of Article 4(2) of Directive 2009/24.

39      According to settled case‑law, the need for a uniform application of European Union law and the principle of equality require that the terms of a provision of European Union law which makes no express reference to the law of the Member States for the purpose of determining its meaning and scope must normally be given an independent and uniform interpretation throughout the European Union (see, inter alia, Case C‑5/08 Infopaq International [2009] ECR I‑6569, paragraph 27; Case C‑34/10 Brüstle [2011] ECR I‑9821, paragraph 25; and judgment of 26 April 2012 in Case C‑510/10 DR and TV2 Danmark, paragraph 33).

40      The wording of Directive 2009/24 does not make any reference to national laws as regards the meaning to be given to the term ‘sale’ in Article 4(2) of the directive. It follows that that term must be regarded, for the purposes of applying the directive, as designating an autonomous concept of European Union law, which must be interpreted in a uniform manner throughout the territory of the European Union (see, to that effect, DR and TV2 Danmark, paragraph 34).

41      That conclusion is supported by the subject-matter and purpose of Directive 2009/24. Recitals 4 and 5 in the preamble to that directive, which is based on Article 95 EC, to which Article 114 TFEU corresponds, state that its objective is to remove differences between the laws of the Member States which have adverse effects on the functioning of the internal market and concern computer programs. A uniform interpretation of the term ‘sale’ is necessary in order to avoid the protection offered to copyright holders by that directive varying according to the national law applicable.

42      According to a commonly accepted definition, a ‘sale’ is an agreement by which a person, in return for payment, transfers to another person his rights of ownership in an item of tangible or intangible property belonging to him. It follows that the commercial transaction giving rise, in accordance with Article 4(2) of Directive 2009/24, to exhaustion of the right of distribution of a copy of a computer program must involve a transfer of the right of ownership in that copy.

43      Oracle submits that it does not sell copies of its computer programs at issue in the main proceedings. It says that it makes available to its customers, free of charge, on its website a copy of the program concerned, and they can download that copy. The copy thus downloaded may not, however, be used by the customers unless they have concluded a user licence agreement with Oracle. Such a licence gives Oracle’s customers a non-exclusive and non-transferable user right for an unlimited period for that program. Oracle submits that neither the making available of a copy free of charge nor the conclusion of the user licence agreement involves a transfer of the right of ownership of that copy.

44      In this respect, it must be observed that the downloading of a copy of a computer program and the conclusion of a user licence agreement for that copy form an indivisible whole. Downloading a copy of a computer program is pointless if the copy cannot be used by its possessor. Those two operations must therefore be examined as a whole for the purposes of their legal classification (see, by analogy, Joined Cases C‑145/08 and C‑149/08 Club Hotel Loutraki and Others [2010] ECR I‑4165, paragraphs 48 and 49 and the case‑law cited).

45      As regards the question whether, in a situation such as that at issue in the main proceedings, the commercial transactions concerned involve a transfer of the right of ownership of the copy of the computer program, it must be stated that, according to the order for reference, a customer of Oracle who downloads the copy of the program and concludes with that company a user licence agreement relating to that copy receives, in return for payment of a fee, a right to use that copy for an unlimited period. The making available by Oracle of a copy of its computer program and the conclusion of a user licence agreement for that copy are thus intended to make the copy usable by the customer, permanently, in return for payment of a fee designed to enable the copyright holder to obtain a remuneration corresponding to the economic value of the copy of the work of which it is the proprietor.

46      In those circumstances, the operations mentioned in paragraph 44 above, examined as a whole, involve the transfer of the right of ownership of the copy of the computer program in question.

47      It makes no difference, in a situation such as that at issue in the main proceedings, whether the copy of the computer program was made available to the customer by the rightholder concerned by means of a download from the rightholder’s website or by means of a material medium such as a CD‑ROM or DVD. Even if, in the latter case too, the rightholder formally separates the customer’s right to use the copy of the program supplied from the operation of transferring the copy of the program to the customer on a material medium, the operation of downloading from that medium a copy of the computer program and that of concluding a licence agreement remain inseparable from the point of view of the acquirer, for the reasons set out in paragraph 44 above. Since an acquirer who downloads a copy of the program concerned by means of a material medium such as a CD‑ROM or DVD and concludes a licence agreement for that copy receives the right to use the copy for an unlimited period in return for payment of a fee, it must be considered that those two operations likewise involve, in the case of the making available of a copy of the computer program concerned by means of a material medium such as a CD‑ROM or DVD, the transfer of the right of ownership of that copy.

48      Consequently, in a situation such as that at issue in the main proceedings, the transfer by the copyright holder to a customer of a copy of a computer program, accompanied by the conclusion between the same parties of a user licence agreement, constitutes a ‘first sale … of a copy of a program’ within the meaning of Article 4(2) of Directive 2009/24.

49      As the Advocate General observes in point 59 of his Opinion, if the term ‘sale’ within the meaning of Article 4(2) of Directive 2009/24 were not given a broad interpretation as encompassing all forms of product marketing characterised by the grant of a right to use a copy of a computer program, for an unlimited period, in return for payment of a fee designed to enable the copyright holder to obtain a remuneration corresponding to the economic value of the copy of the work of which he is the proprietor, the effectiveness of that provision would be undermined, since suppliers would merely have to call the contract a ‘licence’ rather than a ‘sale’ in order to circumvent the rule of exhaustion and divest it of all scope.

50      Secondly, the argument put forward by Oracle and the European Commission that the making available of a copy of a computer program on the copyright holder’s website constitutes a ‘making available to the public’ within the meaning of Article 3(1) of Directive 2001/29, which, in accordance with Article 3(3) of that directive, cannot give rise to exhaustion of the right of distribution of the copy, cannot be accepted.

51      It is apparent from Article 1(2)(a) of Directive 2001/29 that the directive ‘leave[s] intact and … in no way affect[s] existing … provisions [of European Union law] relating to … the legal protection of computer programs’ conferred by Directive 91/250, which was subsequently codified by Directive 2009/24. The provisions of Directive 2009/24, in particular Article 4(2), thus constitute a lex specialis in relation to the provisions of Directive 2001/29, so that even if the contractual relationship at issue in the main proceedings or an aspect of it might also be covered by the concept of ‘communication to the public’ within the meaning of Article 3(1) of the latter directive, the ‘first sale … of a copy of a program’ within the meaning of Article 4(2) of Directive 2009/24 would still give rise, in accordance with that provision, to exhaustion of the right of distribution of that copy.

52      Moreover, as stated in paragraph 46 above, in a situation such as that at issue in the main proceedings, the copyright holder transfers the right of ownership of the copy of the computer program to his customer. As the Advocate General observes in point 73 of his Opinion, it follows from Article 6(1) of the Copyright Treaty, in the light of which Articles 3 and 4 of Directive 2001/29 must, so far as possible, be interpreted (see, to that effect, Case C‑456/06 Peek & Cloppenburg [2008] ECR I‑2731, paragraph 30), that the existence of a transfer of ownership changes an ‘act of communication to the public’ provided for in Article 3 of that directive into an act of distribution referred to in Article 4 of the directive which, if the conditions in Article 4(2) of the directive are satisfied, can, like a ‘first sale … of a copy of a program’ referred to in Article 4(2) of Directive 2009/24, give rise to exhaustion of the distribution right.

53      Thirdly, it must also be examined whether, as argued by Oracle, the governments which have submitted observations to the Court, and the Commission, the exhaustion of the distribution right referred to in Article 4(2) of Directive 2009/24 relates only to tangible property and not to intangible copies of computer programs downloaded from the internet. They refer in this respect to the wording of Article 4(2) of Directive 2009/24, recitals 28 and 29 in the preamble to Directive 2001/29, Article 4 of Directive 2001/29 read in conjunction with Article 8 of the Copyright Treaty, and the agreed statement concerning Articles 6 and 7 of the Copyright Treaty, whose transposition is one of the aims of Directive 2001/29.

54      Furthermore, according to the Commission, recital 29 in the preamble to Directive 2001/29 confirms that ‘[t]he question of exhaustion does not arise in the case of services and on-line services in particular’.

55      On this point, it must be stated, first, that it does not appear from Article 4(2) of Directive 2009/24 that the exhaustion of the right of distribution of copies of computer programs mentioned in that provision is limited to copies of programmes on a material medium such as a CD‑ROM or DVD. On the contrary, that provision, by referring without further specification to the ‘sale … of a copy of a program’, makes no distinction according to the tangible or intangible form of the copy in question.

56      Next, it must be recalled that Directive 2009/24, which concerns specifically the legal protection of computer programs, constitutes a lex specialis in relation to Directive 2001/29.

57      Article 1(2) of Directive 2009/24 states that ‘[p]rotection in accordance with this Directive shall apply to the expression in any form of a computer program’. Recital 7 in the preamble to that directive specifies that the ‘computer programs’ it aims to protect ‘include programs in any form, including those which are incorporated into hardware’.

58      Those provisions thus make abundantly clear the intention of the European Union legislature to assimilate, for the purposes of the protection laid down by Directive 2009/24, tangible and intangible copies of computer programs.

59      In those circumstances, it must be considered that the exhaustion of the distribution right under Article 4(2) of Directive 2009/24 concerns both tangible and intangible copies of a computer program, and hence also copies of programs which, on the occasion of their first sale, have been downloaded from the internet onto the first acquirer’s computer.

60      It is true that the concepts used in Directives 2001/29 and 2009/24 must in principle have the same meaning (see Joined Cases C‑403/08 and C‑429/08 Football Association Premier League and Others [2011] ECR I‑9083, paragraphs 187 and 188). However, even supposing that Article 4(2) of Directive 2001/29, interpreted in the light of recitals 28 and 29 in its preamble and in the light of the Copyright Treaty, which Directive 2001/29 aims to implement (judgment of 9 February 2012 in Case C‑277/10 Luksan, paragraph 59), indicated that, for the works covered by that directive, the exhaustion of the distribution right concerned only tangible objects, that would not be capable of affecting the interpretation of Article 4(2) of Directive 2009/24, having regard to the different intention expressed by the European Union legislature in the specific context of that directive.

61      It should be added that, from an economic point of view, the sale of a computer program on CD‑ROM or DVD and the sale of a program by downloading from the internet are similar. The on-line transmission method is the functional equivalent of the supply of a material medium. Interpreting Article 4(2) of Directive 2009/24 in the light of the principle of equal treatment confirms that the exhaustion of the distribution right under that provision takes effect after the first sale in the European Union of a copy of a computer program by the copyright holder or with his consent, regardless of whether the sale relates to a tangible or an intangible copy of the program.

62      As to the Commission’s argument that European Union law does not provide for the exhaustion of the distribution right in the case of services, it must be recalled that the objective of the principle of the exhaustion of the right of distribution of works protected by copyright is, in order to avoid partitioning of markets, to limit restrictions of the distribution of those works to what is necessary to safeguard the specific subject-matter of the intellectual property concerned (see, to that effect, Case C‑200/96 Metronome Musik [1998] ECR I‑1953, paragraph 14; Case C‑61/97 FDV [1998] ECR I‑5171, paragraph 13; and Football Association Premier League and Others, paragraph 106).

63      To limit the application, in circumstances such as those at issue in the main proceedings, of the principle of the exhaustion of the distribution right under Article 4(2) of Directive 2009/24 solely to copies of computer programs that are sold on a material medium would allow the copyright holder to control the resale of copies downloaded from the internet and to demand further remuneration on the occasion of each new sale, even though the first sale of the copy had already enabled the rightholder to obtain an appropriate remuneration. Such a restriction of the resale of copies of computer programs downloaded from the internet would go beyond what is necessary to safeguard the specific subject-matter of the intellectual property concerned (see, to that effect, Football Association Premier League and Others, paragraphs 105 and 106).

64      Fourthly, it must also be examined whether, as Oracle claims, the maintenance agreement concluded by the first acquirer prevents in any event the exhaustion of the right provided for in Article 4(2) of Directive 2009/24, since the copy of the computer program which the first acquirer may transfer to a second acquirer no longer corresponds to the copy he downloaded but to a new copy of the program.

65      According to the order for reference, the used licences offered by UsedSoft are ‘current’, in that the sale of the copy of the program by Oracle to its customer was accompanied by the conclusion of a maintenance agreement for that copy.

66      It must be observed that the exhaustion of the right of distribution of a copy of a computer program under Article 4(2) of Directive 2009/24 only concerns copies which have been the subject of a first sale in the European Union by the copyright holder or with his consent. It does not relate to contracts for services, such as maintenance agreements, which are separable from such a sale and were concluded, possibly for an unlimited period, on the occasion of the sale.

67      None the less, the conclusion of a maintenance agreement, such as those at issue in the main proceedings, on the occasion of the sale of an intangible copy of a computer program has the effect that the copy originally purchased is patched and updated. Even if the maintenance agreement is for a limited period, the functionalities corrected, altered or added on the basis of such an agreement form an integral part of the copy originally downloaded and can be used by the acquirer of the copy for an unlimited period, even in the event that the acquirer subsequently decides not to renew the maintenance agreement.

68      In such circumstances, the exhaustion of the distribution right under Article 4(2) of Directive 2009/24 extends to the copy of the computer program sold as corrected and updated by the copyright holder.

69      It should be pointed out, however, that if the licence acquired by the first acquirer relates to a greater number of users than he needs, as stated in paragraphs 22 and 24 above, the acquirer is not authorised by the effect of the exhaustion of the distribution right under Article 4(2) of Directive 2009/24 to divide the licence and resell only the user right for the computer program concerned corresponding to a number of users determined by him.

70      An original acquirer who resells a tangible or intangible copy of a computer program for which the copyright holder’s right of distribution is exhausted in accordance with Article 4(2) of Directive 2009/24 must, in order to avoid infringing the exclusive right of reproduction of a computer program which belongs to its author, laid down in Article 4(1)(a) of Directive 2009/24, make his own copy unusable at the time of its resale. In a situation such as that mentioned in the preceding paragraph, the customer of the copyright holder will continue to use the copy of the program installed on his server and will not thus make it unusable.

71      Moreover, even if an acquirer of additional user rights for the computer program concerned did not carry out a new installation — and hence a new reproduction — of the program on a server belonging to him, the effect of the exhaustion of the distribution right under Article 4(2) of Directive 2009/24 would in any event not extend to such user rights. In such a case the acquisition of additional user rights does not relate to the copy for which the distribution right was exhausted at the time of that transaction. On the contrary, it is intended solely to make it possible to extend the number of users of the copy which the acquirer of additional rights has himself already installed on his server.

72      On the basis of all the foregoing, the answer to Question 2 is that Article 4(2) of Directive 2009/24 must be interpreted as meaning that the right of distribution of a copy of a computer program is exhausted if the copyright holder who has authorised, even free of charge, the downloading of that copy from the internet onto a data carrier has also conferred, in return for payment of a fee intended to enable him to obtain a remuneration corresponding to the economic value of the copy of the work of which he is the proprietor, a right to use that copy for an unlimited period.

 Questions 1 and 3

73      By its first and third questions the referring court seeks essentially to know whether, and under what conditions, an acquirer of used licences for computer programs, such as those sold by UsedSoft, may, as a result of the exhaustion of the distribution right under Article 4(2) of Directive 2009/24, be regarded as a ‘lawful acquirer’ within the meaning of Article 5(1) of Directive 2009/24 who, in accordance with that provision, enjoys the right of reproduction of the program concerned in order to enable him to use the program in accordance with its intended purpose.

74      Article 5(1) of Directive 2009/24 provides that, in the absence of specific contractual provisions, the reproduction of a computer program does not require authorisation by the author of the program where that reproduction is necessary for the use of the computer program by the lawful acquirer in accordance with its intended purpose, including for error correction.

75      When the customer of the copyright holder purchases a copy of a computer program that is on the rightholder’s website, he performs, by downloading the copy onto his computer, a reproduction of the copy which is authorised under Article 5(1) of Directive 2009/24. This is a reproduction that is necessary for the use of the program by the lawful acquirer in accordance with its intended purpose.

76      Moreover, recital 13 in the preamble to Directive 2009/24 states that ‘the acts of loading and running necessary for the use of a copy of a program which has been lawfully acquired … may not be prohibited by contract’.

77      It must be recalled, next, that the copyright holder’s distribution right is exhausted, in accordance with Article 4(2) of Directive 2009/24, on the occasion of the first sale in the European Union by that rightholder, or with his consent, of any copy, tangible or intangible, of his computer program. It follows that, by virtue of that provision and notwithstanding the existence of contractual terms prohibiting a further transfer, the rightholder in question can no longer oppose the resale of that copy.

78      Admittedly, as stated in paragraph 70 above, the original acquirer of a tangible or intangible copy of a computer program for which the copyright holder’s distribution right is exhausted in accordance with Article 4(2) of Directive 2009/24 who resells that copy must, in order to avoid infringing that rightholder’s exclusive right of reproduction of his computer program under Article 4(1)(a) of Directive 2009/24, make the copy downloaded onto his computer unusable at the time of its resale.

79      As Oracle rightly observes, ascertaining whether such a copy has been made unusable may prove difficult. However, a copyright holder who distributes copies of a computer program on a material medium such as a CD‑ROM or DVD is faced with the same problem, since it is only with great difficulty that he can make sure that the original acquirer has not made copies of the program which he will continue to use after selling his material medium. To solve that problem, it is permissible for the distributor — whether ‘classic’ or ‘digital’ — to make use of technical protective measures such as product keys.

80      Since the copyright holder cannot object to the resale of a copy of a computer program for which that rightholder’s distribution right is exhausted under Article 4(2) of Directive 2009/24, it must be concluded that a second acquirer of that copy and any subsequent acquirer are ‘lawful acquirers’ of it within the meaning of Article 5(1) of Directive 2009/24.

81      Consequently, in the event of a resale of the copy of the computer program by the first acquirer, the new acquirer will be able, in accordance with Article 5(1) of Directive 2009/24, to download onto his computer the copy sold to him by the first acquirer. Such a download must be regarded as a reproduction of a computer program that is necessary to enable the new acquirer to use the program in accordance with its intended purpose.

82      The argument put forward by Oracle, Ireland and the French and Italian Governments that the concept of ‘lawful acquirer’ in Article 5(1) of Directive 2009/24 relates only to an acquirer who is authorised, under a licence agreement concluded directly with the copyright holder, to use the computer programme cannot be accepted.

83      That argument would have the effect of allowing the copyright holder to prevent the effective use of any used copy in respect of which his distribution right has been exhausted under Article 4(2) of Directive 2009/24, by relying on his exclusive right of reproduction laid down in Article 4(1)(a) of that directive, and would thus render ineffective the exhaustion of the distribution right under Article 4(2).

84      In the case of a situation such as that at issue in the main proceedings, it must be recalled that in paragraphs 44 and 48 above it was found that the downloading onto the customer’s server of a copy of the computer program on the rightholder’s website and the conclusion of a user licence agreement for that copy form an indivisible whole which, as a whole, must be classified as a sale. Having regard to that indivisible link between the copy on the rightholder’s website, as subsequently corrected and updated, on the one hand, and the user licence relating to the copy, on the other, the resale of the user licence entails the resale of ‘that copy’ within the meaning of Article 4(2) of Directive 2009/24, and thus benefits from the exhaustion of the distribution right under that provision, notwithstanding the term in the licence agreement set out in paragraph 23 above.

85      As may be seen from paragraph 81 above, it follows that a new acquirer of the user licence, such as a customer of UsedSoft, will be able, as a ‘lawful acquirer’ within the meaning of Article 5(1) of Directive 2009/24 of the corrected and updated copy of the computer program concerned, to download that copy from the copyright holder’s website, with that downloading constituting a reproduction of a computer program that is necessary to enable the new acquirer to use the program in accordance with its intended purpose.

86      It should be recalled, however, that, if the licence acquired by the first acquirer relates to a greater number of users than he needs, that acquirer is not authorised by the effect of the exhaustion of the distribution right under Article 4(2) of Directive 2009/24 to divide the licence and resell only the user right for the computer program concerned corresponding to a number of users determined by him, as explained in paragraphs 69 to 71 above.

87      Moreover, a copyright holder such as Oracle is entitled, in the event of the resale of a user licence entailing the resale of a copy of a computer program downloaded from his website, to ensure by all technical means at his disposal that the copy still in the hands of the reseller is made unusable.

88      It follows from the foregoing that the answer to Questions 1 and 3 is that Articles 4(2) and 5(1) of Directive 2009/24 must be interpreted as meaning that, in the event of the resale of a user licence entailing the resale of a copy of a computer program downloaded from the copyright holder’s website, that licence having originally been granted by that rightholder to the first acquirer for an unlimited period in return for payment of a fee intended to enable the rightholder to obtain a remuneration corresponding to the economic value of that copy of his work, the second acquirer of the licence, as well as any subsequent acquirer of it, will be able to rely on the exhaustion of the distribution right under Article 4(2) of that directive, and hence be regarded as lawful acquirers of a copy of a computer program within the meaning of Article 5(1) of that directive and benefit from the right of reproduction provided for in that provision.

 Costs

89      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Grand Chamber) hereby rules:

1.      Article 4(2) of Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs must be interpreted as meaning that the right of distribution of a copy of a computer program is exhausted if the copyright holder who has authorised, even free of charge, the downloading of that copy from the internet onto a data carrier has also conferred, in return for payment of a fee intended to enable him to obtain a remuneration corresponding to the economic value of the copy of the work of which he is the proprietor, a right to use that copy for an unlimited period.

2.      Articles 4(2) and 5(1) of Directive 2009/24 must be interpreted as meaning that, in the event of the resale of a user licence entailing the resale of a copy of a computer program downloaded from the copyright holder’s website, that licence having originally been granted by that rightholder to the first acquirer for an unlimited period in return for payment of a fee intended to enable the rightholder to obtain a remuneration corresponding to the economic value of that copy of his work, the second acquirer of the licence, as well as any subsequent acquirer of it, will be able to rely on the exhaustion of the distribution right under Article 4(2) of that directive, and hence be regarded as lawful acquirers of a copy of a computer program within the meaning of Article 5(1) of that directive and benefit from the right of reproduction provided for in that provision.

JUDGMENT OF THE COURT (Third Chamber)

1 December 2011 (*)

(Jurisdiction in civil matters – Regulation (EC) No 44/2001 – Article 6(1) – More than one defendant – Directive 93/98/EEC – Article 6 – Protection of photographs – Directive 2001/29/EC – Article 2 – Reproduction – Use of a portrait photograph as a template to establish a photo-fit – Article 5(3)(d) – Exceptions and limitations as regards quotations – Article 5(3)(e) – Exceptions and limitations for the purposes of public security – Article 5(5))

In Case C‑145/10,

REFERENCE for a preliminary ruling under Article 267 TFEU from the Handelsgericht Wien (Austria), made by decision of 8 March 2010, received at the Court on 22 March 2010, in the proceedings

Eva-Maria Painer

v

Standard VerlagsGmbH,

Axel Springer AG,

Süddeutsche Zeitung GmbH,

Spiegel-Verlag Rudolf Augstein GmbH & Co KG,

Verlag M. DuMont Schauberg Expedition der Kölnischen Zeitung GmbH & Co KG,

THE COURT (Third Chamber),

composed of K. Lenaerts, President of the Chamber, J. Malenovský (Rapporteur), E. Juhász, G. Arestis and T. von Danwitz, Judges,

Advocate General: V. Trstenjak,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

–        Ms Painer, by G. Zanger, Rechtsanwalt,

–        Standard VerlagsGmbH, by M. Windhager, Rechtsanwältin,

–        the Austrian Government, by E. Riedl, acting as Agent,

–        the Spanish Government, by N. Díaz Abad, acting as Agent,

–        the Italian Government, by G. Palmieri, acting as Agent, assisted by M. Russo, avvocato dello Stato,

–        the European Commission, by S. Grünheid, acting as Agent,

after hearing the Opinion of the Advocate General at the sitting on 12 April 2011,

gives the following

Judgment

1        This reference for a preliminary ruling concerns the interpretation of Article 6(1) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (OJ 2001 L 12, p. 1) and Article 5(3)(d) and (e) and (5) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10).

2        The reference has been made in proceedings between Ms Painer, the applicant in the main proceedings, a freelance photographer, and five newspaper publishers, namely Standard VerlagsGmbH (‘Standard’), Axel Springer AG (‘Axel Springer’), Süddeutsche Zeitung GmbH, Spiegel-Verlag Rudolf Augstein GmbH & Co KG and Verlag M. DuMont Schauberg Expedition der Kölnischen Zeitung GmbH & Co KG, concerning their use of photographs of Natascha K.

 Legal context

 International law

3        The Agreement on Trade-Related Aspects of Intellectual Property Rights in Annex 1C to the Agreement establishing the World Trade Organisation (‘WTO’), signed at Marrakesh on 15 April 1994, was approved by Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (OJ 1994 L 336, p. 1).

4        Article 9(1) of the Agreement on Trade-Related Aspects of Intellectual Property Rights provides:

‘Members shall comply with Articles 1 through 21 of the Berne Convention [for the Protection of Literary and Artistic Works (revised at Paris on 24 July 1971), in its version resulting from the amendment of 28 September 1979 (“the Berne Convention”)] and the Appendix thereto. However, Members shall not have rights or obligations under this Agreement in respect of the rights conferred under Article 6bis of that Convention or of the rights derived therefrom.’

5         Article 2(1) of the Berne Convention is in the following terms:

‘The expression “literary and artistic works” shall include every production in the literary, scientific and artistic domain, whatever may be the mode or form of its expression, such as books, pamphlets and other writings; lectures, addresses, sermons and other works of the same nature; dramatic or dramatico-musical works; choreographic works and entertainments in dumb show; musical compositions with or without words; cinematographic works to which are assimilated works expressed by a process analogous to cinematography; works of drawing, painting, architecture, sculpture, engraving and lithography; photographic works to which are assimilated works expressed by a process analogous to photography; works of applied art, illustrations, maps, plans, sketches and three-dimensional works relative to geography, topography, architecture or science.’

6        Article 10(1) of the Berne Convention stipulates:

‘It shall be permissible to make quotations from a work which has already been lawfully made available to the public, provided that their making is compatible with fair practice, and their extent does not exceed that justified by the purpose, including quotations from newspaper articles and periodicals in the form of press summaries.’

7        Article 12 of the Berne Convention states:

‘Authors of literary or artistic works shall enjoy the exclusive right of authorising adaptations, arrangements and other alterations of their works.’

8        Article 37(1)(c) of the Berne Convention provides:

‘In case of differences of opinion on the interpretation of the various texts, the French text shall prevail.’

9        The World Intellectual Property Organisation (‘WIPO’) adopted in Geneva, on 20 December 1996, the WIPO Performances and Phonograms Treaty and the WIPO Copyright Treaty. Those two treaties were approved on behalf of the European Community by Council Decision 2000/278/EC of 16 March 2000 (OJ 2000 L 89, p. 6).

10      Article 1(4) of the WIPO Copyright Treaty provides that Contracting Parties are to comply with Articles 1 to 21 of and the Appendix to the Berne Convention.

 European Union (‘EU’) law

 Regulation No 44/2001

11      Recitals 11, 12 and 15 in the preamble to Regulation No 44/2001 state:

‘(11) The rules of jurisdiction must be highly predictable and founded on the principle that jurisdiction is generally based on the defendant’s domicile and jurisdiction must always be available on this ground save in a few well-defined situations in which the subject-matter of the litigation or the autonomy of the parties warrants a different linking factor. ...

(12)      In addition to the defendant’s domicile, there should be alternative grounds of jurisdiction based on a close link between the court and the action or in order to facilitate the sound administration of justice.

...

(15)      In the interests of the harmonious administration of justice it is necessary to minimise the possibility of concurrent proceedings and to ensure that irreconcilable judgments will not be given in two Member States. …’

12      Article 2(1) of Regulation No 44/2001 is in the following terms:

‘Subject to this Regulation, persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State.’

13      Article 3(1) of that regulation provides:

‘Persons domiciled in a Member State may be sued in the courts of another Member State only by virtue of the rules set out in Sections 2 to 7 of this Chapter.’

14      Article 6(1) of that regulation, which forms part of Section 2 in Chapter II thereof, entitled ‘Special jurisdiction’, provides:

‘A person domiciled in a Member State may also be sued … where he is one of a number of defendants, in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.’

 Directive 93/98/EEC

15      Recital 17 in the preamble to Council Directive 93/98/EEC of 29 October 1993 harmonising the term of protection of copyright and certain related rights (OJ 1993 L 290, p. 9) states:

‘… the protection of photographs in the Member States is the subject of varying regimes; … in order to achieve a sufficient harmonisation of the term of protection of photographic works, in particular of those which, due to their artistic or professional character, are of importance within the internal market, it is necessary to define the level of originality required in this Directive; … a photographic work within the meaning of the Berne Convention is to be considered original if it is the author’s own intellectual creation reflecting his personality, no other criteria such as merit or purpose being taken into account; … the protection of other photographs should be left to national law’.

16      Article 1(1) of that directive provides that protection of the rights of an author of a literary or artistic work within the meaning of Article 2 of the Berne Convention is to run for the life of the author and for 70 years after his death.

17      Article 6 of that directive provides:

‘Photographs which are original in the sense that they are the author’s own intellectual creation shall be protected in accordance with Article 1. No other criteria shall be applied to determine their eligibility for protection. Member States may provide for the protection of other photographs.’

18      Directive 93/98 was repealed by Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights (OJ 2006 L 372, p. 12), which codified it and contains, in essence, the same provisions. Directive 2006/116 entered into force on 16 January 2007.

19      Nonetheless, given the material time in the main proceedings, the legislation applicable to them remains Directive 93/98.

 Directive 2001/29

20      Recitals 6, 9, 21, 31, 32 and 44 in the preamble to Directive 2001/29 read as follows:

‘(6)      Without harmonisation at Community level, legislative activities at national level which have already been initiated in a number of Member States in order to respond to the technological challenges might result in significant differences in protection and thereby in restrictions on the free movement of services and products incorporating, or based on, intellectual property, leading to a refragmentation of the internal market and legislative inconsistency. The impact of such legislative differences and uncertainties will become more significant with the further development of the information society, which has already greatly increased transborder exploitation of intellectual property. This development will and should further increase. Significant legal differences and uncertainties in protection may hinder economies of scale for new products and services containing copyright and related rights.

...

(9)      Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation. Their protection helps to ensure the maintenance and development of creativity in the interests of authors, performers, producers, consumers, culture, industry and the public at large. Intellectual property has therefore been recognised as an integral part of property.

...

(21)      This Directive should define the scope of the acts covered by the reproduction right with regard to the different beneficiaries. This should be done in conformity with the acquis communautaire. A broad definition of these acts is needed to ensure legal certainty within the internal market.

...

(31)      A fair balance of rights and interests between the different categories of rightholders, as well as between the different categories of rightholders and users of protected subject-matter must be safeguarded. ...

(32)      This Directive provides for an exhaustive enumeration of exceptions and limitations to the reproduction right and the right of communication to the public. Some exceptions or limitations only apply to the reproduction right, where appropriate. This list takes due account of the different legal traditions in Member States, while, at the same time, aiming to ensure a functioning internal market. Member States should arrive at a coherent application of these exceptions and limitations, which will be assessed when reviewing implementing legislation in the future.

...

(44)      When applying the exceptions and limitations provided for in this Directive, they should be exercised in accordance with international obligations. Such exceptions and limitations may not be applied in a way which prejudices the legitimate interests of the rightholder or which conflicts with the normal exploitation of his work or other subject-matter. The provision of such exceptions or limitations by Member States should, in particular, duly reflect the increased economic impact that such exceptions or limitations may have in the context of the new electronic environment. Therefore, the scope of certain exceptions or limitations may have to be even more limited when it comes to certain new uses of copyright works and other [protected] subject-matter.’

21      Article 1(1) of that directive states:

‘This Directive concerns the legal protection of copyright and related rights in the framework of the internal market, with particular emphasis on the information society.’

22      Article 2 of that directive, relating to reproduction right, provides:

‘Member States shall provide for the exclusive right to authorise or prohibit direct or indirect, temporary or permanent reproduction by any means and in any form, in whole or in part:

(a)      for authors, of their works;

…’

23      Article 3(1) of that directive is in the following terms:

‘Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them.’

24      Article 5 of Directive 2001/29, entitled ‘Exceptions and limitations’, states in paragraph 3(d) and (e) thereof:

‘Member States may provide for exceptions or limitations to the rights provided for in Articles 2 and 3 in the following cases:

...

(d)      quotations for purposes such as criticism or review, provided that they relate to a work or other subject-matter which has already been lawfully made available to the public, that, unless this turns out to be impossible, the source, including the author’s name, is indicated, and that their use is in accordance with fair practice, and to the extent required by the specific purpose;

(e)      use for the purposes of public security or to ensure the proper performance or reporting of administrative, parliamentary or judicial proceedings;

...’

25      Article 5(5) of that directive provides:

‘The exceptions and limitations provided for in paragraphs 1, 2, 3 and 4 shall only be applied in certain special cases which do not conflict with a normal exploitation of the work or other subject-matter and do not unreasonably prejudice the legitimate interests of the rightholder.’

 National law

26      The abovementioned provisions of Directive 2001/29 were transposed into the Austrian legal order by the Federal law on copyright in literary and artistic works and related rights (Bundesgesetz über das Urheberrecht an Werken der Literatur und der Kunst und über verwandte Schutzrechte, Urheberrechtsgesetz).

 The dispute in the main proceedings and the questions referred for a preliminary ruling

27      Ms Painer has for many years worked as a freelance photographer, photographing, in particular, children in nurseries and day homes. In the course of that work, she took several photographs of Natascha K. designing the background, deciding the position and facial expression, and producing and developing them (‘the contested photographs’).

28      Ms Painer has, for more than 17 years, labelled the photographs she produces with her name. That labelling has been done in different ways which have varied over the years, by stickers and/or impressions in decorative portfolios or mounts. Those indications have always stated her name and business address.

29      Ms Painer sold the photographs which she produced, but without conferring on third parties any rights over them and without consenting to their publication. The price she charged for photographs corresponded solely to the price of the prints.

30      After Natascha K., then aged 10, was abducted in 1998, the competent security authorities launched a search appeal in which the contested photographs were used.

31      The defendants in the main proceedings are newspaper and magazine publishers. Only Standard is established in Vienna (Austria). The other defendants in the main proceedings are established in Germany.

32      Standard publishes the daily newspaper, Der Standard, which is distributed in Austria. Süddeutsche Zeitung GmbH publishes the daily, Süddeutsche Zeitung, which is distributed in Austria and Germany. Spiegel-Verlag Rudolf Augstein GmbH & Co KG publishes a weekly magazine in Germany, Der Spiegel, which also appears in Austria. Verlag M. DuMont Schauberg Expedition der Kölnischen Zeitung GmbH & Co KG produces the daily, Express, which is published only in Germany. Axel Springer publishes the daily, Bild, the German edition of which is not distributed in Austria. The Munich edition of that newspaper, on the other hand, appears also in Austria. Axel Springer publishes, in addition, another daily newspaper, Die Welt, which is also distributed in Austria, and runs news websites on the internet.

33       In 2006 Natascha K. managed to escape from her abductor.

34      Following Natascha K.’s escape and prior to her first public appearance, the defendants in the main proceedings published the contested photographs in the abovementioned newspapers, magazines and websites without, however, indicating the name of the photographer, or indicating a name other than Ms Painer’s as the photographer.

35      The coverage in the various media and websites differed in its choice of the contested photographs and accompanying text. The defendants in the main proceedings claim that they received the contested photographs from a news agency without Ms Painer’s name being mentioned or with a name other than Ms Painer’s name being indicated as the photographer’s.

36      Several of those publications also published a portrait, created by computer from the contested photographs, which, since there was no recent photograph of Natascha K. until her first public appearance, represented the supposed image of Natascha K. (‘the contested photo-fit’).

37      By summons before the Handelsgericht Wien, on 10 April 2007, Ms Painer sought an order that the defendants in the main proceedings immediately cease the reproduction and/or distribution, without her consent and without indicating her as author, of the contested photographs and the contested photo-fit.

38      Ms Painer also applied for an order against the defendants for accounts, payment of appropriate remuneration and damages for her loss.

39      At the same time, Ms Painer applied for an interlocutory injunction, on which a ruling has already been given by the highest court, the Oberster Gerichtshof (Supreme Court) by a judgment of 26 August 2009.

40      As is clear from the order for reference, the Oberster Gerichtshof held, applying the relevant national rules, that the defendants in the main proceedings did not need Ms Painer’s consent to publish the contested photo-fit.

41      In that court’s view, the contested photograph which had been used as a template for the contested photo-fit was, admittedly, a photographic work protected by copyright. However, the production and publication of the contested photo-fit was not an adaptation for which the consent of Ms Painer, as author of the photographic work, was needed, but a free use, which did not require her consent.

42      Indeed, the referring court considered that the question whether it was an adaptation or a free use depends on the creative effort in the template. The greater the creative effort in the template, the less conceivable is a free use. In the case of portrait photographs like the contested photographs, the creator enjoys only a small degree of individual formative freedom. For that reason, the copyright protection of that photograph is accordingly narrow. Furthermore, the contested photo-fit based on the template is a new and autonomous work which is protected by copyright.

43      In those circumstances, the Handelsgericht Wien decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1)      Is Article 6(1) of [Regulation No 44/2001] to be interpreted as meaning that its application and therefore joint legal proceedings are not precluded where actions brought against several defendants for copyright infringements identical in substance are based on differing national legal grounds the essential elements of which are nevertheless identical in substance – such as applies to all European States in proceedings for a prohibitory injunction, not based on fault, in claims for reasonable remuneration for copyright infringements and in claims in damages for unlawful exploitation?

(2)      (a)      Is Article 5(3)(d) of Directive 2001/29 …, in the light of Article 5(5) of that directive, to be interpreted as meaning that its application is not precluded where a press report quoting a work or other protected matter is not a literary work protected by copyright?

(b)      Is Article 5(3)(d) of [Directive 2001/29], in the light of Article 5(5) thereof, to be interpreted as meaning that its application is not precluded where the name of the author or performer is not attached to the work or other protected matter quoted?

(3)      (a)      Is Article 5(3)(e) of Directive 2001/29, in the light of Article 5(5) thereof, to be interpreted as meaning that in the interests of criminal justice in the context of public security its application requires a specific, current and express appeal for publication of the image on the part of the security authorities, i.e. that publication of the image must be officially ordered for search purposes, or otherwise an offence is committed?

(b)      If the answer to question 3a should be in the negative: are the media permitted to rely on Article 5(3)(e) of [Directive 2001/29] even if, without such a search request being made by the authorities, they should decide, of their own volition, whether images should be published “in the interests of public security”?

(c)      If the answer to question 3b should be in the affirmative: is it then sufficient for the media to assert after the event that publication of an image served to trace a person or is it always necessary for there to be a specific appeal to readers to assist in a search in the investigation of an offence, which must be directly linked to the publication of the photograph?

(4)      Are Article 1(1) of Directive 2001/29 in conjunction with Article 5(5) thereof and Article 12 of the Berne Convention … , particularly in the light of Article 1 of the First Additional Protocol to the European Convention for the Protection of Human Rights and Fundamental Freedoms [signed at Rome on 4 November 1950] and Article 17 of the Charter of Fundamental Rights of the European Union, to be interpreted as meaning that photographic works and/or photographs, particularly portrait photos, are afforded “weaker” copyright protection or no copyright protection at all against adaptations because, in view of their “realistic image”, the degree of formative freedom is too minor?’

 Admissibility of the request for a preliminary ruling

44      In their observations, the defendants in the main proceedings challenge, on various grounds, the admissibility both of the request for a preliminary ruling and of some of the questions referred.

45      First of all, the defendants in the main proceedings submit that the request for a preliminary ruling should be rejected as inadmissible because, first, the referring court has given no sufficient explanation of the reasons which led to its doubts concerning the interpretation of EU law and, second, that court has not established a sufficient link between the national legal provisions applicable to the dispute in the main proceedings and those of EU law. In particular, that court has not cited the relevant rules of national law.

46      In that regard, it is settled case-law that the need to provide an interpretation of EU law which will be of use to the national court requires that the national court define the factual and legal context of its questions or, at the very least, that it explain the factual circumstances on which those questions are based (see, in particular, Case C‑134/03 Viacom Outdoor [2005] ECR I‑1167, paragraph 22; Case C‑145/03 Keller [2005] ECR I‑2529, paragraph 29; and Joined Cases C‑453/03, C‑11/04, C‑12/04 and C‑194/04 ABNA and Others [2005] ECR I‑10423, paragraph 45).

47      The Court has also stressed that it is important for the referring court to set out the precise reasons why it was unsure as to the interpretation of EU law and why it considered it necessary to refer questions to the Court for a preliminary ruling. The Court has thus ruled that it is essential that the referring court provide at the very least some explanation of the reasons for the choice of the provisions of EU law which it requires to be interpreted and of the link it establishes between those provisions and the national legislation applicable to the dispute (see, in particular, Case C‑318/00 Bacardi-Martini and Cellier des Dauphins [2003] ECR I‑905, paragraph 43, and ABNA and Others, paragraph 46).

48      In this case, the order for reference sets out the national factual and legal context in which the questions referred arise. In addition, the referring court has set out the reasons which led it to consider it necessary to refer the questions to the Court for a preliminary ruling, since it has noted the opposing arguments of the parties to the main proceedings as regards the compatibility with the provisions of EU law referred to in the questions of the relevant national provisions, as interpreted by the Oberster Gerichtshof in the interlocutory proceedings.

49      It follows that this Court has sufficient information to enable it to give an answer that will be of use to the referring court.

50      In those circumstances, the objection raised by the defendants in the main proceedings on that point must be rejected, with the result that the request for a preliminary ruling is admissible.

51      Secondly, the defendants in the main proceedings submit, more particularly, that the first question is inadmissible because the referring court is not entitled to refer questions to the Court of Justice for a preliminary ruling on the interpretation of Regulation No 44/2001. They submit that, only courts or tribunals against whose decisions there is no judicial remedy under national law could, under Article 68(1) EC, request from the Court a preliminary ruling on the interpretation of that regulation. However, here, judgments given by the referring court, which is a court of first instance, are subject to appeal under national law.

52      In that regard, Regulation No 44/2001, to which the request for a preliminary ruling relates, was adopted on the basis of Article 65 EC, which forms part of Title IV in Part Three of the EC Treaty.

53      Admittedly, under Article 68(1) EC, courts or tribunals of first instance did not have the right to refer questions for a preliminary ruling where acts adopted in the field of Title IV of the EC Treaty were concerned.

54      However, this reference for a preliminary ruling was submitted on 22 March 2010 that is after the Treaty of Lisbon entered into force. On 1 December 2009 when that Treaty entered into force, Article 68 EC was repealed. Since then, it is the general rules governing references for a preliminary ruling under Article 267 TFEU which apply to references for preliminary rulings on the interpretation of acts adopted in the area of judicial cooperation in civil matters. Consequently, Article 267 TFEU also applies to references relating to Regulation No 44/2001.

55      Accordingly, courts or tribunals, such as the referring court, are entitled to refer questions to the Court of Justice for a preliminary ruling on the interpretation of Regulation No 44/2001.

56      In those circumstances, the first question must be held to be admissible.

57      Thirdly, the defendants in the main proceedings argue that question 2(a) is irrelevant and, therefore, inadmissible because the referring court has not found that the press articles in question in the main proceedings are not protected by copyright.

58      However, it is settled case-law that, within the framework of the cooperation established by Article 267 TFEU, it is solely for the national court, before which the dispute has been brought and which must assume responsibility for the subsequent judicial decision, to determine, in the light of the particular circumstances of the case, both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted concern the interpretation of EU law, the Court is in principle bound to give a ruling (see Case C‑380/01 Schneider [2004] ECR I‑1389, paragraph 21; Case C‑165/03 Längst [2005] ECR I‑5637, paragraph 31; and Case C‑313/07 Kirtruna and Vigano [2008] ECR I‑7907, paragraph 26).

59      It follows that questions on the interpretation of EU law referred by a national court in the factual and legislative context which that court is responsible for defining and the accuracy of which is not a matter for this Court to determine, enjoy a presumption of relevance. The Court may refuse to rule on a question referred by a national court only where it is quite obvious that the interpretation of EU law that is sought is unrelated to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (see, in particular, Joined Cases C‑94/04 and C‑202/04 Cipolla and Others [2006] ECR I‑11421, paragraph 25; Joined Cases C‑222/05 to C‑225/05 van der Weerd and Others [2007] ECR I‑4233, paragraph 22; and Kirtruna and Vigano, paragraph 27).

60      The mere fact that the order for reference does not contain a formal finding that the press articles in question in the main proceedings are not protected by copyright cannot lead to an obvious conclusion that question 2(a) is hypothetical or unrelated to the actual facts of the main action or its purpose.

61      Accordingly, the fact that the referring court has not found that the articles in question in the main proceedings are not protected by copyright cannot render question 2(a) inadmissible.

62      In those circumstances question 2(a) must be held to be admissible.

63      Fourthly, question 2(b) is, so the defendants in the main proceedings submit, inadmissible because the answer to that question follows from the very wording of Article 5(3)(d) of Directive 2001/29 and leaves no scope for any reasonable doubt.

64      However, those circumstances in no way prevent a national court from referring to this Court for a preliminary ruling a question the answer to which, in the submission of the defendants in the main proceedings, leaves no scope for reasonable doubt (see, to that effect, Joined Cases C‑428/06 to C‑434/06 UGT-Rioja and Others [2008] ECR I‑6747, paragraphs 42 and 43).

65      Thus, even if the answer to the question referred leaves no scope for any reasonable doubt, that question does not thereby become inadmissible.

66      In those circumstances question 2(b) must be held to be admissible.

67      Fifthly, the defendants in the main proceedings submit that the fourth question is inadmissible because it is too general and has no relevance to the outcome of the dispute in the main proceedings.

68      However, that question does not come within any of the possible situations referred to in paragraph 59 of the present judgment.

69      In fact, the referring court wishes to know whether the distinction drawn by the Oberster Gerichtshof, as stated in paragraphs 41 and 42 of the present judgment, between the free use and the reproduction of a portrait photograph is compatible with EU law. That distinction depends on the existence and/or scope of the protection conferred according to the criteria laid down by EU law on such a subject-matter.

70      The fourth question referred by the national court, which seeks clarification precisely as to the existence and/or scope of that protection, cannot therefore be regarded as being unrelated to the actual facts or purpose of the main action or as being hypothetical.

71      Under those circumstances the fourth question must be declared to be admissible.

 Consideration of the questions referred

 The first question

72      By its first question, the referring court asks, in essence, whether Article 6(1) of Regulation No 44/2001 must be interpreted as precluding its application if actions against several defendants for substantially identical copyright infringements are brought on national legal grounds which vary according to the Member States concerned.

73      The rule of jurisdiction laid down in Article 6(1) of Regulation No 44/2001 provides that a person may, where he is one of a number of defendants, be sued in the courts for the place where any one of them is domiciled, provided the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.

74      That special rule, because it derogates from the principle stated in Article 2 of Regulation No 44/2001 that jurisdiction be based on the defendant’s domicile, must be strictly interpreted and cannot be given an interpretation going beyond the cases expressly envisaged by that regulation (see Case C‑98/06 Freeport [2007] ECR I‑8319, paragraph 35 and the case-law cited).

75      Indeed, as recital 11 in the preamble to Regulation No 44/2001 states, the rules of jurisdiction must be highly predictable and founded on the principle that jurisdiction is generally based on the defendant’s domicile and jurisdiction must always be available on this ground save in a few well-defined situations in which the subject-matter of the litigation or the autonomy of the parties warrants a different linking factor.

76      It is not apparent from the wording of Article 6(1) of Regulation No 44/2001 that the conditions laid down for application of that provision include a requirement that the actions brought against different defendants should have identical legal bases (Freeport, paragraph 38).

77      As regards its purpose, the rule of jurisdiction in Article 6(1) of Regulation No 44/2001, first, meets, in accordance with recitals 12 and 15 in the preamble to that regulation, the wish to facilitate the sound administration of justice, to minimise the possibility of concurrent proceedings and thus to avoid irreconcilable outcomes if cases are decided separately.

78      Secondly, that rule cannot however be applied so as to allow an applicant to make a claim against a number of defendants with the sole object of ousting the jurisdiction of the courts of the State where one of those defendants is domiciled (see, to that effect, Case 189/87Kalfelis [1988] ECR 5565, paragraphs 8 and 9, and Case C‑51/97 Réunion européenne and Others [1998] ECR I‑6511, paragraph 47).

79      In that regard, the Court has stated that, in order for judgments to be regarded as irreconcilable within the meaning of Article 6(1) of Regulation No 44/2001, it is not sufficient that there be a divergence in the outcome of the dispute, but that divergence must also arise in the same situation of fact and law (see Freeport, paragraph 40).

80      However, in assessing whether there is a connection between different claims, that is to say a risk of irreconcilable judgments if those claims were determined separately, the identical legal bases of the actions brought is only one relevant factor among others. It is not an indispensable requirement for the application of Article 6(1) of Regulation No 44/2001 (see, to that effect, Freeport, paragraph 41).

81      Thus, a difference in legal basis between the actions brought against the various defendants, does not, in itself, preclude the application of Article 6(1) of Regulation No 44/2001, provided however that it was foreseeable by the defendants that they might be sued in the Member State where at least one of them is domiciled (see, to that effect, Freeport, paragraph 47).

82      That reasoning is stronger if, as in the main proceedings, the national laws on which the actions against the various defendants are based are, in the referring court’s view, substantially identical.

83      It is, in addition, for the referring court to assess, in the light of all the elements of the case, whether there is a connection between the different claims brought before it, that is to say a risk of irreconcilable judgments if those claims were determined separately. For that purpose, the fact that defendants against whom a copyright holder alleges substantially identical infringements of his copyright did or did not act independently may be relevant.

84      In the light of the foregoing considerations, the answer to the first question is that Article 6(1) of Regulation No 44/2001 must be interpreted as not precluding its application solely because actions against several defendants for substantially identical copyright infringements are brought on national legal grounds which vary according to the Member States concerned. It is for the referring court to assess, in the light of all the elements of the case, whether there is a risk of irreconcilable judgments if those actions were determined separately.

 The fourth question

85      The fourth question, which it is appropriate to consider second, has been raised by the referring court in order to determine the correctness of the position according to which the defendants in the main proceedings did not need Ms Painer’s consent to publish the contested photo-fit worked up from a portrait photograph, because the scope of the protection conferred on such a photograph was restricted, or even non-existent, because of the minor degree of formative freedom allowed by such photographs.

86      Therefore, the referring court’s question must be understood as asking, in essence, whether Article 6 of Directive 93/98 must be interpreted as meaning that a portrait photograph can, under that provision, be protected by copyright and, if so, whether, because of the allegedly too minor degree of creative freedom such photographs can offer, that protection, particularly as regards the regime governing reproduction of works provided for in Article 2(a) of Directive 2001/29, is inferior to that enjoyed by other works, particularly photographic works.

87      As regards, first, the question whether realistic photographs, particularly portrait photographs, enjoy copyright protection under Article 6 of Directive 93/98, it is important to point out that the Court has already decided, in Case C‑5/08 Infopaq International [2009] ECR I‑6569, paragraph 35, that copyright is liable to apply only in relation to a subject-matter, such as a photograph, which is original in the sense that it is its author’s own intellectual creation.

88      As stated in recital 17 in the preamble to Directive 93/98, an intellectual creation is an author’s own if it reflects the author’s personality.

89      That is the case if the author was able to express his creative abilities in the production of the work by making free and creative choices (see, a contrario, Joined Cases C‑403/08 and C‑429/08 Football Association Premier League and Others [2011] ECR I‑0000, paragraph 98).

90      As regards a portrait photograph, the photographer can make free and creative choices in several ways and at various points in its production.

91      In the preparation phase, the photographer can choose the background, the subject’s pose and the lighting. When taking a portrait photograph, he can choose the framing, the angle of view and the atmosphere created. Finally, when selecting the snapshot, the photographer may choose from a variety of developing techniques the one he wishes to adopt or, where appropriate, use computer software.

92      By making those various choices, the author of a portrait photograph can stamp the work created with his ‘personal touch’.

93      Consequently, as regards a portrait photograph, the freedom available to the author to exercise his creative abilities will not necessarily be minor or even non-existent.

94      In view of the foregoing, a portrait photograph can, under Article 6 of Directive 93/98, be protected by copyright if, which it is for the national court to determine in each case, such photograph is an intellectual creation of the author reflecting his personality and expressing his free and creative choices in the production of that photograph.

95      As regards, secondly, the question whether such protection is inferior to that enjoyed by other works, particularly photographic works, it is appropriate to point out straightaway that the author of a protected work is, under Article 2(a) of Directive 2001/29, entitled to, among other things, the exclusive right to authorise or prohibit its direct or indirect, temporary or permanent reproduction by any means and in any form, in whole or in part.

96      In that regard, the Court has held that the protection conferred by that provision must be given a broad interpretation (see Infopaq International, paragraph 43).

97      Moreover, nothing in Directive 2001/29 or in any other directive applicable in this field supports the view that the extent of such protection should depend on possible differences in the degree of creative freedom in the production of various categories of works.

98      Therefore, as regards a portrait photograph, the protection conferred by Article 2(a) of Directive 2001/29 cannot be inferior to that enjoyed by other works, including other photographic works.

99      In the light of the foregoing, the answer to the fourth question is that Article 6 of Directive 93/98 must be interpreted as meaning that a portrait photograph can, under that provision, be protected by copyright if, which it is for the national court to determine in each case, such photograph is an intellectual creation of the author reflecting his personality and expressing his free and creative choices in the production of that photograph. Since it has been determined that the portrait photograph in question is a work, its protection is not inferior to that enjoyed by any other work, including other photographic works.

 Question 3(a) and (b)

100    By question 3(a) and (b), the national court asks, in essence, whether Article 5(3)(e) of Directive 2001/29, read in the light of Article 5(5) of that directive, must be interpreted as meaning that, in a case such as that in the main proceedings, its application requires a specific, current and express appeal for publication of the image on the part of the security authorities for search purposes and, if that is not required, whether the media can rely on that provision should they decide, of their own volition, without a search request being issued, to publish a photograph in the interests of public security.

101    In that regard, the provisions of Directive 2001/29 do not expressly address the circumstances in which the interests of public security can be invoked with a view to the use of a protected work, meaning that the Member States which decide to enact such an exception enjoy a broad discretion in that respect (see, by analogy, Case C‑462/09 Stichting de Thuiskopie [2011] ECR I‑0000, paragraph 23).

102    In fact, such a discretion is, first, in accordance with the idea that each Member State is best placed to determine, in accordance with its national needs, the requirements of public security, in the light of historical, legal, economic or social considerations specific to it (see, by analogy, Case C‑213/07 Michaniki [2008] ECR I‑9999, paragraph 56).

103    Secondly, that discretion is consistent with the Court’s case-law to the effect that, in the absence of sufficiently precise criteria in a directive to delimit the obligations thereunder, it is for the Member States to determine, in their own territory, what are the most relevant criteria for ensuring compliance with that directive (see, to that effect, Case C-245/00 SENA [2003] ECR I-1251, paragraph 34, and Case C‑433/02 Commission v Belgium [2003] ECR I‑12191, paragraph 19).

104    That being so, the discretion which the Member States enjoy when they make use of the exception under Article 5(3)(e) of Directive 2001/29 must be exercised within the limits imposed by EU law.

105    In that regard, it is important to note, first, that it is settled case-law that, when adopting measures to implement EU legislation, national authorities must exercise their discretion in compliance with the general principles of EU law, which include the principle of proportionality (see, inter alia, Case C‑313/99 Mulligan and Others [2002] ECR I‑5719, paragraphs 35 and 36; Joined Cases C‑231/00, C‑303/00 and C‑451/00 Cooperativa Lattepiú and Others [2004] ECR I‑2869, paragraph 57; and Case C‑496/04 Slob [2006] ECR I‑8257, paragraph 41).

106    In accordance with that principle, measures which the Member States may adopt must be appropriate for attaining their objective and must not go beyond what is necessary to achieve it (Case C-434/02 Arnold André [2004] ECR I‑11825, paragraph 45; Case C‑210/03Swedish Match [2004] ECR I‑11893, paragraph 47; and ABNA and Others, paragraph 68).

107    Secondly, the discretion enjoyed by the Member States cannot be used so as to compromise the principal purpose of Directive 2001/29 which, as is apparent from recital 9 in its preamble, is to establish a high level of protection for, in particular, authors, which is crucial to intellectual creation.

108    Thirdly, the exercise of that discretion must comply with the need for legal certainty for authors with regard to the protection of their works as referred to in recitals 4, 6 and 21 in the preamble to Directive 2001/29. That requirement means that the use of a protected work, for the purposes of public security, must not be dependent on discretionary human intervention by a user of the protected work (see, to that effect, Infopaq International, paragraph 62).

109    Fourthly, Article 5(3)(e) of Directive 2001/29, being a derogation from the general principle established by that directive, namely the requirement of authorisation from the copyright holder for any reproduction of a protected work, must, according to settled case-law, be interpreted strictly (Case C‑476/01 Kapper [2004] ECR I‑5205, paragraph 72, and Case C‑36/05 Commission v Spain [2006] ECR I‑10313, paragraph 31).

110    Fifthly, the Member States’ discretion is limited by Article 5(5) of Directive 2001/29, which makes the introduction of the exception under Article 5(3)(e) of that directive subject to three conditions, which are, first, that the exception may be applied only in certain special cases, second, that it does not conflict with a normal exploitation of the work and, finally, that it does not unreasonably prejudice the legitimate interests of the copyright holder.

111    In view of all those requirements and clarifications, the media, such as, in this case, newspaper publishers, cannot be allowed to confer on themselves the protection of public security. Only States, whose competent authorities are provided with appropriate means and coordinated structures, can be regarded as appropriate and responsible for the fulfillment of that objective of general interest by appropriate measures including, for example, assistance with a search appeal.

112    Such a publisher cannot, therefore, of its own volition, use a work protected by copyright by invoking an objective of public security.

113    However, having regard to the purpose of the press, in a democratic society governed by the rule of law, to inform the public, without restrictions other than those that are strictly necessary, it is conceivable that a newspaper publisher might, in specific cases, contribute to the fulfilment of an objective of public security by publishing a photograph of a person for whom a search has been launched. However, it should be required that such initiative is taken, first, within the framework of a decision or action taken by the competent national authorities to ensure public security and, second, by agreement and in coordination with those authorities, in order to avoid the risk of interfering with the measures taken by them. A specific, current and express appeal, on the part of the security authorities, for publication of a photograph for the purposes of an investigation is not, however, necessary.

114    The defendants’ argument that, in the name of freedom of the press, the media should be entitled to avail themselves of Article 5(3)(e) of Directive 2001/29, without a search notice from the security authorities, cannot lead to a different conclusion. Indeed, as the Advocate General pointed out, in point 163 of her opinion, the sole purpose of that provision is to ensure the protection of public security and not to strike a balance between the protection of intellectual property and the freedom of the press.

115    In addition, as is clear from Article 10 of the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed at Rome on 4 November 1950, and Article 11 of the Charter of Fundamental Rights of the European Union, freedom of the press is not intended to protect public security but it is the requirements of the protection of public security which can justify a restriction on that freedom.

116    In the light of the foregoing, the answer to question 3(a) and (b) is that Article 5(3)(e) of Directive 2001/29, read in the light of Article 5(5) of that directive, must be interpreted as meaning that the media, such as newspaper publishers, may not use, of their own volition, a work protected by copyright by invoking an objective of public security. However, it is conceivable that a newspaper publisher might, in specific cases, contribute to the fulfilment of such an objective by publishing a photograph of a person for whom a search has been launched. It should be required that such initiative is taken, first, within the framework of a decision or action taken by the competent national authorities to ensure public security and, second, by agreement and in coordination with those authorities, in order to avoid the risk of interfering with the measures taken by them, without, however, a specific, current and express appeal, on the part of the security authorities, for publication of a photograph for the purposes of an investigation being necessary.

 Question 3(c)

117    In view of the answer to question 3(a) and (b), there is no need to answer question 3(c).

 The second question

 Preliminary observations

118    As a preliminary point, it should be noted that in order to answer question 2(a) and (b) the Court must interpret the same provision of EU law, namely Article 5(3)(d) of Directive 2001/29.

119    Under that provision, Member States may provide for an exception to the author’s exclusive right of reproduction of his work in respect of quotations for purposes such as criticism or review, provided that (i) they relate to a work or other subject-matter which has already been lawfully made available to the public; (ii) unless this turns out to be impossible, the source, including the author’s name, is indicated; and (iii) their use is in accordance with fair practice, and to the extent required by the specific purpose.

120    That provision is intended thus to preclude the exclusive right of reproduction conferred on authors from preventing the publication, by means of quotation accompanied by comments or criticism, of extracts from a work already available to the public.

121    It is common ground that the work relied upon in the main proceedings is a portrait photograph of Natascha K.

122    It is appropriate to observe that the referring court starts from the assumption that a photographic work comes within the scope of Article 5(3)(d) of Directive 2001/29. Moreover, that assumption is not disputed by any of the parties to the main proceedings, by any of the Member States which have lodged observations or by the European Commission.

123    It is from that point of view that question 2(a) and (b) must be answered, without ruling on the correctness of the assumption or on the question of whether the contested photographs were in fact used for the purpose of quotation.

124    In that preliminary respect, it is also appropriate to define the meaning of the expression ‘mis[e] à la disposition du public’ (made available to the public) in the French version of Article 5(3)(d) of Directive 2001/29.

125    In that regard, it is important to point out that neither Article 5(3)(d) of Directive 2001/29 nor any general provision of that directive defines what is meant by the French expression ‘mis[e] à la disposition du public’. Moreover, that expression is used in several contexts with different wording, as is illustrated, in particular, by Article 3(2) of that directive.

126    In those circumstances, according to settled case-law, Article 5(3)(d) of Directive 2001/29 must be interpreted, in so far as possible, in the light of the applicable rules of international law, and in particular those set forth in the Berne Convention (see Case C‑306/05 SGAE[2006] ECR I‑11519, paragraphs 35, 40 and 41, and Football Association Premier League and Others, paragraph 189), it being understood that, under Article 37 thereof, its French version is to prevail if there are differences of opinion on the interpretation of the various language versions.

127    It is clear from the French text of Article 10(1) of the Berne Convention, the material scope of which is comparable to that of Article 5(3)(d) of Directive 2001/29, that the only quotations permissible, under certain conditions, are quotations from a work which has already been lawfully made available to the public.

128    In those circumstances, the French expression ‘mis[e] à la disposition du public [d’une oeuvre]’ (making a work available to the public), in the sense of Article 5(3)(d) of Directive 2001/29, must be understood as meaning the act of making that work available to the public. That interpretation is also confirmed not only by the expression ‘made available to the public’ but also by the expression ‘der Öffentlichkeit zugänglich gemacht’ used unvaryingly in the English and German versions of both Article 5(3)(d) of Directive 2001/29 and Article 10(1) of the Berne Convention.

 Question 2(a)

129    By question 2(a), the referring court asks, in essence, whether Article 5(3)(d) of Directive 2001/29, read in the light of Article 5(5) of that directive, must be interpreted as not precluding its application where a press report quoting a work or other protected subject-matter is not a literary work protected by copyright.

130    In that regard, it is appropriate to note at the outset that Article 5(3)(d) of Directive 2001/29 sets out a series of conditions for its application which do not include a requirement that a work or other protected subject-matter must be quoted as part of a literary work protected by copyright.

131    Contrary to the Italian Government’s submission in its written observations, the part of the sentence ‘provided that they relate to a work or other subject-matter which has already been lawfully made available to the public’ in Article 5(3)(d) refers, unambiguously, to the work or other protected subject-matter quoted and not to the subject-matter in which the quotation is made.

132    As regards the context surrounding Article 5(3)(d) of Directive 2001/29, it is important to note that, as stated in recital 31 in the preamble to that directive, a ‘fair balance’ must be safeguarded between, on the one hand, the rights and interests of authors, and, on the other, the rights of users of protected subject-matter.

133    It is also important to note that while the conditions set out in Article 5(3)(d) of Directive 2001/29 must, according to the Court’s case-law referred to in paragraph 109 of the present judgment, be interpreted strictly, since that provision is a derogation from the general rule established by that directive, the fact remains that the interpretation of those conditions must also enable the effectiveness of the exception thereby established to be safeguarded and its purpose to be observed (see, to that effect, Football Association Premier League and Others, paragraphs 162 and 163).

134    Article 5(3)(d) of Directive 2001/29 is intended to strike a fair balance between the right to freedom of expression of users of a work or other protected subject-matter and the reproduction right conferred on authors.

135    That fair balance is struck, in this case, by favouring the exercise of the users’ right to freedom of expression over the interest of the author in being able to prevent the reproduction of extracts from his work which has already been lawfully made available to the public, whilst ensuring that the author has the right, in principle, to have his name indicated.

136    From those two opposing points of view, the issue of whether the quotation is made as part of a work protected by copyright or, on the other hand, as part of a subject-matter not protected by copyright, is irrelevant.

137    In the light of all the foregoing considerations, the answer to question 2(a) is that Article 5(3)(d) of Directive 2001/29, read in the light of Article 5(5) of that directive, must be interpreted as not precluding its application where a press report quoting a work or other protected subject-matter is not a literary work protected by copyright.

 Question 2(b)

138    By question 2(b), the referring court is asking, in essence, whether Article 5(3)(d) of Directive 2001/29, read in the light of Article 5(5) of that directive, must be interpreted as precluding its application where the name of the author or performer of the work or other protected subject-matter quoted is not indicated.

139    The provisions of Article 5(3)(d) of Directive 2001/29 establish the obligation of principle that, for quotations, the source, including the author’s name, unless that turns out to be impossible, be indicated, it being understood that the work or other protected subject-matter quoted has already been lawfully made available to the public.

140    In that regard, the order for reference states, without giving any details, that the defendants in the main proceedings received the contested photographs from a news agency.

141    Since the contested photographs had been, prior to their use by the defendants in the main proceedings, in the possession of a news agency, which then, according to the defendants, sent them to the defendants, it is legitimate to assume that it was as the result of a lawful disposal that the news agency came into possession of those photographs. It should therefore be considered that the name of the author of the contested photographs was indicated on that occasion. Indeed, in the absence of such indication, the relevant making available to the public would be unlawful and, consequently, Article 5(3)(d) of Directive 2001/29 would not be applicable.

142    Thus, since the name of the author of the contested photographs had already been indicated, it was not in the least impossible for a subsequent user of those photographs to indicate it, in compliance with the obligation under Article 5(3)(d) of Directive 2001/29.

143    However, it should also be noted that the main proceedings are unusual, in that they are taking place in the context of a criminal investigation, as part of which, following the kidnapping of Natascha K., in 1998, a search notice, with a reproduction of the contested photographs, was launched by the competent national security authorities.

144    Consequently, it is conceivable that the national security authorities were the cause of the making available to the public of the contested photographs which were the subject of subsequent use by the defendants in the main proceedings.

145    Such making available does not require, under Article 5(3)(e) of Directive 2001/29, in contrast to Article 5(3)(d) of that directive, the author’s name to be indicated.

146    Consequently, the failure by an original user entitled to rely on Article 5(3)(e) to indicate, in making a protected work available to the public, its author’s name does not affect the lawfulness of that act.

147    In this case, if the contested photographs were, in accordance with Article 5(3)(e) of Directive 2001/29, made available, originally, to the public by the competent national security authorities and if, at the time of that original lawful use, the author’s name was not indicated, the subsequent use of those photographs by the press certainly required, in accordance with Article 5(3)(d) of that directive, the indication of their source but not necessarily the name of their author.

148    Indeed, since it is not for the press to establish the reasons for that failure, it is impossible for the press, in such a situation, to identify and/or indicate the author’s name and, therefore, it must be regarded as exempt from the obligation of principle to indicate the author’s name.

149    In the light of all the foregoing considerations, the answer to question 2(b) is that Article 5(3)(d) of Directive 2001/29, read in the light of Article 5(5) of that directive, must be interpreted as meaning that its application is subject to the obligation to indicate the source, including the name of the author or performer, of the work or other protected subject-matter quoted. However, if, in applying Article 5(3)(e) of Directive 2001/29, that name was not indicated, that obligation must be regarded as having been fulfilled if the source alone is indicated.

 Costs

150    Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Third Chamber) hereby rules:

1.      Article 6(1) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters must be interpreted as not precluding its application solely because actions against several defendants for substantially identical copyright infringements are brought on national legal grounds which vary according to the Member States concerned. It is for the referring court to assess, in the light of all the elements of the case, whether there is a risk of irreconcilable judgments if those actions were determined separately.

2.      Article 6 of Council Directive 93/98/EEC of 29 October 1993 harmonising the term of protection of copyright and certain related rights must be interpreted as meaning that a portrait photograph can, under that provision, be protected by copyright if, which it is for the national court to determine in each case, such photograph is an intellectual creation of the author reflecting his personality and expressing his free and creative choices in the production of that photograph. Since it has been determined that the portrait photograph in question is a work, its protection is not inferior to that enjoyed by any other work, including other photographic works.

3.      Article 5(3)(e) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, read in the light of Article 5(5) of that directive, must be interpreted as meaning that the media, such as newspaper publishers, may not use, of their own volition, a work protected by copyright by invoking an objective of public security. However, it is conceivable that a newspaper publisher might, in specific cases, contribute to the fulfilment of such an objective by publishing a photograph of a person for whom a search has been launched. It should be required that such initiative is taken, first, within the framework of a decision or action taken by the competent national authorities to ensure public security and, second, by agreement and in coordination with those authorities, in order to avoid the risk of interfering with the measures taken by them, without, however, a specific, current and express appeal, on the part of the security authorities, for publication of a photograph for the purposes of an investigation being necessary.

4.      Article 5(3)(d) of Directive 2001/29, read in the light of Article 5(5) of that directive, must be interpreted as not precluding its application where a press report quoting a work or other protected subject-matter is not a literary work protected by copyright.

5.      Article 5(3)(d) of Directive 2001/29, read in the light of Article 5(5) of that directive, must be interpreted as meaning that its application is subject to the obligation to indicate the source, including the name of the author or performer, of the work or other protected subject-matter quoted. However, if, in applying Article 5(3)(e) of Directive 2001/29, that name was not indicated, that obligation must be regarded as having been fulfilled if the source alone is indicated.

JUDGMENT OF THE COURT (Third Chamber)

21 October 2010 (*)

(Approximation of laws – Copyright and related rights – Directive 2001/29/EC – Reproduction right – Exceptions and limitations – Private copying exception – Definition of ‘fair compensation’ – Uniform interpretation – Implementation by the Member States – Criteria – Limits – Private copying levy applied to digital reproduction equipment, devices and media)

In Case C‑467/08,

REFERENCE for a preliminary ruling under Article 234 EC from the Audiencia Provincial de Barcelona (Spain), made by decision of 15 September 2008, received at the Court on 31 October 2008, in the proceedings

Padawan SL

v

Sociedad General de Autores y Editores de España (SGAE),

intervening parties:

Entidad de Gestión de Derechos de los Productores Audiovisuales (EGEDA),

Asociación de Artistas Intérpretes o Ejecutantes – Sociedad de Gestión de España (AIE),

Asociación de Gestión de Derechos Intelectuales (AGEDI),

Centro Español de Derechos Reprográficos (CEDRO),

THE COURT (Third Chamber),

composed of K. Lenaerts, President of the Chamber, D. Šváby, R. Silva de Lapuerta, E. Juhász and J. Malenovský (Rapporteur), Judges,

Advocate General: V. Trstenjak,

Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 4 March 2010,

after considering the observations submitted on behalf of:

–        Padawan SL, by J. Jover Padró, E. Blanco Aymerich and A. González García, abogados,

–        Sociedad General de Autores y Editores (SGAE), by P. Hernández Arroyo, J. Segovia Murúa, R. Allendesalazar Corchó and R. Vallina Hoset, abogados,

–        Entidad de Gestión de Derechos de los Productores Audiovisuales (EGEDA), by J.A. Suárez Lozano and M. Benzal Medina, abogados,

–        Asociación de Artistas Intérpretes o Ejecutantes – Sociedad de Gestión de España (AIE), by C. López Sánchez, abogado,

–        Asociación de Gestión de Derechos Intelectuales (AGEDI), by R. Ros Fernández, procurador, and F. Márquez Martín, abogado,

–        Centro Español de Derechos Reprográficos (CEDRO), by M. Malmierca Lorenzo and J. Díaz de Olarte, abogados,

–        the Spanish Government, by J. López-Medel Bascones and N. Díaz Abad, acting as Agents,

–        the German Government, by M. Lumma and S. Unzeitig, acting as Agents,

–        the Greek Government, by E.-M. Mamouna and V. Karra, acting as Agents,

–        the French Government, by G. de Bergues and B. Beaupère-Manokha, acting as Agents,

–        the Portuguese Government, by L. Inez Fernandes and N. Gonçalves, acting as Agents,

–        the Finnish Government, by A. Guimaraes-Purokoski, acting as Agent,

–        the United Kingdom Government, by H. Walker, acting as Agent,

–        the European Commission, by L. Lozano Palacios and H. Krämer, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 11 May 2010,

gives the following

Judgment

1        This reference for a preliminary ruling concerns the interpretation of the concept of ‘fair compensation’ in Article 5(2)(b) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10) paid to copyright holders in respect of the ‘private copying exception’.

2        The reference has been made in the course of proceedings between Padawan SL (‘Padawan’) and Sociedad General de Autores y Editores de España (‘SGAE’) concerning the ‘private copying levy’ allegedly owed by Padawan in respect of CD-R, CD-RW, DVD-R and MP3 players marketed by it.

 Legal context

 Directive 2001/29

3        Recitals 9, 10, 31, 32, 35, 38 and 39 in the preamble to Directive 2001/29 are worded as follows:

‘(9)       Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation. Their protection helps to ensure the maintenance and development of creativity in the interests of authors, performers, producers, consumers, culture, industry and the public at large. Intellectual property has therefore been recognised as an integral part of property.

(10)       If authors or performers are to continue their creative and artistic work, they have to receive an appropriate reward for the use of their work, as must producers in order to be able to finance this work …

…

(31) A fair balance of rights and interests between the different categories of rightholders, as well as between the different categories of rightholders and users of protected subject-matter must be safeguarded …

(32) This Directive provides for an exhaustive enumeration of exceptions and limitations to the reproduction right and the right of communication to the public. Some exceptions or limitations only apply to the reproduction right, where appropriate. This list takes due account of the different legal traditions in Member States, while, at the same time, aiming to ensure a functioning internal market. Member States should arrive at a coherent application of these exceptions and limitations, which will be assessed when reviewing implementing legislation in the future.

…

(35)       In certain cases of exceptions or limitations, rightholders should receive fair compensation to compensate them adequately for the use made of their protected works or other subject-matter. When determining the form, detailed arrangements and possible level of such fair compensation, account should be taken of the particular circumstances of each case. When evaluating these circumstances, a valuable criterion would be the possible harm to the rightholders resulting from the act in question. In cases where rightholders have already received payment in some other form, for instance as part of a licence fee, no specific or separate payment may be due. The level of fair compensation should take full account of the degree of use of technological protection measures referred to in this Directive. In certain situations where the prejudice to the rightholder would be minimal, no obligation for payment may arise.

…

(38)       Member States should be allowed to provide for an exception or limitation to the reproduction right for certain types of reproduction of audio, visual and audio-visual material for private use, accompanied by fair compensation. This may include the introduction or continuation of remuneration schemes to compensate for the prejudice to rightholders …

(39)       When applying the exception or limitation on private copying, Member States should take due account of technological and economic developments, in particular with respect to digital private copying and remuneration schemes, when effective technological protection measures are available. Such exceptions or limitations should not inhibit the use of technological measures or their enforcement against circumvention.’

4        Under Article 2 of Directive 2001/29:

‘Member States shall provide for the exclusive right to authorise or prohibit direct or indirect, temporary or permanent reproduction by any means and in any form, in whole or in part:

(a)       for authors, of their works;

(b)       for performers, of fixations of their performances;

(c)       for phonogram producers, of their phonograms;

(d)       for the producers of the first fixations of films, in respect of the original and copies of their films;

(e)       for broadcasting organisations, of fixations of their broadcasts, whether those broadcasts are transmitted by wire or over the air, including by cable or satellite.’

5        Article 5 of Directive 2001/29, entitled ‘Exceptions and limitations’, states in subparagraph 2(b):

‘Member States may provide for exceptions or limitations to the reproduction right provided for in Article 2 in the following cases:

…

(b)       in respect of reproductions on any medium made by a natural person for private use and for ends that are neither directly nor indirectly commercial, on condition that the rightholders receive fair compensation which takes account of the application or non-application of technological measures referred to in Article 6 to the work or subject-matter concerned’.

6        Article 5(5) of that directive provides:

‘The exceptions and limitations provided for in paragraphs 1, 2, 3 and 4 shall only be applied in certain special cases which do not conflict with a normal exploitation of the work or other subject-matter and do not unreasonably prejudice the legitimate interests of the rightholder.’

7        Article 6 of Directive 2001/29, entitled ‘Obligations as to technological measures’, provides in paragraphs 3 and 4:

‘3.       For the purposes of this Directive, the expression “technological measures” means any technology, device or component that, in the normal course of its operation, is designed to prevent or restrict acts, in respect of works or other subject-matter, which are not authorised by the rightholder of any copyright or any right related to copyright as provided for by law or the sui generis right provided for in Chapter III of Directive 96/9/EC. Technological measures shall be deemed “effective” where the use of a protected work or other subject-matter is controlled by the rightholders through application of an access control or protection process, such as encryption, scrambling or other transformation of the work or other subject-matter or a copy control mechanism, which achieves the protection objective.

4.       Notwithstanding the legal protection provided for in paragraph 1, in the absence of voluntary measures taken by rightholders, including agreements between rightholders and other parties concerned, Member States shall take appropriate measures to ensure that rightholders make available to the beneficiary of an exception or limitation provided for in national law in accordance with Article 5(2)(a), (2)(c), (2)(d), (2)(e), (3)(a), (3)(b) or (3)(e) the means of benefiting from that exception or limitation, to the extent necessary to benefit from that exception or limitation and where that beneficiary has legal access to the protected work or subject-matter concerned.

A Member State may also take such measures in respect of a beneficiary of an exception or limitation provided for in accordance with Article 5(2)(b), unless reproduction for private use has already been made possible by rightholders to the extent necessary to benefit from the exception or limitation concerned and in accordance with the provisions of Article 5(2)(b) and (5), without preventing rightholders from adopting adequate measures regarding the number of reproductions in accordance with these provisions.

…’

 National legislation

8        The applicable rules are contained in Royal Legislative Decree 1/1996 of 12 April 1996, approving the consolidated text of the Law on Intellectual Property (‘the CTLIP’). That royal legislative decree was amended in the context of the transposition of Directive 2001/29 by the Law 23/2006 of 7 July 2006 amending the consolidated text of the Law on Intellectual Property approved by Royal Legislative Decree 1/1996 (BOE No 162 of 8 July 2006, p. 25561).

9        Article 17 of the CTLIP, entitled ‘Exclusive rights of exploitation and implementing rules’, is worded as follows:

‘The author shall have exclusive rights of exploitation of his works regardless of their form and, in particular, reproduction rights … which cannot be exercised without his permission except in circumstances laid down in this Law.’

10      Under the heading ‘Reproduction’, Article 18 of the CTLIP provides:

‘Reproduction means the fixation of the work on a medium which enables communication of the work and copying of the whole or part of the work.’

11      Under Article 31(2) of the CTLIP:

‘The reproduction of works which have already been circulated shall not be subject to the author’s permission where the reproduction is by a natural person for his private use with respect to works which he has accessed legally, without prejudice to the fair compensation provided for in Article 25 … provided that the usage of the copy is not collective or for profit’.

12      Article 25 of the CTLIP, entitled ‘Fair compensation for private copying’, provides in subparagraphs 1, 2 and 4:

‘1.      Reproduction exclusively for private use, by means of non-typographical devices or technical instruments, of works circulated in the form of books or publications, deemed by regulation to be equivalent, and phonograms, videograms and other sound, visual or audiovisual media shall give rise to fair compensation paid at a flat rate for each of the three methods of reproduction mentioned, for the persons cited in subparagraph 4(b) in order to compensate the intellectual property rights which cease to be paid by reason of that reproduction. …

2.      That compensation shall be determined for each means of reproduction according to the equipment, devices and media appropriate to create that reproduction, which were manufactured on Spanish territory or acquired elsewhere with a view to their commercial distribution or their use there.

…

4.      With respect to the legal obligation mentioned in subparagraph 1,

(a)      “Debtors”: means manufacturers established in Spain, where they operate as commercial distributors, and persons who acquire outside Spanish territory, the equipment, devices and media referred to in subparagraph 2 with a view to their commercial distribution or use there.

The distributors, wholesalers and retailers, as subsequent purchasers of the equipment, devices and media, shall pay compensation jointly and severally with the debtors who supplied them for the products concerned, unless they prove that that compensation has in fact been paid for them, without prejudice to subparagraphs 14, 15 and 20.

(b)      “Creditors” means the authors of works publicly exploited in one of the forms mentioned in subparagraph 1, together, according to the case and mode of reproduction, with the editors, producers of phonograms and videograms and performers whose performances have been fixed on those phonograms and videograms.’

13      Article 25(6) of the CTLIP sets out the procedure for approving the amount of compensation which each debtor has to pay with respect to digital equipment, devices and media, a procedure which involves the Ministry of Culture, the Ministry of Industry, Tourism and Trade, intellectual property rights management societies, sectoral associations which represent mainly the debtors, Spanish consumer associations and the Ministry of Economy and Finance.

14      Article 25(6) provides that ‘the parties to the process of negotiation and, in every case, the Ministry of Culture and the Ministry of Industry, Tourism and Trade, for the purposes of the adoption of the inter-ministerial decree referred to in the following provision, shall take into account, inter alia, the following criteria:

–        the harm actually caused to the rightholders referred to in subparagraph 1, regard being had to the fact that if the harm caused to the holder is minimal it cannot give rise to an obligation for payment;

–        the degree to which the equipment, devices and media was used for the copying referred to in subparagraph 1;

–        the storage capacity of the equipment, devices and media;

–        the quality of the reproductions;

–        the availability, level of application and effectiveness of the technological measures referred to in Article 161;

–        how long the reproductions can be preserved;

–        the corresponding amounts of compensation applicable to the various equipment or devices concerned must be financially proportionate with respect to the average final retail price of those products.’

15      Article 25(12) of the CTLIP, which concerns the persons who are required to pay compensation, is worded as follows:

‘The obligation to pay compensation shall arise in the following circumstances:

(a)      With respect to manufacturers, where they operate as distributors, and for the persons who acquire the equipment, devices and media outside Spanish territory with a view to their commercial distribution therein, when the passing of property is effected by the debtor or, as the case may be, when the right to use or to enjoy any of the equipment, devices and media is transferred.

(b)      With respect to the persons who acquire equipment, devices and media outside Spanish territory in order to use them therein, at the time they were acquired.’

 The dispute in the main proceedings and the questions referred for a preliminary ruling

16      SGAE is one of the bodies responsible for the collective management of intellectual property rights in Spain.

17      Padawan markets CD-Rs, CD-RWs, DVD-Rs and MP3 players. SGAE claimed payment from Padawan of the ‘private copying levy’ provided for in Article 25 of the CTLIP for the years 2002 to 2004. Padawan refused on the ground that the application of that levy to digital media, indiscriminately and regardless of the purpose for which they were intended (private use or other professional or commercial activities), was incompatible with Directive 2001/29. By judgment of 14 June 2007, the Juzgado de lo Mercantil No 4 de Barcelona upheld SGAE’s claim in its entirety and Padawan was ordered to pay EUR 16 759.25 together with interest.

18      Padawan appealed against that judgment to the referring court.

19      After consulting the parties and the Public Prosecutor’s office about the expediency of making a reference for a preliminary ruling, the Audiencia Provincial de Barcelona (Provincial Court, Barcelona) decided to stay its proceedings and to refer the following questions to the Court for a preliminary ruling:

‘1.      Does the concept of “fair compensation” in Article 5(2)(b) of Directive 2001/29/EC entail harmonisation, irrespective of the Member States’ right to choose the system of collection which they deem appropriate for the purposes of giving effect to the right to fair compensation of intellectual property rightholders affected by the adoption of the private copying exception or limitation?

2.      Regardless of the system used by each Member State to calculate fair compensation, must that system ensure a fair balance between the persons affected, the intellectual property rightholders affected by the private copying exception, to whom the compensation is owed, on the one hand, and the persons directly or indirectly liable to pay the compensation, on the other, and is that balance determined by the reason for the fair compensation, which is to mitigate the harm arising from the private copying exception?

3.      Where a Member State opts for a system of charging or levying in respect of digital reproduction equipment, devices and media, in accordance with the aim pursued by Article 5(2)(b) of Directive 2001/29 and the context of that provision, must that charge (the fair compensation for private copying) necessarily be linked to the presumed use of those equipment and media for making reproductions covered by the private copying exception, with the result that the application of the charge would be justified where it may be presumed that the digital reproduction equipment, devices and media are to be used for private copying, but not otherwise?

4.      If a Member State adopts a private copying “levy” system, is the indiscriminate application of that “levy” to undertakings and professional persons who clearly purchase digital reproduction devices and media for purposes other than private copying compatible with the concept of “fair compensation”?

5.      Might the system adopted by the Spanish State of applying the private copying levy indiscriminately to all digital reproduction equipment, devices and media infringe Directive 2001/29, in so far as there is insufficient correlation between the fair compensation and the limitation of the private copying right justifying it, because to a large extent it is applied to different situations in which the limitation of rights justifying the compensation does not exist?’

 The questions referred for a preliminary ruling

 Admissibility

20      First, the Centro Español de Derechos Reprográficos and the Spanish Government argue essentially that the reference for a preliminary ruling is irrelevant to the outcome of the dispute in the main proceedings since Directive 2001/29 is not applicable to it ratione temporis. They submit that the national provisions preceding the entry into force of those implementing Directive 2001/29 are applicable to the present dispute. Consequently, the interpretation of the notion of ‘fair compensation’ in Article 5(2)(b) of that directive is unnecessary for the resolution of the dispute.

21      In that connection, it should be recalled that, in the context of the cooperation between the Court of Justice and the national courts provided for by Article 267 TFEU, it is solely for the national court before which a dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine, in the light of the particular circumstances of the case, both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted concern the interpretation of European Union law, the Court of Justice is bound, in principle, to give a ruling (see, inter alia, Case C-379/98 PreussenElektra [2001] ECR I-2099, paragraph 38; Case C-18/01 Korhonen and Others[2003] ECR I-5321, paragraph 19; and Joined Cases C-261/07 and C‑299/07 VTB-VAB and Galatea [2009] ECR I-2949, paragraph 32).

22      However, it is not for the Court, in the context of a reference for a preliminary ruling, to rule on the interpretation of national provisions or to decide whether the referring court’s interpretation thereof is correct. The Court must take account, under the division of jurisdiction between the courts of the European Union and the national courts, of the factual and legislative context, as described in the order for reference, in which the questions put to it are set (Joined Cases C-482/01 and C-493/01 Orfanopoulos and Oliveri [2004] ECR I-5257, paragraph 42; Case C‑330/07 Jobra [2008] ECR I-9099, paragraph 17; and Joined Cases C-378/07 to C-380/07 Angelidaki and Others [2009] ECR I-3071, paragraph 48).

23      As far as concerns the present reference for a preliminary ruling, it must be stated, first, that it concerns the interpretation of a provision of European Union law, namely Article 5(2)(b) of Directive 2001/29, which falls within the jurisdiction of the Court in such a reference, and furthermore, it is not inconceivable, having regard to the period for which the levy at issue in the main proceedings is claimed and the expiry date of the transposition period prescribed in the first subparagraph of Article 13(1) of Directive 2001/29 of 22 December 2002, that the referring court may be required to draw conclusions from the interpretation it has requested, in particular with respect to its obligation to interpret national law in the light of European Union law (Case C-106/89 Marleasing [1990] ECR I-4135, paragraph 8).

24      Second, the determination of the applicable national legislation ratione temporis is a question of interpretation of national law and thus does not fall within the jurisdiction of the Court in a reference for a preliminary ruling.

25      It follows that the first plea of inadmissibility must be dismissed.

26      Second, SGAE submits that the questions referred by the national court are inadmissible in so far as they concern situations of national law which are not harmonised by Directive 2001/29. It argues that the questions raised are based essentially on aspects which fall within the jurisdiction of the Member States. In the context of a reference for a preliminary ruling the Court of Justice does not have jurisdiction to interpret and apply national law.

27      However, it should be borne in mind that the issue whether the questions submitted by the national court concern a matter unconnected with European Union law, on the ground that Directive 2001/29 provides only for minimal harmonisation in that area, relates to the substance of the questions submitted by that Court and, not to their admissibility (see Joined Cases C-51/96 and C-191/97 Deliège [2000] ECR I-2549, paragraph 28). Therefore, SGAE’s plea alleging that that directive is inapplicable to the dispute in the main proceedings does not relate to the admissibility of these proceedings but concerns the substance of those questions (see, to that effect, Joined Cases C-295/04 to C-298/04 Manfredi and Others [2006] ECR I-6619, paragraph 30).

28      Since the second plea of inadmissibility must be dismissed, it follows from all of the foregoing considerations that the reference for a preliminary ruling must be declared admissible.

 Substance

 The first question

29      By its first question, the national court asks, in essence, whether the concept of ‘fair compensation’, within the meaning of Article 5(2)(b) of Directive 2001/29, is an autonomous concept of European Union law which must be interpreted in a uniform manner in all Member States, irrespective of the Member States’ right to choose the system of collection.

30      It should be borne in mind that under Article 5(2)(b) of Directive 2001/29 Member States which decide to introduce the private copying exception into their national law are required to provide for the payment of ‘fair compensation’ to rightholders.

31      It should be noted at the outset that neither Article 5(2)(b) nor any other provision of Directive 2001/29 refers to the national law of the Member States as regards the concept of ‘fair compensation’.

32      In such circumstances, according to settled case-law, the need for a uniform application of European Union law and the principle of equality require that the terms of a provision of European Union law which makes no express reference to the law of the Member States for the purpose of determining its meaning and scope must normally be given an independent and uniform interpretation throughout the European Union; that interpretation must take into account the context of the provision and the objective of the relevant legislation (see, in particular, Case 327/82 Ekro [1984] ECR 107, paragraph 11; Case C-287/98 Linster [2000] ECR I-6917, paragraph 43; and Case C-523/07 A [2009] ECR I‑2805, paragraph 34).

33      It is clear from that case-law that the concept of ‘fair compensation’ which appears in a provision of a directive which does not contain any reference to national laws must be regarded as an autonomous concept of European Union law and interpreted uniformly throughout the European Union (see, by analogy, as regards the concept of ‘equitable remuneration’ in Article 8(2) of Council Directive 92/100/EEC of 19 November 1992 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ 1992 L 346, p. 61) and Case C-245/00 SENA [2003] ECR I-1251, paragraph 24).

34      That conclusion is supported by the objective pursued by the legislation in which the concept of fair compensation appears.

35      The objective of Directive 2001/29, based, in particular, on Article 95 EC and intended to harmonise certain aspects of the law on copyright and related rights in the information society and to ensure competition in the internal market is not distorted as a result of Member States’ different legislation (Case C-479/04 Laserdisken [2006] ECR I-8089, paragraphs 26, 31 to 34) requires the elaboration of autonomous concepts of European Union law. The European Union legislature’s aim of achieving the most uniform interpretation possible of Directive 2001/29 is apparent in particular from recital 32 in the preamble thereto, which calls on the Member States to arrive at a coherent application of the exceptions to and limitations on reproduction rights, with the aim of ensuring a functioning internal market.

36      Therefore, although it is open to the Member States, pursuant to Article 5(2)(b) of Directive 2001/29, to introduce a private copying exception to the author’s exclusive reproduction right laid down in European Union law, those Member States which make use of that option must provide for the payment of fair compensation to authors affected by the application of that exception. An interpretation according to which Member States which have introduced an identical exception of that kind, provided for by European Union law and including, as set out in recitals 35 and 38 in the preamble thereto the concept of ‘fair compensation’ as an essential element, are free to determine the limits in an inconsistent and un-harmonised manner which may vary from one Member State to another, would be incompatible with the objective of that directive, as set out in the preceding paragraph.

37      Having regard to the foregoing considerations, the answer to the first question is that the concept of ‘fair compensation’, within the meaning of Article 5(2)(b) of Directive 2001/29, is an autonomous concept of European Union law which must be interpreted uniformly in all the Member States that have introduced a private copying exception, irrespective of the power conferred on them to determine, within the limits imposed by European Union law and in particular by that directive, the form, detailed arrangements for financing and collection, and the level of that fair compensation.

The second question

38      By its second question, the national court asks, in essence, whether the ‘fair balance’ to be established between the persons concerned requires fair compensation to be calculated on the basis of the criterion of the harm caused to authors as a result of the introduction of the private copying exception. It also asks who, apart from the authors affected, are the persons concerned between whom a ‘fair balance’ must be established.

39      In the first place, as regards the role played by the criterion of the harm suffered by the author in the calculation of fair compensation, it is apparent from recitals 35 and 38 in the preamble to Directive 2001/29 that the purpose of fair compensation is to compensate authors ‘adequately’ for the use made of their protected works without their authorisation. In order to determine the level of that compensation, account must be taken – as a ‘valuable criterion’ – of the ‘possible harm’ suffered by the author as a result of the act of reproduction concerned, although prejudice which is ‘minimal’ does not give rise to a payment obligation. The private copying exception must therefore include a system ‘to compensate for the prejudice to rightholders’.

40      It is clear from those provisions that the notion and level of fair compensation are linked to the harm resulting for the author from the reproduction for private use of his protected work without his authorisation. From that perspective, fair compensation must be regarded as recompense for the harm suffered by the author.

41      Furthermore, the word ‘compensate’ in recitals 35 and 38 in the preamble to Directive 2001/29 expresses the intention of the European Union legislature to establish a specific compensation scheme triggered by the existence of harm to the detriment of the rightholders, which gives rise, in principle, to the obligation to ‘compensate’ them.

42      It follows that fair compensation must necessarily be calculated on the basis of the criterion of the harm caused to authors of protected works by the introduction of the private copying exception.

43      In the second place, as regards the question of the persons concerned by the ‘fair balance’, recital 31 in the preamble to Directive 2001/29 provides for the maintenance of a ‘fair balance’ between the rights and interests of the rightholders, who are to receive the fair compensation, on one hand, and those of the users of protected works on the other.

44      Copying by natural persons acting in a private capacity must be regarded as an act likely to cause harm to the author of the work concerned.

45      It follows that the person who has caused harm to the holder of the exclusive reproduction right is the person who, for his own private use, reproduces a protected work without seeking prior authorisation from the rightholder. Therefore, in principle, it is for that person to make good the harm related to that copying by financing the compensation which will be paid to the rightholder.

46      However, given the practical difficulties in identifying private users and obliging them to compensate rightholders for the harm caused to them, and bearing in mind the fact that the harm which may arise from each private use, considered separately, may be minimal and therefore does not give rise to an obligation for payment, as stated in the last sentence of recital 35 in the preamble to Directive 2001/29, it is open to the Member States to establish a ‘private copying levy’ for the purposes of financing fair compensation chargeable not to the private persons concerned, but to those who have the digital reproduction equipment, devices and media and who, on that basis, in law or in fact, make that equipment available to private users or who provide copying services for them. Under such a system, it is the persons having that equipment who must discharge the private copying levy.

47      It is true that in such a system it is not the users of the protected subject-matter who are the persons liable to finance fair compensation, contrary to what recital 31 in the preamble to the directive appears to require.

48      However, it should be observed, first, that the activity of the persons liable to finance the fair compensation, namely the making available to private users of reproduction equipment, devices and media, or their supply of copying services, is the factual precondition for natural persons to obtain private copies. Second, nothing prevents those liable to pay the compensation from passing on the private copying levy in the price charged for making the reproduction equipment, devices and media available or in the price for the copying service supplied. Thus, the burden of the levy will ultimately be born by the private user who pays that price. In those circumstances, the private user for whom the reproduction equipment, devices or media are made available or who benefit from a copying service must be regarded in fact as the person indirectly liable to pay fair compensation.

49      Accordingly, since that system enables the persons liable to pay compensation to pass on the cost of the levy to private users and that, therefore, the latter assume the burden of the private copying levy, it must be regarded as consistent with a ‘fair balance’ between the interests of authors and those of the users of the protected subject-matter.

50      Having regard to all of the foregoing considerations, the answer to the second question is that Article 5(2)(b) of Directive 2001/29 must be interpreted as meaning that the ‘fair balance’ between the persons concerned means that fair compensation must be calculated on the basis of the criterion of the harm caused to authors of protected works by the introduction of the private copying exception. It is consistent with the requirements of that ‘fair balance’ to provide that persons who have digital reproduction equipment, devices and media and who, on that basis, in law or in fact, make that equipment available to private users or provide them with copying services are the persons liable to finance the fair compensation, inasmuch as they are able to pass on to private users the actual burden of financing it.

 The third and fourth questions

51      By its third and fourth questions, which it is appropriate to examine together, the national court asks essentially whether, under Article 5(2)(b) of Directive 2001/29, there is a necessary link between the application of the levy intended to finance fair compensation with respect to digital reproduction equipment, devices and media, and the deemed use of the latter for the purposes of private copying. It also asks whether the indiscriminate application of the private copying levy, in particular with respect to digital reproduction equipment, devices and media clearly intended for uses other than the production of private copies, complies with Directive 2001/29.

52      It must be held from the outset that a system for financing fair compensation such as that described in paragraphs 46 and 48 of this judgment is compatible with the requirements of a ‘fair balance’ only if the digital reproduction equipment, devices and media concerned are liable to be used for private copying and, therefore, are likely to cause harm to the author of the protected work. There is therefore, having regard to those requirements, a necessary link between the application of the private copying levy to the digital reproduction equipment, devices and media and their use for private copying.

53      Consequently, the indiscriminate application of the private copying levy to all types of digital reproduction equipment, devices and media, including in the case expressly mentioned by the national court in which they are acquired by persons other than natural persons for purposes clearly unrelated to private copying, does not comply with Article 5(2) of Directive 2001/29.

54      On the other hand, where the equipment at issue has been made available to natural persons for private purposes it is unnecessary to show that they have in fact made private copies with the help of that equipment and have therefore actually caused harm to the author of the protected work.

55      Those natural persons are rightly presumed to benefit fully from the making available of that equipment, that is to say that they are deemed to take full advantage of the functions associated with that equipment, including copying.

56      It follows that the fact that that equipment or devices are able to make copies is sufficient in itself to justify the application of the private copying levy, provided that the equipment or devices have been made available to natural persons as private users.

57      Such an interpretation is supported by the wording of recital 35 in the preamble to Directive 2001/29. That recital mentions, as a valuable criterion for the determination of the level of fair compensation, not only the ‘harm’ as such but also the ‘possible’ harm. The ‘possibility’ of causing harm to the author of the protected work depends on the fulfilment of the necessary pre-condition that equipment or devices which allow copying have been made available to natural persons, which need not necessarily be followed by the actual production of private copies.

58      Furthermore, the Court has already held that, from the copyright point of view, account must be taken of the mere possibility for the ultimate user, in that case customers of a hotel, to watch programmes broadcast by means of a television set and a television signal made available to them by that establishment, and not the actual access of the customers to those works (Case C-306/05 SGAE [2006] ECR I-11519, paragraphs 43 and 44).

59      Having regard to all of the foregoing considerations, the answer to questions 3 and 4 is that Article 5(2)(b) of Directive 2001/29 must be interpreted as meaning that a link is necessary between the application of the levy intended to finance fair compensation with respect to digital reproduction equipment, devices and media and the deemed use of them for the purposes of private copying. Consequently, the indiscriminate application of the private copying levy, in particular with respect to digital reproduction equipment, devices and media not made available to private users and clearly reserved for uses other than private copying, is incompatible with Directive 2001/29.

 The fifth question

60      By its fifth question, the national court asks, in essence, whether the system adopted by the Kingdom of Spain, which consists in indiscriminately applying the private copying levy to all types of digital reproduction equipment, devices and media, however the equipment, devices or media are used, is compatible with Directive 2001/29.

61      In that connection, the Court has consistently held that, except in an action for a declaration of a failure to fulfil obligations, it is not for the Court to rule on the compatibility of a national provision with European Union law. That competence belongs to the national courts, if necessary, after obtaining from the Court, by way of a reference for a preliminary ruling, such clarification as may be necessary on the scope and interpretation of that law (see Case C-347/87 Triveneta Zuccheri and Others v Commission [1990] ECR I-1083, paragraph 16).

62      Therefore, it is for the national court to determine, in the light of the answers provided to the first four questions, the compatibility of the Spanish private copying levy with Directive 2001/29.

63      Therefore, there is no need for the Court to answer that question.

 Costs

64      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Third Chamber) hereby rules:

1.      The concept of ‘fair compensation’, within the meaning of Article 5(2)(b) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, is an autonomous concept of European Union law which must be interpreted uniformly in all the Member States that have introduced a private copying exception, irrespective of the power conferred on the Member States to determine, within the limits imposed by European Union law in particular by that directive, the form, detailed arrangements for financing and collection, and the level of that fair compensation.

2.      Article 5(2)(b) of Directive 2001/29 must be interpreted as meaning that the ‘fair balance’ between the persons concerned means that fair compensation must be calculated on the basis of the criterion of the harm caused to authors of protected works by the introduction of the private copying exception. It is consistent with the requirements of that ‘fair balance’ to provide that persons who have digital reproduction equipment, devices and media and who on that basis, in law or in fact, make that equipment available to private users or provide them with copying services are the persons liable to finance the fair compensation, inasmuch as they are able to pass on to private users the actual burden of financing it.

3.      Article 5(2)(b) of Directive 2001/29 must be interpreted as meaning that a link is necessary between the application of the levy intended to finance fair compensation with respect to digital reproduction equipment, devices and media and the deemed use of them for the purposes of private copying. Consequently, the indiscriminate application of the private copying levy, in particular with respect to digital reproduction equipment, devices and media not made available to private users and clearly reserved for uses other than private copying, is incompatible with Directive 2001/29.

Case C-467/08

Padawan SL

v

Sociedad General de Autores y Editores de España (SGAE)

(Reference for a preliminary ruling from the

Audiencia Provincial de Barcelona)

(Approximation of laws – Copyright and related rights – Directive 2001/29/EC – Reproduction right – Exceptions and limitations – Private copying exception – Definition of ‘fair compensation’ – Uniform interpretation – Implementation by the Member States – Criteria – Limits – Private copying levy applied to digital reproduction equipment, devices and media)

Summary of the Judgment

1.        Approximation of laws – Copyright and related rights – Directive 2001/29 – Harmonisation of certain aspects of copyright and related rights in the information society – Reproduction right

(European Parliament and Council Directive 2001/29, Art. 5(2)(b))

2.        Approximation of laws – Copyright and related rights – Directive 2001/29 – Harmonisation of certain aspects of copyright and related rights in the information society – Reproduction right

(European Parliament and Council Directive 2001/29, recitals 35 and 38 and Art. 5(2)(b))

3.        Approximation of laws – Copyright and related rights – Directive 2001/29 – Harmonisation of certain aspects of copyright and related rights in the information society – Reproduction right

(European Parliament and Council Directive 2001/29, Art. 5(2)(b))

1.        The concept of ‘fair compensation’, within the meaning of Article 5(2)(b) of Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society, is an autonomous concept of European Union law which must be interpreted uniformly in all the Member States that have introduced a private copying exception, irrespective of the power conferred on the Member States to determine, within the limits imposed by European Union law in particular by that directive, the form, detailed arrangements for financing and collection, and the level of that fair compensation.

(see para. 37, operative part 1)

2.        Article 5(2)(b) of Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that the fair balance between the persons concerned means that fair compensation must be calculated on the basis of the criterion of the harm caused to authors of protected works by the introduction of the private copying exception. It is consistent with the requirements of that fair balance to provide that persons who have digital reproduction equipment, devices and media and who on that basis, in law or in fact, make that equipment available to private users or provide them with copying services are the persons liable to finance the fair compensation, inasmuch as they are able to pass on to private users the actual burden of financing it.

In that connection, given the practical difficulties in identifying private users and obliging them to compensate rightholders for the harm caused to them, and bearing in mind the fact that the harm which may arise from each private use, considered separately, may be minimal and therefore does not give rise to an obligation for payment, as stated in the last sentence of recital 35 in the preamble to Directive 2001/29, it is open to the Member States to establish a ‘private copying levy’ for the purposes of financing fair compensation chargeable not to the private persons concerned, but to those who have the digital reproduction equipment, devices and media and who, on that basis, in law or in fact, make that equipment available to private users or who provide copying services for them.

(see paras 46, 50, operative part 2)

3.        Article 5(2)(b) of Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that a link is necessary between the application of the levy intended to finance fair compensation with respect to digital reproduction equipment, devices and media and the deemed use of them for the purposes of private copying. Consequently, the indiscriminate application of the private copying levy, in particular with respect to digital reproduction equipment, devices and media not made available to private users and clearly reserved for uses other than private copying, is incompatible with Directive 2001/29.

On the other hand, where the equipment at issue has been made available to natural persons for private purposes it is unnecessary to show that they have in fact made private copies with the help of that equipment and have therefore actually caused harm to the author of the protected work. Those natural persons are rightly presumed to benefit fully from the making available of that equipment, that is to say that they are deemed to take full advantage of the functions associated with that equipment, including copying.

(see paras 54-55, 59, operative part 3)

934 F.Supp.2d 640 (2013)

644*644 Richard Stephen Mandel, Jonathan Zachary King, and Robert William Clarida of Cowan, Liebowitz & Latmant P.C., New York, NY, for Plaintiff.

Gary Philip Adelman of Davis Shapiro Lewit & Hayes LLP, New York, NY, for Defendant.

MEMORANDUM AND ORDER

RICHARD J. SULLIVAN, District Judge.

Capitol Records, LLC ("Capitol"), the recording label for such classic vinyls as 645*645Frank Sinatra's "Come Fly With Me" and The Beatles' "Yellow Submarine," brings this action against ReDigi Inc. ("ReDigi"), a twenty-first century technology company that touts itself as a "virtual" marketplace for "pre-owned" digital music. What has ensued in a fundamental clash over culture, policy, and copyright law, with Capitol alleging that ReDigi's web-based service amounts to copyright infringement in violation of the Copyright Act of 1976 (the "Copyright Act"), 17 U.S.C. § 101 et seq.Now before the Court are Capitol's motion for partial summary judgment and ReDigi's motion for summary judgment, both filed pursuant to Federal Rule of Civil Procedure 56. Because this is a court of law and not a congressional subcommittee or technology blog, the issues are narrow, technical, and purely legal. Thus, for the reasons that follow, Capitol's motion is granted and ReDigi's motion is denied.

I. BACKGROUND

A. Facts

ReDigi markets itself as "the world's first and only online marketplace for digital used music."^[1] (Capitol 56.1 Stmt., Doc. No. 50 ("Cap. 56.1"), ¶ 6.) Launched on October 13, 2011, ReDigi's website invites users to "sell their legally acquired digital music files, and buy used digital music from others at a fraction of the price currently available on iTunes." (Id. ¶¶ 6, 9.) Thus, much like used record stores, ReDigi permits its users to recoup value on their unwanted music. Unlike used record stores, however, ReDigi's sales take place entirely in the digital domain. (See ReDigi Reply 56.1 Stmt., Doc. No. 83 ("RD Rep. 56.1"), 4 ¶ 16.)

To sell music on ReDigi's website, a user must first download ReDigi's "Media Manager" to his computer. (ReDigi 56.1 Stmt., Doc. No. 56 ("RD 56.1"), ¶ 8.) Once installed, Media Manager analyzes the user's computer to build a list of digital music files eligible for sale. (Id.) A file is eligible only if it was purchased on iTunes or from another ReDigi user; music downloaded from a CD or other file-sharing website is ineligible for sale. (Id.) After this validation process, Media Manager continually runs on the user's computer and attached devices to ensure that the user has not retained music that has been sold or uploaded for sale. (Id. ¶ 10.) However, Media Manager cannot detect copies stored in other locations. (Cap. 56.1 ¶¶ 59-61, 63; see Capitol Reply 56.1 Stmt., Doc. No. 78 ("Cap. Rep. 56.1"), ¶ 10.) If a copy is detected, Media Manager prompts the user to delete the file. (Cap. 56.1 ¶ 64.) The file is not deleted automatically or involuntarily, though ReDigi's policy is to suspend the accounts of users who refuse to comply. (Id.)

After the list is built, a user may upload any of his eligible files to ReDigi's "Cloud Locker," an ethereal moniker for what is, in fact, merely a remote server in Arizona. (RD 56.1 ¶¶ 9, 11; Cap. 56.1 ¶ 22.) ReDigi's upload process is a source of contention between the parties. (See RD 56.1 ¶¶ 14-23; Cap. Rep. 56.1 ¶¶ 14-23.) ReDigi asserts that the process involves "migrating" a user's file, packet by packet — "analogous to a train" — from the user's computer to the Cloud Locker so that data does not exist in two places at any one time.^[2] (RD 56.1 ¶¶ 14, 36.) Capitol asserts 646*646 that, semantics aside, ReDigi's upload process "necessarily involves copying" a file from the user's computer to the Cloud Locker. (Cap. Rep. 56.1 ¶ 14.) Regardless, at the end of the process, the digital music file is located in the Cloud Locker and not on the user's computer. (RD 56.1 ¶ 21.) Moreover, Media Manager deletes any additional copies of the file on the user's computer and connected devices. (Id. ¶ 38.)

Once uploaded, a digital music file undergoes a second analysis to verify eligibility. (Cap. 56.1 ¶¶ 131-32.) If ReDigi determines that the file has not been tampered with or offered for sale by another user, the file is stored in the Cloud Locker, and the user is given the option of simply storing and streaming the file for personal use or offering it for sale in Re-Digi's marketplace. (Id. ¶¶ 33-37.) If a user chooses to sell his digital music file, his access to the file is terminated and transferred to the new owner at the time of purchase. (Id. ¶ 49.) Thereafter, the new owner can store the file in the Cloud Locker, stream it, sell it, or download it to her computer and other devices. (Id. ¶ 50.) No money changes hands in these transactions. (RD Rep. 56.15 ¶ 18.) Instead, users buy music with credits they either purchased from ReDigi or acquired from other sales. (Id.) ReDigi credits, once acquired, cannot be exchanged for money. (Id.) Instead, they can only be used to purchase additional music. (Id.)

To encourage activity in its marketplace, ReDigi initially permitted users to preview thirty-second clips and view album cover art of songs posted for sale pursuant to a licensing agreement with a third party. (See RD 56.1 ¶¶ 73-78.) However, shortly after its launch, ReDigi lost the licenses. (Id.) Accordingly, ReDigi now sends users to either YouTube or iTunes to listen to and view this promotional material. (Id. ¶¶ 77, 79.) ReDigi also offers its users a number of incentives. (Cap. 56.1 ¶ 39.) For instance, ReDigi gives twenty-cent credits to users who post files for sale and enters active sellers into contests for prizes. (Id. ¶¶ 39, 42.) ReDigi also encourages sales by advising new users via email that they can "[c]ash in" their music on the website, tracking and posting the titles of sought after songs on its website and in its newsletter, notifying users when they are low on credits and advising them to either purchase more credits or sell songs, and connecting users who are seeking unavailable songs with potential sellers. (Id. ¶¶ 39-48.)

Finally, ReDigi earns a fee for every transaction. (Id. ¶ 54.) ReDigi's website prices digital music files at fifty-nine to seventy-nine cents each. (Id. ¶ 55.) When users purchase a file, with credits, 20% of the sale price is allocated to the seller, 20% goes to an "escrow" fund for the artist, and 60% is retained by ReDigi.^[3] (Id.)

B. Procedural History

Capitol, which owns a number of the recordings sold on ReDigi's website, commenced 647*647 this action by filing the Complaint on January 6, 2012. (SeeComplaint, dated Jan. 5, 2012, Doc. No. 1 ("Compl."); Cap. 56.1 ¶¶ 68-73.) In its Complaint, Capitol alleges multiple violations of the Copyright Act, 17 U.S.C. § 101,et seq., including direct copyright infringement, inducement of copyright infringement, contributory and vicarious copyright infringement, and common law copyright infringement. (Compl. ¶¶ 44-88.) Capitol seeks preliminary and permanent injunctions of ReDigi's services, as well as damages, attorney's fees and costs, interest, and any other appropriate relief. (Id. at 17-18.) On February 6, 2012, the Court denied Capitol's motion for a preliminary injunction, finding that Capitol had failed to establish irreparable harm. (Doc. No. 26.)

On July 20, 2012, Capitol filed its motion for partial summary judgment on the claims that ReDigi directly and secondarily infringed Capitol's reproduction and distribution rights. (Doc. No. 48.) ReDigi filed its cross-motion the same day, seeking summary judgment on all grounds of liability, including ReDigi's alleged infringement of Capitol's performance and display rights.^[4] (Doc. No. 54.) Both parties responded on August 14, 2012 and replied on August 24, 2012. (Doc. Nos. 76, 79, 87, 90.) The Court heard oral argument on October 5, 2012.

II. LEGAL STANDARD

Pursuant to Federal Rule of Civil Procedure 56(a), a court may not grant a motion for summary judgment unless "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party bears the burden of showing that it is entitled to summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The court "is not to weigh evidence but is instead required to view the evidence in the light most favorable to the party opposing summary judgment, to draw all reasonable inferences in favor of that party, and to eschew credibility assessments." Amnesty Am. v. Town of W. Hartford, 361 F.3d 113, 122 (2d Cir.2004) (internal quotation marks omitted); accord Anderson, 477 U.S. at 249, 106 S.Ct. 2505. As such, "if there is any evidence in the record from any source from which a reasonable inference in the [nonmoving party's] favor may be drawn, the moving party simply cannot obtain a summary judgment." Binder & Binder PC v. Barnhart, 481 F.3d 141, 148 (2d Cir.2007) (internal quotation marks omitted).

Inferences and burdens of proof on cross-motions for summary judgment are the same as those for a unilateral motion. See Straube v. Fla. Union Free Sch. Dist., 801 F.Supp. 1164, 1174 (S.D.N.Y.1992). "That is, each cross-movant must present sufficient evidence to satisfy its burden of proof on all material facts." U.S. Underwriters Ins. Co. v. Roka LLC, No. 99 Civ. 10136(AGS), 2000 WL 1473607, at *3 (S.D.N.Y. Sept. 29, 2000); see Barhold v. Rodriguez, 863 F.2d 233, 236 (2d Cir.1988).

648*648 III. DISCUSSION

Section 106 of the Copyright Act grants "the owner of copyright under this title" certain "exclusive rights," including the right "to reproduce the copyrighted work in copies or phonorecords," "to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership," and to publicly perform and display certain copyrighted works. 17 U.S.C. §§ 106(1), (3)-(5). However, these exclusive rights are limited by several subsequent sections of the statute. Pertinently, Section 109 sets forth the "first sale" doctrine, which provides that "the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord."Id. § 109(a). The novel question presented in this action is whether a digital music file, lawfully made and purchased, may be resold by its owner through ReDigi under the first sale doctrine. The Court determines that it cannot.

A. Infringement of Capitol's Copyrights

To state a claim for copyright infringement, a plaintiff must establish that it owns a valid copyright in the work at issue and that the defendant violated one of the exclusive rights the plaintiff holds in the work. Twin Peaks Prods., Inc. v. Publ'ns Int'l, Ltd., 996 F.2d 1366, 1372 (2d Cir.1993) (citing Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991)). It is undisputed that Capitol owns copyrights in a number of the recordings sold on ReDigi's website. (See Cap. 56.1 ¶¶ 68-73; RD Rep. 56.118-19, ¶¶ 68-73; Decl. of Richard S. Mandel, dated July 19, 2012, Doc. No. 52 ("Mandel Decl."), ¶ 16, Ex. M; Decl. of Alasdair J. McMullan, dated July 19, 2012, Doc. No. 51 ("McMullan Decl."), ¶¶ 3-5, Ex. 1.) It is also undisputed that Capitol did not approve the reproduction or distribution of its copyrighted recordings on ReDigi's website. Thus, if digital music files are "reproduce[d]" and "distribute[d]" on ReDigi's website within the meaning of the Copyright Act, Capitol's copyrights have been infringed.

1. Reproduction Rights

Courts have consistently held that the unauthorized duplication of digital music files over the Internet infringes a copyright owner's exclusive right to reproduce. See, e.g.,A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1014 (9th Cir.2001). However, courts have not previously addressed whether the unauthorized transfer of a digital music file over the Internet — where only one file exists before and after the transfer — constitutes reproduction within the meaning of the Copyright Act. The Court holds that it does.

The Copyright Act provides that a copyright owner has the exclusive right "to reproduce the copyrighted work in ... phonorecords." 17 U.S.C. § 106(1) (emphasis added). Copyrighted works are defined to include, inter alia, "sound recordings," which are "works that result from the fixation of a series of musical, spoken, or other sounds." Id. § 101. Such works are distinguished from their material embodiments. These include phonorecords, which are the "material objects in which sounds ... are fixed by any method now known or later developed, and from which the sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device." Id. § 101 (emphasis added). Thus, the plain text of the Copyright Act makes clear that reproduction occurs when a copyrighted work is fixed in a new material object. 649*649 See Matthew Bender & Co., Inc. v. W. Pub. Co.,158 F.3d 693, 703 (2d Cir.1998).

The legislative history of the Copyright Act bolsters this reading. The House Report on the Copyright Act distinguished between sound recordings and phonorecords, stating that "[t]he copyrightable work comprises the aggregation of sounds and not the tangible medium of fixation. Thus, `sound recordings' as copyrightable subject matter are distinguished from `phonorecords[,]' the latter being physical objects in which sounds are fixed." H.R.Rep. No. 94-1476, at 56 (1976), 1976 U.S.C.C.A.N. 5659, 5669. Similarly, the House and Senate Reports on the Act both explained:

Read together with the relevant definitions in [S]ection 101, the right "to reproduce the copyrighted work in copies or phonorecords" means the right to produce a material object in which the work is duplicated, transcribed, imitated, or simulated in a fixed form from which it can be "perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device."

Id. at 61, 1976 U.S.C.C.A.N. at 5675; S.Rep. No. 94-473, at 58 (1975). Put differently, the reproduction right is the exclusive right to embody, and to prevent others from embodying, the copyrighted work (or sound recording) in a new material object (or phonorecord). See Nimmer on Copyright § 8.02 (stating that "in order to infringe the reproduction right, the defendant must embody the plaintiffs work in a `material object'").

Courts that have dealt with infringement on peer-to-peer ("P2P") file-sharing systems provide valuable guidance on the application of this right in the digital domain. For instance, in London-Sire Records, Inc. v. John Doe 1, the court addressed whether users of P2P software violated copyright owners' distribution rights. 542 F.Supp.2d 153, 166 & n. 16 (D.Mass.2008). Citing the "material object" requirement, the court expressly differentiated between the copyrighted work — or digital music file — and the phonorecord — or "appropriate segment of the hard disk" that the file would be embodied in following its transfer. Id. at 171. Specifically,

[w]hen a user on a[P2P] network downloads a song from another user, he receives into his computer a digital sequence representing the sound recording. That sequence is magnetically encoded on a segment of his hard disk (or likewise written on other media). With the right hardware and software, the downloader can use the magnetic sequence toreproduce the sound recording. The electronic file (or, perhaps more accurately, the appropriate segment of the hard disk) is therefore a "phonorecord" within the meaning of the statute.

Id. (emphasis added). Accordingly, when a user downloads a digital music file or "digital sequence" to his "hard disk," the file is "reproduce[d]" on a new phonorecord within the meaning of the Copyright Act. Id.

This understanding is, of course, confirmed by the laws of physics. It is simply impossible that the same "material object" can be transferred over the Internet. Thus, logically, the court in London-Sire noted that the Internet transfer of a file results in a material object being "created elsewhere at its finish." Id. at 173. Because the reproduction right is necessarily implicated when a copyrighted work is embodied in a new material object, and because digital music files must be embodied in a new material object following their transfer over the Internet, the Court determines that the embodiment of a digital music file on a new hard disk is a reproduction 650*650 within the meaning of the Copyright Act.

This finding holds regardless of whether one or multiple copies of the file exist.London-Sire, like all of the P2P cases, obviously concerned multiple copies of one digital music file. But that distinction is immaterial under the plain language of the Copyright Act. Simply put, it is the creation of a new material object and not anadditional material object that defines the reproduction right. The dictionary defines "reproduction" to mean, inter alia, "to produce again" or "to cause to exist again oranew." See Merriam-Webster Collegiate Edition 994 (10th ed. 1998) (emphasis added). Significantly, it is not defined as "to produce again while the original exists." Thus, the right "to reproduce the copyrighted work in ... phonorecords" is implicated whenever a sound recording is fixed in a new material object, regardless of whether the sound recording remains fixed in the original material object.

Given this finding, the Court concludes that ReDigi's service infringes Capitol's reproduction rights under any description of the technology. ReDigi stresses that it "migrates" a file from a user's computer to its Cloud Locker, so that the same file is transferred to the ReDigi server and no copying occurs.^[5] However, even if that were the case, the fact that a file has moved from one material object — the user's computer — to another — the ReDigi server — means that a reproduction has occurred. Similarly, when a ReDigi user downloads a new purchase from the ReDigi website to her computer, yet another reproduction is created. It is beside the point that the original phonorecord no longer exists. It matters only that a new phonorecord has been created.

ReDigi struggles to avoid this conclusion by pointing to C.M. Paula Co. v. Logan, a 1973 case from the Northern District of Texas where the defendant used chemicals to lift images off of greeting cards and place them on plaques for resale. 355 F.Supp. 189, 190 (N.D.Tex.1973); (see Re-Digi Mem. of Law, dated July 20, 2012, Doc. No. 55 ("ReDigi Mem."), at 13). The court determined that infringement did not occur because "should defendant desire to make one hundred ceramic plaques ..., defendant would be required to purchase one hundred separate ... prints." C.M. Paula, 355 F.Supp. at 191. ReDigi argues that, like the defendant in C.M. Paula, its users must purchase a song on iTunes in order to sell a song on ReDigi. (ReDigi Mem. 13.) Therefore, no "duplication" occurs. See C.M. Paula, 355 F.Supp. at 191 (internal quotation marks omitted). ReDigi's argument is unavailing. Ignoring the questionable merits of the court's holding in C.M. Paula, ReDigi's service is distinguishable from the process in that case. There, the copyrighted print, or material object, was lifted from the greeting card 651*651 and transferred in toto to the ceramic tile; no new material object was created. By contrast, ReDigi's service by necessity creates a new material object when a digital music file is either uploaded to or downloaded from the Cloud Locker.

ReDigi also argues that the Court's conclusion would lead to "irrational" outcomes, as it would render illegal any movement of copyrighted files on a hard drive, including relocating files between directories and defragmenting. (ReDigi Opp'n, dated Aug. 14, 2012, Doc. No. 79 ("ReDigi Opp'n"), at 8.) However, this argument is nothing more than a red herring. As Capitol has conceded, such reproduction is almost certainly protected under other doctrines or defenses, and is not relevant to the instant motion. (Cap. Reply, dated Aug. 24, 2012, Doc. No. 87 ("Cap. Reply"), at 5 n. 1.)

Accordingly, the Court finds that, absent the existence of an affirmative defense, the sale of digital music files on ReDigi's website infringes Capitol's exclusive right of reproduction.

2. Distribution Rights

In addition to the reproduction right, a copyright owner also has the exclusive right "to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership." 17 U.S.C. § 106(3). Like the court in London-Sire, the Court agrees that "[a]n electronic file transfer is plainly within the sort of transaction that § 106(3) was intended to reach [and] ... fit[s] within the definition of `distribution' of a phonorecord." London-Sire, 542 F.Supp.2d at 173-74. For that reason, "courts have not hesitated to find copyright infringement by distribution in cases of file-sharing or electronic transmission of copyrighted works." Arista Records LLC v. Greubel, 453 F.Supp.2d 961, 968 (N.D.Tex.2006) (collecting cases); see, e.g.,Napster, 239 F.3d at 1014. Indeed, in New York Times Co., Inc. v. Tasini, the Supreme Court stated it was "clear" that an online news database violated authors' distribution rights by selling electronic copies of their articles for download. 533 U.S. 483, 498, 121 S.Ct. 2381, 150 L.Ed.2d 500 (2001).

There is no dispute that sales occurred on ReDigi's website. Capitol has established that it was able to buy more than one-hundred of its own recordings on ReDigi's webite, and ReDigi itself compiled a list of its completed sales of Capitol's recordings. (Cap. 56.1 ¶¶ 68-73; RD Rep. 56.1 ¶¶ 68-73.) ReDigi, in fact, does not contest that distribution occurs on its website — it only asserts that the distribution is protected by the fair use and first sale defenses. (See, e.g., ReDigi Opp'n 15 (noting that "any distributions ... which occur on the ReDigi marketplace are protected").)

Accordingly, the Court concludes that, absent the existence of an affirmative defense, the sale of digital music files on ReDigi's website infringes Capitol's exclusive right of distribution.^[6] 

652*652 3. Performance and Display Rights

Finally, a copyright owner has the exclusive right, "in the case of ... musical ... works, to perform the copyrighted work publicly." 17 U.S.C. § 106(4). Public performance includes transmission to the public regardless of "whether the members of the public ... receive it in the same place or in separate places and at the same time or at different times." Id. § 101. Accordingly, audio streams are performances because a "stream is an electronic transmission that renders the musical work audible as it is received by the client-computer's temporary memory. This transmission, like a television or radio broadcast, is a performance because there is a playing of the song that is perceived simultaneously with the transmission." United States v. Am. Soc. Of Composers, Authors, & Publishers, 627 F.3d 64, 74 (2d Cir.2010). To state a claim for infringement of the performance right, a plaintiff must establish that (1) the public performance or display of the copyrighted work was for profit, and (2) the defendant lacked authorization from the plaintiff or the plaintiff's representative. See Broad. Music, Inc. v. 315 W. 44th St. Rest. Corp., No. 93 Civ. 8082(MBM), 1995 WL 408399, at *2 (S.D.N.Y. July 11, 1995).

The copyright owner also has the exclusive right, "in the case of ... pictorial [and] graphic ... works[,] ... to display the copyrighted work publicly." 17 U.S.C. § 106(5). Public display includes "show[ing] a copy of [a work], either directly or by means of a film, slide, television image, or any other device or process." Id. § 101. The Ninth Circuit has held that the display of a photographic image on a computer may implicate the display right, though infringement hinges, in part, on where the image was hosted. Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1160 (9th Cir.2007).

Capitol alleges that ReDigi infringed its copyrights by streaming thirty-second song clips and exhibiting album cover art to potential buyers. (Compl. ¶¶ 25-26.) ReDigi counters that it only posted such content pursuant to a licensing agreement and within the terms of that agreement. (ReDigi Mem. 24-25.) ReDigi also asserts that it promptly removed the content when its licenses were terminated, and instead sent users to YouTube or iTunes for previews. (Id.) Capitol, in response, claims that ReDigi's use violated the terms of those licenses and did not cease at the time the licenses were terminated. (Compare RD 56.1 ¶¶ 73-79, with Cap. Rep. 56.1 ¶¶ 73-79.) As such, there are material disputes as to the source of the content, whether ReDigi was authorized to transmit the content, when authorization was or was not revoked, and when ReDigi ceased providing the content. Because the Court cannot determine whether ReDigi infringed Capitol's display and performance rights on the present record, ReDigi's motion for summary judgment on its alleged infringement of these exclusive rights is denied.

B. Affirmative Defenses

Having concluded that sales on ReDigi's website infringe Capitol's exclusive rights of reproduction and distribution, the Court turns to whether the fair use or first sale defenses excuse that infringement. For the reasons set forth below, the Court determines that they do not.

1. Fair Use

"The ultimate test of fair use ... is whether the copyright law's goal of `promot[ing] the Progress of Science and useful Arts' would be better served by allowing 653*653 the use than by preventing it." Castle Rock Entm't, Inc. v. Carol Publ'g Grp., Inc., 150 F.3d 132, 141 (2d Cir.1998) (quoting U.S. Const., art. I, § 8, cl. 8). Accordingly, fair use permits reproduction of copyrighted work without the copyright owner's consent "for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research." 17 U.S.C. § 107. The list is not exhaustive but merely illustrates the types of copying typically embraced by fair use.Castle Rock Entm't, Inc., 150 F.3d at 141. In addition, four statutory factors guide courts' application of the doctrine. Specifically, courts look to:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.

17 U.S.C. § 107. Because fair use is an "equitable rule of reason," courts are "free to adapt the doctrine to particular situations on a case-by-case basis." Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 448 n. 31, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984) (quoting H. Rep. No. 94-1476, at 65-66, 1976 U.S.C.C.A.N. at 5679-5680); see Iowa State Univ. Research Found., Inc. v. Am. Broad. Cos., 621 F.2d 57, 60 (2d Cir.1980).

On the record before it, the Court has little difficulty concluding that ReDigi's reproduction and distribution of Capitol's copyrighted works falls well outside the fair use defense. ReDigi obliquely argues that uploading to and downloading from the Cloud Locker for storage and personal use are protected fair use.^[7] (See ReDigi Mem. 15.) Significantly, Capitol does not contest that claim. (See Tr. 12:8-23.) Instead, Capitol asserts only that uploading to and downloading from the Cloud Locker incident to sale fall outside the ambit of fair use. The Court agrees. See Arista Records, LLC v. Doe 3, 604 F.3d 110, 124 (2d Cir.2010) (rejecting application of fair use to user uploads and downloads on P2P file-sharing network).

Each of the statutory factors counsels against a finding of fair use. The first factor requires the Court to determine whether ReDigi's use "transforms" the copyrighted work and whether it is commercial. Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 578-79, 114 S.Ct. 1164, 127 L.Ed.2d 500 (1994). Both inquiries disfavor ReDigi's claim. Plainly, the upload, sale, and download of digital music files on ReDigi's website does nothing to "add[] something new, with a further purpose or different character" to the copyrighted works. Id.; see, e.g., Napster, 239 F.3d at 1015 (endorsing district court finding that "downloading MP3 files does not transform the copyrighted work"). ReDigi's use is also undoubtedly commercial. ReDigi and the uploading user directly profit from the sale of a digital music file, and the downloading user saves significantly on the price of the song in the primary market. See Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 562, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985) ("The crux of the profit/nonprofit distinction is not whether the sole motive of the use is monetary gain but whether the user stands to profit from exploitation of the copyrighted material without paying 654*654 the customary price."). ReDigi asserts that downloads for personal, and not public or commercial, use "must be characterized as ... noncommercial, nonprofit activity." (ReDigi Mem. 16 (quotingSony, 464 U.S. at 449, 104 S.Ct. 774).) However, ReDigi twists the law to fit its facts. When a user downloads purchased files from the Cloud Locker, the resultant reproduction is an essential component of ReDigi's commercial enterprise. Thus, ReDigi's argument is unavailing.

The second factor — the nature of the copyrighted work — also weighs against application of the fair use defense, as creative works like sound recordings are "close to the core of the intended copyright protection" and "far removed from the ... factual or descriptive work more amenable to fair use." UMG Recordings, Inc. v. MP3.Com, Inc., 92 F.Supp.2d 349, 351 (S.D.N.Y.2000) (alteration and internal quotation marks omitted) (citing Campbell, 510 U.S. at 586, 114 S.Ct. 1164). The third factor — the portion of the work copied — suggests a similar outcome because ReDigi transmits the works in their entirety, "negating any claim of fair use." Id. at 352, 114 S.Ct. 1164. Finally, ReDigi's sales are likely to undercut the "market for or value of the copyrighted work" and, accordingly, the fourth factor cuts against a finding of fair use. Cf. Arista Records, LLC v. Doe 3, 604 F.3d at 124 (rejecting application of fair use to P2P file sharing, in part, because "the likely detrimental effect of filesharing on the value of copyrighted compositions is well documented." (citing Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 923, 125 S.Ct. 2764, 162 L.Ed.2d 781 (2005))). The product sold in ReDigi's secondary market is indistinguishable from that sold in the legitimate primary market save for its lower price. The clear inference is that ReDigi will divert buyers away from that primary market. ReDigi incredibly argues that Capitol is preempted from making a market-based argument because Capitol itself condones downloading of its works on iTunes. (ReDigi Mem. 18.) Of course, Capitol, as copyright owner, does not forfeit its right to claim copyright infringement merely because it permits certain uses of its works. This argument, too, is therefore unavailing.

In sum, ReDigi facilitates and profits from the sale of copyrighted commercial recordings, transferred in their entirety, with a likely detrimental impact on the primary market for these goods. Accordingly, the Court concludes that the fair use defense does not permit ReDigi's users to upload and download files to and from the Cloud Locker incident to sale.

2. First Sale

The first sale defense, a common law principle recognized in Bobbs-Merrill Co. v. Straus, 210 U.S. 339, 350, 28 S.Ct. 722, 52 L.Ed. 1086 (1908) and now codified at Section 109(a) of the Copyright Act, provides that:

Notwithstanding the provisions of section 106(3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

17 U.S.C. § 109. Under the first sale defense, "once the copyright owner places a copyrighted item [here, a phonorecord] in the stream of commerce by selling it, he has exhausted his exclusive statutory right to control its distribution." Quality King Distribs., Inc. v. L'anza Research Int'l, Inc., 523 U.S. 135, 152, 118 S.Ct. 1125, 140 L.Ed.2d 254 (1998); see Kirtsaeng v. John Wiley & Sons, Inc., ___ U.S. ___, 133 S.Ct. 1351, 1354-55, 185 L.Ed.2d 392 (2013).

655*655 ReDigi asserts that its service, which involves the resale of digital music files lawfully purchased on iTunes, is protected by the first sale defense. (ReDigi Mem. 19.) The Court disagrees.

As an initial matter, it should be noted that the fair use defense is, by its own terms, limited to assertions of the distribution right. 17 U.S.C. § 109 (referencing Section 106(3)); see Nimmer on Copyright § 8.12. Because the Court has concluded that ReDigi's service violates Capitol's reproduction right, the first sale defense does not apply to ReDigi's infringement of those rights. See Design Options v. Belle-Pointe, Inc., 940 F.Supp. 86, 91 (S.D.N.Y. 1996).

In addition, the first sale doctrine does not protect ReDigi's distribution of Capitol's copyrighted works. This is because, as an unlawful reproduction, a digital music file sold on ReDigi is not "lawfully made under this title." 17 U.S.C. § 109(a). Moreover, the statute protects only distribution by "the owner of a particular copy or phonorecord ... of that copy or phonorecord." Id. Here, a ReDigi user owns the phonorecord that was created when she purchased and downloaded a song from iTunes to her hard disk. But to sell that song on ReDigi, she must produce a new phonorecord on the ReDigi server. Because it is therefore impossible for the user to sell her "particular" phonorecord on ReDigi, the first sale statute cannot provide a defense. Put another way, the first sale defense is limited to material items, like records, that the copyright owner put into the stream of commerce. Here, ReDigi is not distributing such material items; rather, it is distributing reproductions of the copyrighted code embedded in new material objects, namely, the ReDigi server in Arizona and its users' hard drives. The first sale defense does not cover this any more than it covered the sale of cassette recordings of vinyl records in a bygone era.

Rejecting such a conclusion, ReDigi argues that, because "`technological change has rendered its literal terms ambiguous, the Copyright Act must be construed in light of [its] basic purpose,'" namely, to incentivize creative work for the "ultimate[]... cause of promoting broad public availability of literature, music, and the other arts."Sony, 464 U.S. at 432, 104 S.Ct. 774 (quoting Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156, 95 S.Ct. 2040, 45 L.Ed.2d 84 (1975)). Thus, ReDigi asserts that refusal to apply the first sale doctrine to its service would grant Capitol "a Court sanctioned extension of rights under the [C]opyright [A]ct... which is against policy, and should not be endorsed by this Court." (ReDigi Mem. 24.)

The Court disagrees. ReDigi effectively requests that the Court amend the statute to achieve ReDigi's broader policy goals — goals that happen to advance ReDigi's economic interests. However, ReDigi's argument fails for two reasons. First, while technological change may have rendered Section 109(a) unsatisfactory to many contemporary observers and consumers, it has not rendered it ambiguous. The statute plainly applies to the lawful owner's "particular" phonorecord, a phonorecord that by definition cannot be uploaded and sold on ReDigi's website. Second, amendment of the Copyright Act in line with ReDigi's proposal is a legislative prerogative that courts are unauthorized and ill suited to attempt.

Nor are the policy arguments as straightforward or uncontested as ReDigi suggests. Indeed, when confronting this precise subject in its report on the Digital Millenium Copyright Act, 17 U.S.C. § 512, the United States Copyright Office (the "USCO") rejected extension of the first 656*656 sale doctrine to the distribution of digital works, noting that the justifications for the first sale doctrine in the physical world could not be imported into the digital domain. See USCO, Library of Cong., DMCA Section 104 Report (2001) ("DMCA Report"); see also Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121, 129 (2d Cir.2008) (finding that the DMCA report is entitled to deference under Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944)). For instance, the USCO stated that "the impact of the [first sale] doctrine on copyright owners [is] limited in the off-line world by a number of factors, including geography and the gradual degradation of books and analog works." DMCA Report at xi. Specifically,

[p]hysical copies of works degrade with time and use, making used copies less desirable than new ones. Digital information does not degrade, and can be reproduced perfectly on a recipient's computer. The "used" copy is just as desirable as (in fact, is indistinguishable from) a new copy of the same work. Time, space, effort and cost no longer act as barriers to the movement of copies, since digital copies can be transmitted nearly instantaneously anywhere in the world with minimal effort and negligible cost. The need to transport physical copies of works, which acts as a natural brake on the effect of resales on the copyright owner's market, no longer exists in the realm of digital transmissions. The ability of such "used" copies to compete for market share with new copies is thus far greater in the digital world.

Id. at 82-83 (footnotes omitted). Thus, while ReDigi mounts attractive policy arguments, they are not as one-sided as it contends.

Finally, ReDigi feebly argues that the Court's reading of Section 109(a) would in effect exclude digital works from the meaning of the statute. (ReDigi Mem. 21.) That is not the case. Section 109(a) still protects a lawful owner's sale of her "particular" phonorecord, be it a computer hard disk, iPod, or other memory device onto which the file was originally downloaded. While this limitation clearly presents obstacles to resale that are different from, and perhaps even more onerous than, those involved in the resale of CDs and cassettes, the limitation is hardly absurd — the first sale doctrine was enacted in a world where the ease and speed of data transfer could not have been imagined. There are many reasons, some discussed herein, for why such physical limitations may be desirable. It is left to Congress, and not this Court, to deem them outmoded.

Accordingly, the Court concludes that the first sale defense does not permit sales of digital music files on ReDigi's website.

C. Liability

Having determined that sales on ReDigi's website infringe Capitol's copyrights, the Court turns to whether ReDigi is directly and/or secondarily liable for that infringement. Direct liability requires "volitional conduct" that "causes" the reproduction or distribution to be made. See Cartoon Network, 536 F.3d at 131. Secondary infringement occurs when a defendant contributed to or benefitted from a third party's infringement such that it is "just" to hold the defendant accountable for the infringing activity. Sony, 464 U.S. at 435, 104 S.Ct. 774. For the reasons stated below, the Court finds that ReDigi directly and secondarily infringed Capitol's copyrights.

1. Direct Infringement

To be liable for direct infringement, a defendant must have "engaged in 657*657 some volitional conduct sufficient to show that [it] actively" violated one of the plaintiff's exclusive rights. Arista Records LLC v. Usenet.com, Inc., 633 F.Supp.2d 124, 148 (S.D.N.Y.2009). In other words, "`to establish direct liability under ... the Act, something more must be shown than mere ownership of a machine used by others to make illegal copies. There must be actual infringing conduct with a nexus sufficiently close and causal to the illegal copying that one could conclude that the machine owner himself trespassed on the exclusive domain of the copyright owner.'"Cartoon Network, 536 F.3d at 130 (quoting CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544, 550 (4th Cir.2004)) (citing Religious Tech. Ctr. v. Netcom On-Line Commc'n Servs., Inc., 907 F.Supp. 1361, 1370 (N.D.Cal.1995)).

In Cartoon Network, the Second Circuit addressed whether the cable television provider Cablevision had directly infringed the plaintiff's copyrights by providing digital video recording devices to its customers. 536 F.3d 121. The court determined that it had not. Though Cablevision had "design[ed], hous[ed], and maintain[ed]" the recording devices, it was Cablevision's customers who "made" the copies and therefore directly infringed the plaintiff's reproduction rights. Id. at 131-32. The court reasoned that, "[i]n determining who actually `makes' a copy, a significant difference exists between making a request to a human employee, who then volitionally operates the copying system to make the copy, and issuing a command directly to a system, which automatically obeys commands and engages in no volitional conduct." Id. at 131. However, the court allowed that a case may exist where "one's contribution to the creation of an infringing copy [is] so great that it warrants holding that party directly liable for the infringement, even though another party has actually made the copy." Cartoon Network, 536 F.3d at 133.

On the record before it, the Court concludes that, if such a case could ever occur, it has occurred with ReDigi. ReDigi's founders built a service where only copyrighted work could be sold. Unlike Cablevision's programming, which offered a mix of protected and public television, ReDigi's Media Manager scans a user's computer to build a list of eligible files that consists solely of protected music purchased on iTunes. While that process is itself automated, absolving ReDigi of direct liability on that ground alone would be a distinction without a difference. The fact that ReDigi's founders programmed their software to choose copyrighted content satisfies the volitional conduct requirement and renders ReDigi's case indistinguishable from those where human review of content gave rise to direct liability. See Usenet.com,633 F.Supp.2d at 148; Playboy Enters., Inc. v. Russ Hardenburgh, Inc., 982 F.Supp. 503, 512-13 (N.D.Ohio 1997). Moreover, unlike Cablevision, ReDigi infringed both Capitol's reproduction and distribution rights. ReDigi provided the infrastructure for its users' infringing sales and affirmatively brokered sales by connecting users who are seeking unavailable songs with potential sellers. Given this fundamental and deliberate role, the Court concludes that ReDigi's conduct "transform[ed][it] from [a] passive provider[] of a space in which infringing activities happened to occur to [an] active participant[] in the process of copyright infringement." Usenet.com, 633 F.Supp.2d at 148. Accordingly, the Court grants Capitol's motion for summary judgment on its claims for ReDigi's direct infringement of its distribution and reproduction 658*658 rights.^[8]

2. Secondary Infringement

"The Copyright Act does not expressly render anyone liable for infringement committed by another." Sony, 464 U.S. at 434, 104 S.Ct. 774. However, common law doctrines permit a court to impose secondary liability where "just" and appropriate. Id.at 435, 104 S.Ct. 774. Capitol asserts that ReDigi is secondarily liable for its users' direct infringement under three such doctrines: contributory infringement, inducement of infringement, and vicarious infringement. (Cap. Mem. 13-16.) The Court agrees with respect to contributory and vicarious infringement, and therefore does not reach the inducement claim.

a. Contributory Infringement

Contributory infringement occurs where "one ... with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another." Arista Records, LLC v. Doe 3, 604 F.3d at 118 (quoting Gershwin Publ'g Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2d Cir.1971)); see, e.g.,Grokster, 545 U.S. at 930, 125 S.Ct. 2764. The knowledge requirement is "objective" and satisfied where the defendant knew or had reason to know of the infringing activity. See Arista Records, LLC v. Doe 3, 604 F.3d at 118. Further, the support must be "more than a mere quantitative contribution to the primary infringement ... [, it] must be substantial." Usenet.com, 633 F.Supp.2d 124, 155 (S.D.N.Y.2009). However, even where a defendant's contribution is material, it may evade liability if its product is "capable of substantial noninfringing uses." Sony, 464 U.S. at 442, 104 S.Ct. 774 (the "Sony-Betamax rule").

In weighing the knowledge requirement, courts consider evidence of actual and constructive knowledge, including cease-and-desist letters, officer and employee statements, promotional materials, and industry experience. See, e.g., Napster, 239 F.3d at 1020-21, 1027; Arista Records LLC v. Lime Grp. LLC, 784 F.Supp.2d at 432;Usenet.com, 633 F.Supp.2d at 155. In addition, courts have consistently found that material support existed where file-sharing systems provided "the site and facilities" for their users' infringement. Napster, 239 F.3d at 1022; see, e.g., Usenet.com, 633 F.Supp.2d at 155.

The Court has little difficulty concluding that ReDigi knew or should have known that its service would encourage infringement. Despite the fact that ReDigi boasted on its website that it was "The Legal Alternative" and insisted "YES, ReDigi is LEGAL," ReDigi warned investors in its subscription agreements that "the law cannot be said to be well-settled" in this area and that it could not guarantee ReDigi would prevail on its copyright defenses. (Cap. 56.1 ¶¶ 65-66.) The Recording Industry Association of America ("RIAA") sent ReDigi a cease-and-desist 659*659 letter in November 2011, advising ReDigi that its website violated Capitol's and other RIAA members' copyrights. (Compl. ¶ 41.) Further, ReDigi was ensnared in a licensing dispute over song clips and cover art shortly after its launch, plainly indicating that infringement could be afoot. (RD 56.1 ¶¶ 74-75, 77.) ReDigi was also, of course, aware that copyright protected content was being sold on its website — a fact central to its business model and promotional campaigns. (Cap. 56.1 ¶¶ 70-73). Finally, ReDigi's officers claim to have "researched copyright law [and] consulted with attorneys" concerning their service, and also to have met with record companies "to get input, get marketing support[,] and enter into deals with the labels." (RD Rep. 56.12 ¶ 5, 5 ¶ 20.) By educating themselves, the officers presumably understood the likelihood that use of ReDigi's service would result in infringement. Indeed, though ReDigi attempts to use its consultations with counsel as a shield, it is telling that ReDigi declined to reveal any of the advice it received on the subject. (See Cap. Reply 9). ReDigi's lone rebuttal to this surfeit of evidence could only be that it "sincerely" believed in the legality of its service. However, the Court has not found and will not create a subjective, good faith defense to contributory liability's objective knowledge requirement, and therefore concludes that, based on the objective facts, ReDigi was aware of its users' infringement.

The Court also finds that ReDigi materially contributed to its users' infringement. As ReDigi has admitted, "more than any other website that permits the sale of music, ReDigi is intimately involved in examining the content that will be sold and supervising the steps involved in making the music available for sale and selling it." (Cap. 56.1 ¶ 35; RD Rep. 56.115 ¶ 35.) ReDigi thus provided the "site and facilities" for the direct infringement. See, e.g., Napster, 239 F.3d at 1022; Usenet.com, 633 F.Supp.2d at 155; Lime Grp., 784 F.Supp.2d at 434. Without ReDigi's Cloud Locker, no infringement could have occurred. Indeed, Media Manager ensured that onlyinfringement occurred by limiting eligible files to iTunes tracks. Contrary to any conception of remote conduct, ReDigi's service was the hub and heart of its users' infringing activity.

The Court finally concludes that ReDigi's service is not capable of substantial noninfringing uses. The Sony-Betamax rule requires a court to determine whether a product or service is capable of substantial noninfringing uses, not whether it is currently used in a non-infringing manner. Napster, 239 F.3d at 1021 (discussingSony, 464 U.S. at 442-43, 104 S.Ct. 774). But, put simply, ReDigi, by virtue of its design, is incapable of compliance with the law. ReDigi's business is built on the erroneous notion that the first sale defense permits the electronic resale of digital music. As such, ReDigi is built to trade only in copyright protected iTunes files. However, as determined above, ReDigi's legal argument — and therefore business model — is fundamentally flawed. Accordingly, to comply with the law, either the law or ReDigi must change. While ReDigi 2.0, 3.0, or 4.0 may ultimately be deemed to comply with copyright law — a finding the Court need not and does not now make — it is clear that ReDigi 1.0 does not. Given the fundamental disconnect between ReDigi and the Copyright Act, and ReDigi's failure to provide any evidence of present or potential noninfringing uses, the Court concludes that the Sony-Betamaxrule cannot save ReDigi from contributory liability.

Accordingly, the Court grants Capitol's motion for summary judgment on its claim660*660 for ReDigi's contributory infringement of its distribution and reproduction rights.^[9]

b. Vicarious Infringement

Vicarious liability for copyright infringement exists where the defendant "`has the right and ability to supervise the infringing activity and also has a direct financial interest in such activities.'" Napster, 239 F.3d at 1022 (quoting Gershwin Pub. Corp., 443 F.2d at 1162); see Grokster, 545 U.S. at 930, 125 S.Ct. 2764. Unlike contributory infringement, knowledge is not an element of vicarious liability. Gershwin, 443, F.2d at 1162; see Fonovisa, Inc. v. Cherry Auction Inc., 76 F.3d 259, 262-63 (9th Cir.1996).

Clearly, ReDigi Vicariously infringed Capitol's copyrights. As discussed, ReDigi exercised complete control over its website's content, user access, and sales. Indeed, ReDigi admits that it "is intimately involved in ... supervising the steps involved in making the music available for sale and selling it" on the website. (Cap. 56.1 ¶ 35; RD Rep. 56.1 ¶ 35); see e.g., Lime Grp., 784 F.Supp.2d at 435 (finding right to supervise where P2P file sharing system could filter content and regulate users). In addition, ReDigi financially benefitted from every infringing sale when it collected 60% of each transaction fee. See e.g., Shapiro, Bernstein & Co. v. H.L. Green Co., 316 F.2d 304, 308 (2d Cir.1963) (finding a direct financial benefit where the defendant received a share of the gross receipts on every infringing sale). Notably, ReDigi failed to address any of these arguments in its opposition brief, instead insisting that it was not vicariously liable for infringement that occurredoutside the ReDigi service, for instance, when a user Impermissibly retained files on his computer. (See ReDigi Opp'n 22-23.) However, this argument is inapposite to the instant motions. Accordingly, the Court grants Capitol's motion for summary judgment on its claim for ReDigi's vicarious infringement of its distribution and reproduction rights.

IV. CONCLUSION

At base, ReDigi seeks judicial amendment of the Copyright Act to reach its desired policy outcome. However, "[s]ound policy, as well as history, supports [the Court's] consistent deference to Congress when major technological innovations alter the market for copyrighted materials. Congress has the constitutional authority and the institutional ability to accommodate fully the varied permutations of competing interests that are inevitably implicated by such new technology." Sony, 464 U.S. at 431, 104 S.Ct. 774. Such defence often counsels for a limited interpretation of copyright protection. However, here, the Court cannot of its own accord condone the wholesale application of the first sale defense to the digital sphere, particularly when Congress itself has declined to take that step. Accordingly, and for the reasons stated above, the Court GRANTS Capitol's motion for summary judgment on its claims for ReDigi's direct, 661*661 contributory, and vicarious infringement of its distribution and reproduction rights. The Court also DENIES ReDigi's motion in its entirety.

Because issues remain with respect to Capitol's performance and display rights, and ReDigi's secondary infringement of Capitol's common law copyrights, as well as damages, injunctive relief, and attorney's fees, IT IS HEREBY ORDERED THAT the parties shall submit a joint letter to the Court no later than April 12, 2013 concerning the next contemplated steps in this case.

The Clerk of Court is respectfully directed to terminate the motions pending at Doc. Nos. 48 and 54.

SO ORDERED.

[1] The facts are taken from the pleadings, the parties' Local Civil Rule 56.1 Statements, the affidavits submitted in connection with the instant motions, and the exhibits attached thereto. The facts are undisputed unless otherwise noted. Where one party's 56.1 Statement is cited, the other party does not dispute the fact asserted, has offered no admissible evidence to refute that fact, or merely objects to inferences drawn from that fact.

[2] A train was only one of many analogies used to describe ReDigi's service. At oral argument, the device was likened to the Star Trek transporter — "Beam me up, Scotty" — and Willy Wonka's teleportation device, Wonkavision. (Tr., dated Oct. 5, 2012 ("Tr."), 10:2-12; 28:15-20.)

[3] On June 11, 2012, ReDigi launched ReDigi 2.0, new software that, when installed on a user's computer, purportedly directs the user's new iTunes purchases to upload from iTunes directly to the Cloud Locker. (RD 56.1 ¶¶ 40-41.) Accordingly, while access may transfer from user to user upon resale, the file is never moved from its initial location in the Cloud Locker. (Id. ¶¶ 44-52.) However, because ReDigi 2.0 launched after Capitol filed the Complaint and mere days before the close of discovery, the Court will not consider it in this action. (See Tr. 19:2-20:3.)

[4] ReDigi's arguments in this round of briefing differ markedly from those it asserted in opposition to Capitol's motion for a preliminary injunction. (See ReDigi Opp'n to Prelim. Inj., dated Jan. 27, 2012, Doc. No. 14 ("ReDigi Opp'n to PI").) For instance, ReDigi no longer asserts an "essential step defense," nor does it argue that "copying" to the Cloud Locker for storage is protected by the fair use defense. (Id. at 9-14.) ReDigi has also abandoned its argument that the Digital Millennium Copyright Act, 17 U.S.C. § 512, bars Capitol's claim. (Id. at 22.) As such, the Court will consider only those arguments made in the instant motions.

[5] It bears noting that ReDigi made numerous admissions to the contrary at the preliminary injunction stage. For instance, in its opposition to Capitol's motion, ReDigi stated that, "The only copying which takes place in the ReDigi service occurs when a user uploads music files to the ReDigi Cloud, ... or downloads music files from the user's Cloud Locker." (See ReDigi Opp'n to PI at 9 (emphasis added).) ReDigi also stated that, after a digital music file was uploaded to the Cloud Locker, "the copy from which it was made was actually deleted from the user's machine." (Id. at 14 (emphasis added).) ReDigi's officers made similar statements in their depositions, and ReDigi's patent application for its upload technology states that "to be offered for sale, [a music file] is first copied to the remote server and stored on the disc." (See Capitol Mem. of Law, dated July 20, 2012, Doc. No. 49 ("Cap. Mem."), at 8-9, n. 6 (emphasis added).) But, as earlier stated, these semantic distinctions are immaterial as even ReDigi's most recent description of its service runs afoul of the Copyright Act.

[6] Capitol argues that ReDigi also violated its distribution rights simply by making Capitol's recordings available for sale to the public, regardless of whether a sale occurred. (See Cap. Mem. 11 n. 8 (citing Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 199, 201 (4th Cir.1997))). However, a number of courts, including one in this district, have cast significant doubt on this "make available" theory of distribution. See, e.g., Elektra Entm't Grp., Inc. v. Barker, 551 F.Supp.2d 234, 243 (S.D.N.Y.2008) ("[T]he support in the case law for the "make available" theory of liability is quite limited."); London-Sire, 542 F.Supp.2d at 169 ("[T]he defendants cannot be liable for violating the plaintiffs' distribution right unless a `distribution' actually occurred."). In any event, because the Court concludes that actual sales on ReDigi's website infringed Capitol's distribution right, it does not reach this additional theory of liability.

[7] ReDigi's argument is, perhaps, a relic of the argument it previously levied that "copying" to the Cloud Locker is protected as "space shifting" under the fair use doctrine. (See ReDigi Opp'n to PI at 10.)

[8] Capitol also asserts a claim for common law copyright infringement arising from sales of its pre-1972 recordings on ReDigi's website. (Compl. ¶¶ 82-88.) Capitol correctly argues in its memorandum that the elements for a direct infringement claim under federal law mirror those for infringement of common law copyright under state law. See Capitol Records, Inc. v. Naxos of Am., Inc., 4 N.Y.3d 540, 563, 797 N.Y.S.2d 352, 830 N.E.2d 250 (2005); (Cap. Mem. 4.) Accordingly, the Court also Court grants Capitol's motion for summary judgment with respect to ReDigi's direct infringement of Capitol's distribution and reproduction rights in its pre-1972 recordings. However, because neither Capitol nor ReDigi addressed the question of secondary infringement of common law copyrights, the Court does not reach that claim.

[9] As noted above, Capitol has alleged a separate cause of action for inducement of infringement. (Compl. ¶¶ 51-60.) Disagreement exists over whether "inducement of infringement" is a separate theory of liability for copyright infringement or merely a subset of contributory liability. Compare Flava Works, Inc. v. Gunter, 689 F.3d 754, 758 (7th Cir.2012) (describing inducement as "a form of contributory infringement"), with Lime Grp., 784 F.Supp.2d at 424 ("In Grokster, the Supreme Court confirmed that inducement of copyright infringement constitutes a distinct cause of action."). Regardless, because the Court concludes that ReDigi is liable for contributing to its users' direct infringement of Capitol's copyrights, it does not reach Capitol's inducement claim.

JUDGMENT OF THE COURT (Third Chamber)

7 December 2006 (*)

(Copyright and related rights in the information society – Directive 2001/29/EC – Article 3 – Concept of communication to the public – Works communicated by means of television sets installed in hotel rooms)

In Case C-306/05,

REFERENCE for a preliminary ruling under Article 234 EC from the Audiencia Provincial de Barcelona (Spain), made by decision of 7 June 2005, received at the Court on 3 August 2005, in the proceedings

Sociedad General de Autores y Editores de España (SGAE)

v

Rafael Hoteles SA,

THE COURT (Third Chamber),

composed of A. Rosas, President of the Chamber, A. Borg Barthet, J. Malenovský (Rapporteur), U. Lõhmus and A. Ó Caoimh, Judges,

Advocate General: E. Sharpston,

Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 4 May 2006,

after considering the observations submitted on behalf of:

–        the Sociedad General de Autores y Editores de España (SGAE), by R. Gimeno-Bayón Cobos and P. Hernández Arroyo, abogados,

–        Rafael Hoteles SA, by R. Tornero Moreno, abogado,

–        the French Government, by G. de Bergues and J.‑C. Niollet, acting as Agents,

–        Ireland, by D.J. O’Hagan, acting as Agent, assisted by N. Travers BL,

–        the Austrian Government, by C. Pesendorfer, acting as Agent,

–        the Polish Government, by K. Murawski, U. Rutkowska and P. Derwicz, acting as Agents,

–        the Commission of the European Communities, by J.R. Vidal Puig and W. Wils, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 13 July 2006,

gives the following

Judgment

1        The reference for a preliminary ruling concerns the interpretation of Article 3 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10).

2        This reference was made in the context of proceedings between the Sociedad General de Autores y Editores de España (SGAE) and Rafael Hoteles SA (‘Rafael’), concerning the alleged infringement, by the latter, of intellectual property rights managed by SGAE.

 Legal context

 Applicable international law

3        The Agreement on Trade-Related Aspects of Intellectual Property Rights (‘the TRIPs Agreement’), as set out in Annex 1C to the Marrakesh Agreement establishing the World Trade Organisation, was approved on behalf of the European Community by Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (OJ 1994 L 336, p. 1).

4        Article 9(1) of the TRIPs Agreement provides:

‘Members shall comply with Articles 1 through 21 of the Berne Convention (1971) and the Appendix thereto. However, Members shall not have rights or obligations under this Agreement in respect of the rights conferred under Article 6bis of that Convention or of the rights derived therefrom.’

5        Article 11 of the Berne Convention for the Protection of Literary and Artistic Works (Paris Act of 24 July 1971), as amended on 28 September 1979 (‘the Berne Convention’) provides:

‘1.      Authors of dramatic, dramatico-musical and musical works shall enjoy the exclusive right of authorising:

(i)      the public performance of their works, including such public performance by any means or process;

(ii)      any communication to the public of the performance of their works.

2.      Authors of dramatic or dramatico-musical works shall enjoy, during the full term of their rights in the original works, the same rights with respect to translations thereof.’

6        Article 11bis(1) of the Berne Convention provides:

‘Authors of literary and artistic works shall enjoy the exclusive right of authorising:

(i)      the broadcasting of their works or the communication thereof to the public by any other means of wireless diffusion of signs, sounds or images;

(ii)      any communication to the public by wire or by rebroadcasting of the broadcast of the work, when this communication is made by an organization other than the original one;

(iii) the public communication by loudspeaker or any other analogous instrument transmitting, by signs, sounds or images, the broadcast of the work.’

7        The World Intellectual Property Organisation (WIPO) adopted in Geneva, on 20 December 1996, the WIPO Performances and Phonograms Treaty and the WIPO Copyright Treaty. Those two treaties were approved on behalf of the Community by Council Decision 2000/278/EC of 16 March 2000 (OJ 2000 L 89, p. 6).

8        Article 8 of the WIPO Copyright Treaty provides:

‘Without prejudice to the provisions of Articles 11(1)(ii), 11bis(1)(i) and (ii), 11ter(1)(ii), 14(1)(ii) and 14bis(1) of the Berne Convention, authors of literary and artistic works shall enjoy the exclusive right of authorising any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them.’

9        Joint declarations concerning the WIPO Copyright Treaty were adopted by the Diplomatic Conference on 20 December 1996.

10      The joint declaration concerning Article 8 of that Treaty provides:

‘It is understood that the mere provision of physical facilities for enabling or making a communication does not in itself amount to communication within the meaning of this Treaty or the Berne Convention. It is further understood that nothing in Article 8 precludes a Contracting Party from applying Article 11bis(2).’

 Community legislation

11      The ninth recital in the preamble to Directive 2001/29 states:

‘Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation. Their protection helps to ensure the maintenance and development of creativity in the interests of authors, performers, producers, consumers, culture, industry and the public at large. Intellectual property has therefore been recognised as an integral part of property.’

12      The 10th recital in the preamble to that directive states:

‘If authors or performers are to continue their creative and artistic work, they have to receive an appropriate reward for the use of their work, as must producers in order to be able to finance this work. The investment required to produce products such as phonograms, films or multimedia products, and services such as “on-demand” services, is considerable. Adequate legal protection of intellectual property rights is necessary in order to guarantee the availability of such a reward and provide the opportunity for satisfactory returns on this investment.’

13      The 15th recital in the preamble to that directive states:

‘The Diplomatic Conference held under the auspices of the [WIPO] in December 1996 led to the adoption of two new Treaties, the [WIPO Copyright Treaty] and the [WIPO Performances and Phonograms Treaty], dealing respectively with the protection of authors and the protection of performers and phonogram producers. Those Treaties update the international protection for copyright and related rights significantly, not least with regard to the so-called “digital agenda”, and improve the means to fight piracy world-wide. The Community and a majority of Member States have already signed the Treaties and the process of making arrangements for the ratification of the Treaties by the Community and the Member States is under way. This Directive also serves to implement a number of the new international obligations.’

14      The 23rd recital in the preamble to that directive states:

‘This Directive should harmonise further the author’s right of communication to the public. This right should be understood in a broad sense covering all communication to the public not present at the place where the communication originates. This right should cover any such transmission or retransmission of a work to the public by wire or wireless means, including broadcasting. This right should not cover any other acts.’

15      The 27th recital in the preamble to Directive 2001/29 states:

‘The mere provision of physical facilities for enabling or making a communication does not in itself amount to communication within the meaning of this Directive.’

16      Article 3 of that directive provides:

‘1.      Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them. 

2.      Member States shall provide for the exclusive right to authorise or prohibit the making available to the public, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them:

(a)      for performers, of fixations of their performances;

(b)      for phonogram producers, of their phonograms;

(c)      for the producers of the first fixations of films, of the original and copies of their films;

(d)      for broadcasting organisations, of fixations of their broadcasts, whether these broadcasts are transmitted by wire or over the air, including by cable or satellite.

3.      The rights referred to in paragraphs 1 and 2 shall not be exhausted by any act of communication to the public or making available to the public as set out in this Article.’

 National legislation

17      The codified text of the Law on intellectual property, which rectifies, clarifies and harmonises the legislative provisions in force in that area (‘the LIP’), was approved by Royal Legislative Decree No 1/1996 of 12 April 1996 (BOE No 97 of 22 April 1996).

18      Article 17 of the LIP provides:

‘The author has the exclusive rights of exploitation of his works regardless of their form and, inter alia, the exclusive rights of reproduction, distribution, public communication and conversion which cannot be exercised without his permission except in circumstances laid down in this Law.’

19      Article 20(1) of the LIP provides:

‘Public communication shall mean any act by which a number of persons can have access to the work without prior distribution of copies to each of those persons.

Communication which takes place within a strictly domestic location which is not integrated into or connected to a distribution network of any kind shall not be classified as public.’

 The main proceedings and the questions referred for a preliminary ruling

20      SGAE is the body responsible for the management of intellectual property rights in Spain.

21      SGAE took the view that the use of television sets and the playing of ambient music within the hotel owned by Rafael, during the period from June 2002 to March 2003, involved communication to the public of works belonging to the repertoire which it manages. Considering that those acts were carried out in breach of the intellectual property rights attached to the works, SGAE brought an action for compensation against Rafael before the Juzgado de Primera Instancia (Court of First Instance) No 28, Barcelona (Spain).

22      By decision of 6 June 2003, that court partially rejected the claim. It took the view that the use of television sets in the hotel’s rooms did not involve communication to the public of works managed by SGAE. It considered, on the other hand, that the claim was well founded as regards the well-known existence in hotels of communal areas with television sets and where ambient music is played.

23      SGAE and Rafael both brought appeals before the Audiencia Provincial (Provincial Court) de Barcelona, which decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1)      Does the installation in hotel rooms of television sets to which a satellite or terrestrial television signal is sent by cable constitute an act of communication to the public which is covered by the harmonisation of national laws protecting copyright provided for in Article 3 of Directive [2001/29]?

(2)      Is the fact of deeming a hotel room to be a strictly domestic location, so that communication by means of television sets to which is fed a signal previously received by the hotel is not regarded as communication to the public, contrary to the protection of copyright pursued by Directive [2001/29]?

(3)      For the purposes of protecting copyright in relation to acts of communication to the public provided for in Directive [2001/29], can a communication that is effected through a television set inside a hotel bedroom be regarded as public because successive viewers have access to the work?’

 The request to have the oral procedure reopened

24      By letter received at the Court of Justice on 12 September 2006, Rafael requested the reopening of the oral procedure, pursuant to Article 61 of the Rules of Procedure of the Court of Justice.

25      That request is based on the alleged inconsistency of the Advocate General’s Opinion. Rafael submits that the negative response in the Opinion to the first question unavoidably implies a negative response to the second and third questions, whereas the Advocate General suggests that the answer to the latter questions should be in the affirmative.

26      On that point, it is appropriate to recall that neither the Statute of the Court of Justice nor the Rules of Procedure make provision for the parties to submit observations in response to the Advocate General’s Opinion (see, in particular, Case C-259/04 Emanuel [2006] ECR I‑3089, paragraph 15).

27      The Court may, certainly, of its own motion, on a proposal from the Advocate General or at the request of the parties, order that the oral procedure should be reopened in accordance with Article 61 of its Rules of Procedure, if it considers that it lacks sufficient information or that the case must be dealt with on the basis of an argument which has not been debated between the parties (see, in particular, Case C-209/01 Schilling and Fleck-Schilling [2003] ECR I‑13389, paragraph 19, and Case C-30/02 Recheio – Cash & Carry [2004] ECR I‑6051, paragraph 12).

28      However, the Court finds that in the present case it has all the information necessary to give judgment.

29      Consequently, there is no need to order the reopening of the oral procedure.

 The questions

 Preliminary observations

30      It should be stated at the outset that, contrary to Rafael’s submissions, the situation at issue in the main proceedings does not fall within Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission (OJ 1993 L 248, p. 15), but within Directive 2001/29. The latter applies to all communications to the public of protected works, whereas Directive 93/83 only provides for minimal harmonisation of certain aspects of protection of copyright and related rights in the case of communication to the public by satellite or cable retransmission of programmes from other Member States. As the Court has already held, unlike Directive 2001/29, this minimal harmonisation does not provide information to enable the Court to reply to a question concerning a situation similar to that which is the subject of the questions referred for a preliminary ruling (see, to that effect, Case C-293/98 Egeda [2000] ECR I‑629, paragraphs 25 et 26).

31      Next, it should be noted that the need for uniform application of Community law and the principle of equality require that where provisions of Community law make no express reference to the law of the Member States for the purpose of determining their meaning and scope, as is the case with Directive 2001/29/EC, they must normally be given an autonomous and uniform interpretation throughout the Community (see, in particular, Case C-357/98 Yiadom [2000] ECR I‑9265, paragraph 26, and Case C-245/00 SENA [2003] ECR I‑1251, paragraph 23). It follows that the Austrian Government cannot reasonably maintain that it is for the Member States to provide the definition of ‘public’ to which Directive 2001/29 refers but does not define.

 The first and third questions

32      By its first and third questions, which it is appropriate to examine together, the referring court asks, essentially, whether the distribution of a signal through television sets to customers in hotel rooms constitutes communication to the public within the meaning of Article 3(1) of Directive 2001/29, and whether the installation of television sets in hotel rooms constitutes, in itself, an act of that nature.

33      In that respect, it should be noted that that Directive does not define ‘communication to the public’.

34      According to settled case-law, in interpreting a provision of Community law it is necessary to consider not only its wording, but also the context in which it occurs and the objectives pursued by the rules of which it is part (see, in particular, Case C‑156/98 Germany vCommission [2000] ECR I‑6857, paragraph 50, and Case C‑53/05 Commission v Portugal [2006] ECR I-0000, paragraph 20).

35      Moreover, Community legislation must, so far as possible, be interpreted in a manner that is consistent with international law, in particular where its provisions are intended specifically to give effect to an international agreement concluded by the Community (see, in particular, Case C‑341/95 Bettati [1998] ECR I‑4355, paragraph 20 and the case-law cited).

36      It follows from the 23rd recital in the preamble to Directive 2001/29 that ‘communication to the public’ must be interpreted broadly. Such an interpretation is moreover essential to achieve the principal objective of that directive, which, as can be seen from its ninth and tenth recitals, is to establish a high level of protection of, inter alios, authors, allowing them to obtain an appropriate reward for the use of their works, in particular on the occasion of communication to the public.

37      The Court has held that, in the context of this concept, the term ‘public’ refers to an indeterminate number of potential television viewers (Case C‑89/04 Mediakabel [2005] ECR I‑4891, paragraph 30, and Case C-192/04 Lagardère Active Broadcast [2005] ECR I‑7199, paragraph 31).

38      In a context such as that in the main proceedings, a general approach is required, making it necessary to take into account not only customers in hotel rooms, such customers alone being explicitly mentioned in the questions referred for a preliminary ruling, but also customers who are present in any other area of the hotel and able to make use of a television set installed there. It is also necessary to take into account the fact that, usually, hotel customers quickly succeed each other. As a general rule, a fairly large number of persons are involved, so that they may be considered to be a public, having regard to the principal objective of Directive 2001/29, as referred to in paragraph 36 of this judgment.

39      In view, moreover, of the cumulative effects of making the works available to such potential television viewers, the latter act could become very significant in such a context. It matters little, accordingly, that the only recipients are the occupants of rooms and that, taken separately, they are of limited economic interest for the hotel.

40      It should also be pointed out that a communication made in circumstances such as those in the main proceedings constitutes, according to Article 11bis(1)(ii) of the Berne Convention, a communication made by a broadcasting organisation other than the original one. Thus, such a transmission is made to a public different from the public at which the original act of communication of the work is directed, that is, to a new public.

41      As is explained in the Guide to the Berne Convention, an interpretative document drawn up by the WIPO which, without being legally binding, nevertheless assists in interpreting that Convention, when the author authorises the broadcast of his work, he considers only direct users, that is, the owners of reception equipment who, either personally or within their own private or family circles, receive the programme. According to the Guide, if reception is for a larger audience, possibly for profit, a new section of the receiving public hears or sees the work and the communication of the programme via a loudspeaker or analogous instrument no longer constitutes simple reception of the programme itself but is an independent act through which the broadcast work is communicated to a new public. As the Guide makes clear, such public reception falls within the scope of the author’s exclusive authorisation right.

42      The clientele of a hotel forms such a new public. The transmission of the broadcast work to that clientele using television sets is not just a technical means to ensure or improve reception of the original broadcast in the catchment area. On the contrary, the hotel is the organisation which intervenes, in full knowledge of the consequences of its action, to give access to the protected work to its customers. In the absence of that intervention, its customers, although physically within that area, would not, in principle, be able to enjoy the broadcast work.

43      It follows from Article 3(1) of Directive 2001/29 and Article 8 of the WIPO Copyright Treaty that for there to be communication to the public it is sufficient that the work is made available to the public in such a way that the persons forming that public may access it. Therefore, it is not decisive, contrary to the submissions of Rafael and Ireland, that customers who have not switched on the television have not actually had access to the works.

44      Moreover, it is apparent from the documents submitted to the Court that the action by the hotel by which it gives access to the broadcast work to its customers must be considered an additional service performed with the aim of obtaining some benefit. It cannot be seriously disputed that the provision of that service has an influence on the hotel’s standing and, therefore, on the price of rooms. Therefore, even taking the view, as does the Commission of the European Communities, that the pursuit of profit is not a necessary condition for the existence of a communication to the public, it is in any event established that the communication is of a profit-making nature in circumstances such as those in the main proceedings.

45      With reference to the question whether the installation of television sets in hotel rooms constitutes, in itself, a communication to the public within the meaning of Article 3(1) of Directive 2001/29, it should be pointed out that the 27th recital in the preamble to that directive states, in accordance with Article 8 of the WIPO Copyright Treaty, that ‘[t]he mere provision of physical facilities for enabling or making a communication does not in itself amount to communication within the meaning of [that] Directive.’

46      While the mere provision of physical facilities, usually involving, besides the hotel, companies specialising in the sale or hire of television sets, does not constitute, as such, a communication within the meaning of Directive 2001/29, the installation of such facilities may nevertheless make public access to broadcast works technically possible. Therefore, if, by means of television sets thus installed, the hotel distributes the signal to customers staying in its rooms, then communication to the public takes place, irrespective of the technique used to transmit the signal.

47      Consequently, the answer to the first and second questions is that, while the mere provision of physical facilities does not as such amount to a communication within the meaning of Directive 2001/29, the distribution of a signal by means of television sets by a hotel to customers staying in its rooms, whatever technique is used to transmit the signal, constitutes communication to the public within the meaning of Article 3(1) of that directive.

 The second question

48      By its second question, the referring court asks, essentially, whether the private nature of hotel rooms precludes the communication of a work to those rooms by means of television sets from constituting communication to the public within the meaning of Article 3(1) of Directive 2001/29.

49      In that respect, Ireland submits that communication or making available of works in the private context of hotel rooms should be distinguished from the same acts which take place in public areas of the hotel. This argument cannot however be accepted.

50      It is apparent from both the letter and the spirit of Article 3(1) of Directive 2001/29 and Article 8 of the WIPO Copyright Treaty – both of which require authorisation by the author not for retransmissions in a public place or one which is open to the public but for communications by which the work is made accessible to the public – that the private or public nature of the place where the communication takes place is immaterial.

51      Moreover, according to the provisions of Directive 2001/29 and of the WIPO Copyright Treaty, the right of communication to the public covers the making available to the public of works in such a way that they may access them from a place and at a time individually chosen by them. That right of making available to the public and, therefore, of communication to the public would clearly be meaningless if it did not also cover communications carried out in private places.

52      In support of the argument concerning the private nature of hotel rooms, Ireland also invokes the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950 (‘the ECHR’), and in particular its Article 8, which prohibits any arbitrary or disproportionate interference by a public authority in the sphere of private activity. However, this argument cannot be accepted either.

53      In that respect, it should be pointed out that Ireland does not make clear who, in a context such as that of the main proceedings, would be the victim of such an arbitrary or disproportionate intervention. Ireland can hardly have in mind the customers who benefit from the signal which they receive and who are under no obligation to pay the authors. Nor can the victim be the hotel since, even though it must be concluded that the hotel is obliged to make such payment, it cannot claim to be a victim of an infringement of Article 8 of the ECHR in so far as the rooms, once made available to its customers, cannot be considered as coming within its private sphere.

54      Having regard to all of the foregoing considerations, the answer to the second question is that the private nature of hotel rooms does not preclude the communication of a work by means of television sets from constituting communication to the public within the meaning of Article 3(1) of Directive 2001/29.

 Costs

55      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Third Chamber) hereby rules:

1.      While the mere provision of physical facilities does not as such amount to communication within the meaning of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of copyright and related rights in the information society, the distribution of a signal by means of television sets by a hotel to customers staying in its rooms, whatever technique is used to transmit the signal, constitutes communication to the public within the meaning of Article 3(1) of that directive.

2.      The private nature of hotel rooms does not preclude the communication of a work by means of television sets from constituting communication to the public within the meaning of Article 3(1) of Directive 2001/29.

JUDGMENT OF THE COURT (Third Chamber)

15 March 2012 (*)

(Copyright and related rights in the information society — Direct applicability of the Rome Convention, the TRIPS Agreement and the WPPT in the European Union legal order — Directive 92/100/EC — Article 8(2) — Directive 2001/29/EC — Concept of ‘communication to the public’– Communication to the public of phonograms broadcast by radio in a dental practice)

In Case C‑135/10,

REFERENCE for a preliminary ruling under Article 267 TFEU, from the Corte d’appello di Torino (Italy), made by decision of 10 February 2010, received at the Court on 15 March 2010, in the proceedings

Società Consortile Fonografici (SCF)

v

Marco Del Corso,

intervening party:

Procuratore generale della Repubblica,

THE COURT (Third Chamber),

composed of K. Lenaerts, President of the Chamber, J. Malenovský (Rapporteur), E. Juhász, G. Arestis and T. von Danwitz, Judges,

Advocate General: V. Trstenjak,

Registrar: A. Impellizzeri, Administrator,

having regard to the written procedure and further to the hearing on 7 April 2011,

after considering the observations submitted on behalf of:

–        Società Consortile Fonografici (SCF), by L. Ubertazzi, F. Pocar and B. Ubertazzi, avvocati,

–        Marco Del Corso, by R. Longhin, A. Tigani Sava, L. Bontempi and V. Vaccaro, avvocati,

–        the Italian Government, by G. Palmieri, acting as Agent, and P. Gentili, avvocato dello Stato,

–        Ireland, by D. O’Hagan, acting as Agent, assisted by E. Fitzsimons and J. Jeffers, barristers,

–        the Greek Government, by G. Papadaki, acting as Agent,

–        the French Government, by J. Gstalter, acting as Agent,

–        the European Commission, by J. Samnadda and S. La Pergola, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 29 June 2011

gives the following

Judgment

1        This reference for a preliminary ruling concerns the interpretation of Article 8(2) of Council Directive 92/100/EEC of 19 November 1992 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ 1992 L 346, p. 61), and of Article 3 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 1992 L 167, p. 10).

2        The reference has been made in proceedings between Società Consortile Fonografici (‘SCF’) and Mr Del Corso, a dental surgeon, concerning the broadcasting in his dental practice of protected phonograms.

 Legal context

 International law

3        The Agreement on Trade-Related Aspects of Intellectual Property Rights (‘TRIPS Agreement’), which constitutes Annex 1C to the Agreement establishing the World Trade Organisation (WTO) signed at Marrakesh on 15 April 1994 and approved by Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (OJ 1994 L 336, p. 1), contains a Part II entitled ‘Standards concerning the availability, scope and use of intellectual property rights’. Part II includes Article 14(1), (2) and (6) which provides:

‘1.      In respect of a fixation of their performance on a phonogram, performers shall have the possibility of preventing the following acts when undertaken without their authorisation: the fixation of their unfixed performance and the reproduction of such fixation. Performers shall also have the possibility of preventing the following acts when undertaken without their authorisation: the broadcasting by wireless means and the communication to the public of their live performance.

2.      Producers of phonograms shall enjoy the right to authorise or prohibit the direct or indirect reproduction of their phonograms.

…

6.      Any Member may, in relation to the rights conferred under paragraphs 1, 2 and 3, provide for conditions, limitations, exceptions and reservations to the extent permitted by [the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations, adopted at Rome on 26 October 1961 (‘Rome Convention’)]. However, the provisions of Article 18 of the Berne Convention (1971) shall also apply, mutatis mutandis, to the rights of performers and producers of phonograms in phonograms.’

4        The World Intellectual Property Organisation (WIPO) adopted, on 20 December 1996, the WIPO Performances and Phonograms Treaty (‘WPPT’) and the WIPO Copyright Treaty (‘WCT’). The two treaties were approved on behalf of the European Community by Council Decision 2000/278/EC of 16 March 2000 (OJ 2000 L 89, p. 6).

5        Article 1 of the WPPT provides:

‘1.      Nothing in this Treaty shall derogate from existing obligations that Contracting Parties have to each other under the [Rome Convention].

2.      Protection granted under this Treaty shall leave intact and shall in no way affect the protection of copyright in literary and artistic works. Consequently, no provision of this Treaty may be interpreted as prejudicing such protection.

3.      This Treaty shall not have any connection with, nor shall it prejudice any rights and obligations under, any other treaties.’

6        Under Article 2(b) of the WPPT, for the purposes of that treaty, ‘phonogram’ means the fixation of the sounds of a performance or of other sounds, or of a representation of sounds, other than in the form of a fixation incorporated in a cinematographic or other audiovisual work.

7        Article 2(d) of the WPPT provides that ‘producer of a phonogram’ means the person, or the legal entity, who or which takes the initiative and has the responsibility for the first fixation of the sounds of a performance or other sounds, or the representations of sounds.

8        Article 2(g) of the WPPT states that ‘communication to the public’ of a performance or a phonogram means the transmission to the public by any medium, otherwise than by broadcasting, of sounds of a performance or the sounds or the representations of sounds fixed in a phonogram. For the purposes of Article 15, ‘communication to the public’ includes making the sounds or representations of sounds fixed in a phonogram audible to the public.

9        Under the heading ‘Right of making available of fixed performances’, Article 10 of the WPPT provides:

‘Performers shall enjoy the exclusive right of authorising the making available to the public of their performances fixed in phonograms, by wire or wireless means, in such a way that members of the public may access them from a place at a time individually chosen by them.’

10      Article 14 of the WPPT, headed ‘Right of making available of phonograms’, provides:

‘Producers of phonograms shall enjoy the exclusive right of authorising the making available to the public of their phonograms, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them.’

11      Article 15 of the WPPT, headed ‘Right to remuneration for broadcasting and communication to the public’ is worded as follows:

‘1. Performers and producers of phonograms shall enjoy the right to a single equitable remuneration for the direct or indirect use of phonograms published for commercial purposes for broadcasting or for any communication to the public.

2. Contracting Parties may establish in their national legislation that the single equitable remuneration shall be claimed from the user by the performer or by the producer of a phonogram or by both. Contracting Parties may enact national legislation that, in the absence of an agreement between the performer and the producer of a phonogram, sets the terms according to which performers and producers of phonograms shall share the single equitable remuneration.

3. Any Contracting Party may, in a notification deposited with the Director-General of WIPO, declare that it will apply the provisions of paragraph 1 only in respect of certain uses, or that it will limit their application in some other way, or that it will not apply these provisions at all.

4. For the purposes of this Article, phonograms made available to the public by wire or wireless means in such a way that members of the public may access them from a place and at a time individually chosen by them shall be considered as if they had been published for commercial purposes.’

12      Under Article 23(1) of theWPPT:

‘Contracting Parties undertake to adopt, in accordance with their legal systems, the measures necessary to ensure the application of this Treaty.’

13      Article 8 of the WCT, headed ‘Right of communication to the public’:

‘Without prejudice to the provisions of Articles 11(1)(ii), 11bis(1)(i) and (ii), 11ter(1)(ii), 14(1)(ii) and 14bis(1) of the Berne Convention, authors of literary and artistic works shall enjoy the exclusive right of authorising any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access these works from a place and at at time individually chosen by them.’

14      The European Union is not a Contracting Party to the Rome Convention, unlike all the Member States of the European Union except Malta.

15      Under Article 12 of the Rome Convention, which concerns the secondary use of phonograms:

‘If a phonogram published for commercial purposes, or a reproduction of such phonogram, is used directly for broadcasting or for any communication to the public, a single equitable remuneration shall be paid by the user to the performers, or to the producers of the phonograms, or to both. …’

 European Union law

16      The last recital of the preamble to Decision 94/800 reads as follows:

‘Whereas, by its nature, the Agreement establishing the World Trade Organisation, including the Annexes thereto, is not susceptible to being directly invoked in Community or Member State courts’.

17      Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ 2006 L 376, p. 28), which entered into force on 16 January 2007, codified and repealed Directive 92/100.

18      However, in view of the dates of the facts of the dispute in the main proceedings, Directive 92/100 still applies to it.

19      The seventh recital of the preamble to Directive 92/100 reads:

‘Whereas the creative and artistic work of authors and performers necessitates an adequate income as a basis for further creative and artistic work, and the investments required particularly for the production of phonograms and films are especially high and risky; whereas the possibility for securing that income and recouping that investment can only effectively be guaranteed through adequate legal protection of the rightholders concerned’.

20      The tenth recital of the preamble to that directive reads:

‘Whereas the legislation of the Member States should be approximated in such a way so as not to conflict with the international conventions on which many Member States’ copyright and related rights laws are based’.

21      Article 8(2) and (3) of Directive 92/100 provides:

‘2.      Member States shall provide a right in order to ensure that a single equitable remuneration is paid by the user, if a phonogram published for commercial purposes, or a reproduction of such phonogram, is used for broadcasting by wireless means or for any communication to the public, and to ensure that this remuneration is shared between the relevant performers and phonogram producers. Member States may, in the absence of agreement between the performers and phonogram producers, lay down the conditions as to the sharing of this remuneration between them.

3.      Member States shall provide for broadcasting organisations the exclusive right to authorise or prohibit the rebroadcasting of their broadcasts by wireless means, as well as the communication to the public of their broadcasts if such communication is made in places accessible to the public against payment of an entrance fee.’

22      Article 8(2) of Directive 2006/115 provides:

‘Member States shall provide a right in order to ensure that a single equitable remuneration is paid by the user, if a phonogram published for commercial purposes, or a reproduction of such phonogram, is used for broadcasting by wireless means or for any communication to the public, and to ensure that this remuneration is shared between the relevant performers and phonogram producers. Member States may, in the absence of agreement between the performers and phonogram producers, lay down the conditions as to the sharing of this remuneration between them’.

23      Recitals 15 and 25 of the preamble to Directive 2001/29 read as follows:

‘15      The Diplomatic Conference held under the auspices of the [WIPO] in December 1996 led to the adoption of two new Treaties, the [WCT] and the [WPPT] … This Directive also serves to implement a number of the new international obligations.

…

25      The legal uncertainty regarding the nature and the level of protection of acts of on-demand transmission of copyright works and subject-matter protected by related rights over networks should be overcome by providing for harmonised protection at Community level. It should be made clear that all rightholders recognised by this Directive should have an exclusive right to make available to the public copyright works or any other subject-matter by way of interactive on-demand transmissions. Such interactive on-demand transmissions are characterised by the fact that members of the public may access them from a place and at a time individually chosen by them’.

24      Article 3 of Directive 2001/29 provides:

‘1.      Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them’.

2.      Member States shall provide for the exclusive right to authorise or prohibit the making available to the public, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them:

(a)      for performers, of fixations of their performances;

(b)      for phonogram producers, of their phonograms;

(c)      for the producers of the first fixations of films, of the original and copies of their films;

(d)      for broadcasting organisations, of fixations of their broadcasts, whether these broadcasts are transmitted by wire or over the air, including by cable or satellite.

The rights referred to in paragraphs 1 and 2 shall not be exhausted by any act of communication to the public or making available to the public as set out in this Article’.

 National law

25      Article 72 of Italian Law No 633 of 22 April 1941 on the protection of copyright and other rights relating to its exercise (legge n° 633 recante protezione del diritto d’autore e di altri diritti connessi al suo esercizio), as replaced by Article 11 of Legislative Decree No 68 implementing Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (decreto legislativo n° 68, attuazione della direttiva 2001/29/CE sull’armonizzazione di taluni aspetti del diritto d’autore e dei diritti connessi nella società dell’informazione), of 9 April 2003 (Ordinary Supplement to GURI No 87, of 14 April 2003), in the version applicable to the dispute in the main proceedings (‘the Law on copyright’), provides:

‘Without prejudice to the rights conferred on the author under Title I, the producer of phonograms shall have the exclusive right, for the period and under the conditions laid down in the articles that follow:

(a)      to authorise the direct or indirect, temporary or permanent reproduction, by any means and in any form, in whole or in part, of his phonograms, and by any process of duplication;

(b)      to authorise the distribution of copies of his phonograms. The exclusive distribution right shall not be exhausted within the territory of the European Community, except in relation to the first sale of the medium containing the phonogram by the producer or with his consent in a Member State;

(c)      to authorise the rental or lending of copies of his phonograms. That right shall not be exhausted by the sale of the copies or their distribution in any form; and

(d)      to authorise the making available to the public of his phonograms in such a way that members of the public may access them from a place and at a time individually chosen by them. That right shall not be exhausted by any act making them available to the public.’

26      Article 73(1) of the Law on copyright, as replaced by Article 12 of Legislative Decree No 68 provides:

‘Irrespective of the royalties for distribution, rental and lending to which they are entitled, producers of phonograms, as well as performers whose performance has been fixed or reproduced on phonograms, shall be entitled to receive remuneration for the use for profit of the phonograms, by means of cinematography, radio and television broadcasting, including communication to the public, via satellite, at public dances, in public establishments and on the occasion of any other public use of the phonograms themselves. It is for the producer to exercise that right, sharing the remuneration with the performers concerned.’

27      Article 73a of the Law on copyright as introduced by Article 9 of Legislative Decree No 685 (decreto legislativo n° 685, attuazione della direttiva 92/100/CEE concernente il diritto di noleggio, il diritto di prestito e taluni diritti connessi al diritto d’autore in materia di proprieta intellettuale), of 16 November 1994 (GURI No 293 of 16 December 1994), provides:

‘1.      The performers and producer of the phonogram of which use has been made shall be entitled to equitable remuneration even where the use to which Article 73 refers was not for profit.

2.      In the absence of agreement to the contrary between the parties, such remuneration is determined, paid out and distributed according to the provisions of the [implementing rules for the amended Law on copyright].’

 The dispute in the main proceedings and the questions referred for a preliminary ruling

28      SCF acts as a collecting agency, both within and outside Italy, and manages, collects and distributes the royalties of its associated phonogram producers.

29      In the exercise of its activity as agent, SCF conducted negotiations with the Associazione Dentisti Italiani (Association of Italian Dentists) with a view to concluding a collective agreement quantifying the relevant equitable remuneration within the meaning of Articles 73 or 73a of the Law on copyright for any ‘communication to the public’ of phonograms, including such communication in private professional practices.

30      As those negotiations were unsuccessful, on 16 June 2006 SCF brought an action before the Turin district court against Mr Marco Del Corso, seeking a declaration that he was broadcasting, by way of background music, in his private dental practice in Turin phonograms protected by property rights, and that, since it constituted ‘communication to the public’ within the meaning of the Law on copyright, international law and European Union law, such activity gave rise to the payment of equitable remuneration.

31      In his defence, Mr Del Corso argued, among other things, that, in his practice, the music was being broadcast by radio and that SCF could claim copyright only if the medium on which the phonogram had been fixed was used, whereas remuneration for listening to the broadcast was payable not by the listener, but by the radio or television broadcaster. The Law on copyright expressly made a distinction between remuneration due for a disk and that due for use of broadcasting equipment.

32      In any event, Mr Del Corso argued that Articles 73 and 73a of the amended Law on copyright were not applicable to the present case, as they referred to communication to the public in public places and on the occasion of any other public use of phonograms. A private dental practice could not be classified as a public place, unlike public health facilities.

33      By judgment of 20 March 2008, amended by order of 16 May 2008, the Turin district court dismissed the application by SCF, finding that in this case there was no communication for profit, the type of music played in the practice did not influence the patients’ choice of dentist, and the situation did not fall within those provided for in Article 73a of the Law on copyright, since the dental practice was private and, as such, could not be equated with a public place or place open to the public, given that the patients were not a random public but were individually identified and could normally attend the practice only if they had an appointment and, in any event, with the dentist’s consent

34      SCF appealed against that judgment to the Corte d’appello di Torino.

35      As it considered that there was some doubt over the question whether the broadcasting of phonograms in private professional practices such as dental practices, was included in the definition of ‘communication to the public’ for the purposes of international law and European Union law, the Corte d’appello decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘1.      Are the [Rome Convention], the [TRIPs Agreement] and the [WPPT] directly applicable within the Community legal order?

2.      Are the abovementioned sources of uniform international law also directly effective within the context of private-law relationships?

3.      Do the concepts of ‘communication to the public’ contained in the abovementioned treaty-law texts mirror the Community concepts contained in Directives 92/100 and 2001/29 and, if not, which source should take precedence?

4.      Does the broadcasting, free of charge, of phonograms within private dental practices engaged in professional economic activity, for the benefit of patients of those practices and enjoyed by them without any active choice on their part, constitute ‘communication to the public’ or ‘making available to the public’ for the purposes of the application of Article 3(2)(b) of Directive 2001/29?

5.      Does such an act of transmission entitle the phonogram producers to the payment of remuneration?’

 The questions referred for a preliminary ruling

 The first to third questions

36      By its first to third questions, which should be examined together, the referring court asks, essentially, first, whether the Rome Convention, the TRIPS Agreement and the WPPT are directly applicable in the legal order of the European Union and whether individuals may rely on them directly. Next, it wishes to know whether the definition of ‘communication to the public’ in those international conventions is the same as that in Directives 92/100 and 2001/29 and, finally, in the event that the last question is answered in the negative, which source of law should prevail.

37      First, as regards the question whether the Rome Convention, the TRIPS Agreement and the WPPT are directly applicable in the legal order of the European Union, it must be recalled at the outset that, under Article 216(2) of the TFEU, ‘[a]greements concluded by the Union are binding upon the institutions of the Union and on its Member States’.

38      The TRIPS Agreement and the WPPT were signed by the European Union and approved by Decisions 94/800 and 2000/278 respectively. Consequently, that agreement and treaty bind the institutions of the European Union and the Member States.

39      Moreover, according to the settled case‑law of the Court, the provisions of agreements concluded by the Union form an integral part of the Union legal order (Case 181/73 Haegeman [1974] ECR 449, paragraph 5; Case 12/86 Demirel [1987] ECR 3719, paragraph 7, and Case C‑301/08 Bogiatzi [2009] ECR I‑10185, paragraph 23) and are therefore applicable in the Union.

40      The TRIPS Agreement and the WPPT are such agreements.

41      As regards the Rome Convention, it must be pointed out, first, that the European Union is not a contracting party to that convention and, second, that it cannot be regarded as having taken the place of its Member States as regards its application, if only because not all of those States are parties to that convention (see, by analogy, Case C‑188/07 Commune de Mesquer [2008] ECR I‑4501, paragraph 85).

42      Consequently, the provisions of the Rome Convention do not form part of the legal order of the European Union.

43      As regards, second, the question whether individuals are entitled to rely directly on the provisions of the TRIPS Agreement and the WPPT, it must be observed that, according to the case‑law of the Court of Justice, it is not sufficient that they are part of the legal order of the Union. Those provisions must also appear, as regards their content, to be unconditional and sufficiently precise and their nature and broad logic must not preclude their being so relied on (see, to that effect, Demirel, paragraph 14; Case C‑162/96 Racke [1998] ECR I‑3655, paragraph 31, and Case C‑344/04 IATA and ELFAA [2006] ECR I‑403, paragraph 39).

44      The first condition is met where the provisions relied on contain clear and precise obligations which are not subject, in their implementation or effects, to the adoption of any subsequent measure (see, to that effect, Case C‑213/03 Pêcheurs de l’étang de Berre [2004] ECR I‑7357, paragraph 39 and the case‑law cited, and Case C‑240/09 Lesoochranárske zoskupenie [2011] ECR I‑1255, paragraph 44 and the case‑law cited).

45      As regards the TRIPS Agreement, it must be recalled that, according to the last recital in the preamble to Decision 94/800, the Agreement establishing the World Trade Organisation, including its Annexes is not susceptible to being directly invoked in European Union or Member State courts.

46      Moreover, the Court has already held that, having regard to their nature and structure, the provisions of the TRIPs Agreement do not have direct effect. Those provisions are not, in principle, among the rules in the light of which the Court is to review the legality of measures of the Community institutions under the first paragraph of Article 230 EC and are not such as to create rights upon which individuals may rely directly before the courts by virtue of European Union law (see, to that effect, Case C‑149/96 Portugal v Council [1999] ECR I‑8395, paragraphs 42 to 48; Joined Cases C‑300/98 and C‑392/98 Dior and Others [2000] ECR I‑11307, paragraph 44, and Case C‑245/02 Anheuser-Busch [2004] ECR I‑10989, paragraph 54).

47      Article 23(1) of the WPPT provides that the Contracting Parties undertake to adopt, in accordance with their legal systems, the measures necessary to ensure the application of that Treaty.

48      It follows that the application of the provisions of the WPPT, in their implementation or effects, is subject to the adoption of subsequent measures. Therefore, such provisions have no direct effect in the law of the European Union and are not such as to create rights for individuals which they may rely on before the courts by virtue of that law.

49      As regards the Rome Convention, it must be recalled that, under Article 1(1) of the WPPT, nothing in that treaty is to derogate from existing obligations that Contracting Parties have to each other under the Rome Convention.

50      Accordingly, although the European Union is not a contracting party to the Rome Convention, it is none the less required, under Article 1(1) of the WPPT, not to stand in the way of the obligations of the Member States under that convention. Accordingly, that convention has indirect effects within the European Union.

51      Third, as regards the question of the relationship between the concept of ‘communication to the public’ in the TRIPS Agreement, the WPPT and the Rome Convention and that in Directives 92/100 and 2001/29, it must be recalled that, according to settled case‑law, European Union legislation must, so far as possible, be interpreted in a manner that is consistent with international law, in particular where its provisions are intended specifically to give effect to an international agreement concluded by the European Union (see, inter alia, Case C‑341/95Bettati [1998] ECR I‑4355, paragraph 20, and Case C‑306/05 SGAE [2006] ECR I‑11519, paragraph 35).

52      In that regard, it is common ground that, as recital 15 in the preamble to Directive 2001/29 makes clear, that directive is intended to implement a number of the Union’s new obligations under the WCT and the WPPT, which are considered, according to the same recital, to update the international protection for copyright and related rights significantly. In those circumstances, the concepts contained in that directive must be interpreted, as far as is possible, in the light of those two Treaties (see, to that effect, Case C‑456/06 Peek & Cloppenburg[2008] ECR I‑2731, paragraph 31).

53      Moreover, it follows from recital 10 of Directive 92/100 that the legislation of the Member States should be approximated in such a way as not to conflict with the international conventions on which many Member States’ laws on copyright and related rights are based.

54      As that directive is intended to harmonise certain aspects of the law on copyright and related rights in the field of intellectual property in compliance with the relevant international agreements such as, inter alia, the Rome Convention, the TRIPS Agreement and the WPPT, it is supposed to establish a set of rules compatible with those contained in those agreements.

55      It follows from all those considerations that the concepts appearing in Directives 92/100 and 2001/29, such as ‘communication to the public’ must be interpreted in the light of the equivalent concepts contained in those international agreements and in such a way that they are compatible with those agreements, taking account of the context in which those concepts are found and the purpose of the relevant provisions of the agreements as regards intellectual property.

56      Having regard to the foregoing considerations, the answer to the first to third questions is:

–        the provisions of the TRIPS Agreement and the WPPT are applicable in the legal order of the European Union,

–        as the Rome Convention does not form part of the legal order of the European Union it is not applicable there; however, it has indirect effects within the European Union

–        individuals may not rely directly either on that convention or on the TRIPS Agreement or the WPPT;

–        the concept of ‘communication to the public’ must be interpreted in the light of the equivalent concepts contained in the Rome Convention, the TRIPS Agreement and the WPPT and in such a way that it is compatible with those agreements, taking account of the context in which those concepts are found and the purpose of the relevant provisions of the agreements as regards intellectual property.

 The fourth and fifth questions

 Preliminary observations

57      By its fourth and fifth questions, the referring court asks whether the broadcasting, free of charge, of phonograms within private dental practices engaged in professional economic activity, for the benefit of patients of those practices and enjoyed by them without any active choice on their part, constitutes ‘communication to the public’ or ‘making available to the public’ for the purposes of the application of Article 3(2)(b) of Directive 2001/29 and whether such an act of transmission entitles the phonogram producers to the payment of remuneration?

58      In that regard, it must be observed at the outset that the referring court refers, in the wording of those questions, to Article 3(2)(b) of Directive 2001/29 concerning the exclusive right of phonogram producers to authorise or prohibit the making available to the public of their phonograms, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them.

59      As is clear from the explanatory memorandum to the Proposal for Directive 2001/29 (COM(97) 628), confirmed by recital 25 of that directive, making available to the public, for the purposes of that provision, is intended to refer to ‘interactive on-demand transmissions’ characterised by the fact that members of the public may access them from a place and at a time individually chosen by them.

60      According to the decision for reference, the issue in the main proceedings is the broadcasting of music in a dental practice for the benefit of the patients present and not interactive on-demand transmission.

61      However, according to case‑law, in order to provide the national court with an answer which will be of use to it and enable it to determine the case before it, it is for the Court of Justice, if necessary, to reformulate the questions referred to it (Case C‑286/05 Haug [2006] ECR I‑4121, paragraph 17, and Case C‑420/06 Jager [2008] ECR I‑1315, paragraph 46).

62      Moreover, in order to provide the national court with an answer which will be of use to it and enable it to determine the case before it, the Court may find it necessary to consider provisions of European Union law which the national court has not referred to in its questions (C‑329/06 and C‑343/06 Wiedemann and Funk [2008] ECR I‑4635, paragraph 45, and Case C‑145/09 Tsakouridis [2010] ECR I‑11979, paragraph 36).

63      In that connection, it must be observed that Article 8(2) of Directive 92/100 is intended to ensure that a single equitable remuneration is paid by the user to performers and phonogram producers, if a phonogram published for commercial purposes, or a reproduction of such phonogram, is used for broadcasting by wireless means or for any communication to the public.

64      In those circumstances, the fourth and fifth questions of the referring court must be interpreted as asking, in essence, whether the concept of ‘communication to the public’ for the purposes of Article 8(2) of Directive 92/100 must be interpreted as meaning that it covers the broadcasting, free of charge, of phonograms within private dental practices engaged in professional economic activity, for the benefit of patients of those practices and enjoyed by them without any active choice on their part, and whether such an act of transmission entitles the phonogram producers to the payment of remuneration

 Admissibility

65      Mr Del Corso considers that the fourth and fifth questions are inadmissible since he has never acknowledged that he was broadcasting protected phonograms to his patients by means of his radio-broadcast receiver in his private dental practice, particularly as such broadcasts were not made in exchange for the payment of an entrance fee by those patients.

66      In that regard, it must be recalled that it is not for the Court of Justice but for the national court to ascertain the facts which have given rise to the dispute before it and to establish the consequences which they have for the judgment which it is required to deliver (Case C‑435/97 WWF and Others [1999] ECR I‑5613, paragraph 32, and Case C‑232/09 Danosa [2010] ECR I‑11405, paragraph 33).

67      As regards the division of jurisdiction between the European Union judicature and national courts, it is in principle for the national court to determine whether the factual conditions triggering the application of a European Union rule are fulfilled in the case pending before it, while the Court, when giving a preliminary ruling, may, where appropriate, provide clarification to guide the national court in its interpretation (see, to that effect, Case C‑424/97 Haim [2000] ECR I‑5123, paragraph 58, and Joined Cases C‑22/08 and C‑23/08 Vatsouras and Koupatantze [2009] ECR I‑4585, paragraph 23).

68      In the present case, as is clear from the decision for reference, the fourth and fifth questions are based on the factual premiss that Mr Del Corso broadcast protected phonograms to his patients.

69      Accordingly, those questions must be considered to be admissible and must be examined in the factual framework defined by the referring court.

 Merits

70      As regards the concept of ‘communication to the public’, it must be observed at the outset that it appears not only in Article 8(2) of Directive 92/100, a provision which is relevant to the main proceedings, but also in Article 3(1) of Directive 2001/29 and, inter alia, in Article 12 of the Rome Convention, Article 15 of the WPPT and Article 14(1) of the TRIPS agreement.

71      As is clear from paragraph 55 of the present judgment, the concept of ‘communication to the public’ must be interpreted in the light of the equivalent concepts contained in the Rome Convention, the TRIPS agreement and the WPPT and in such a way that it is compatible with those agreements, taking account of the context in which those concepts are found and the purpose of the provisions of those agreements.

72      It must be recalled that, under Article 3(1) of Directive 2001/29, Member States are to provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them. That provision is inspired by Article 8 of the WCT, the wording of which it reproduces almost verbatim.

73      Article 8(2) of Directive 92/100 requires Member States to provide a right in order to ensure that a single equitable remuneration is paid by the user if a phonogram published for commercial purposes, or a reproduction of such phonogram, is used for broadcasting by wireless means or for any communication to the public and to ensure that this remuneration is shared between the relevant performers and phonogram producers. That provision is inspired by Article 12 of the Rome Convention the wording of which it likewise reproduces almost verbatim (Case C‑245/00 SENA [2003] ECR I‑1251, paragraph 35).

74      It is clear from a comparison of Article 3(1) of Directive 2001/29 and Article 8(2) of Directive 92/100 that the concept of communication to the public appearing in those provisions is used in contexts which are not the same and pursue objectives which, while similar, are none the less different to some extent.

75      Under Article 3(1) of Directive 2001/29, authors have a right which is preventive in nature and allows them to intervene, between possible users of their work and the communication to the public which such users might contemplate making, in order to prohibit such use. On the other hand, under Article 8(2) of Directive 92/100, performers and producers of phonograms have a right which is compensatory in nature, which is not liable to be exercised before a phonogram published for commercial purposes, or a reproduction of such a phonogram, has been used for communication to the public by a user.

76      It follows that Article 8(2) of Directive 92/100, on the one hand, requires an individual interpretation of the concept of communication to the public. The same applies as regards the identity of the user and the question of the use of the phonogram at issue.

77      On the other hand, as the right under Article 8(2) of Directive 92/100 is exercised in the event of the use of a work, that right is clearly a right which is essentially financial in nature.

78      Thus, in order to assess whether a user is making a communication to the public within the meaning of Article 8(2) of Directive 92/100, in accordance with the need for an individual approach noted in paragraph 76 of the present judgment, the situation of a specific user and of all the persons to whom he communicates the protected phonograms must be assessed.

79      For the purposes of such an assessment, account must be taken of several complementary criteria, which are not autonomous and are interdependent. Consequently, they must be applied individually and in the light of their interaction with one another, given that in different specific situations, they may be met to varying degrees.

80      Thus, it is for the national court to make an overall assessment of a given situation.

81      In that connection, it should be pointed out that the Court has already identified certain criteria in the rather different context of Article 3(1) of Directive 2001/29.

82      First, the Court has already stressed the indispensable role of the user. Thus, the Court has held that the operator of a hotel or public house makes a communication to the public within the meaning of Article 3(1) of Directive 2001/29 when it intervenes, in full knowledge of the consequences of its action, to give access to a broadcast containing the protected work to its customers. Without its intervention the customers cannot enjoy the works broadcast, even though they are physically within the broadcast’s catchment area (see, to that effect,SGAE, paragraph 42, and Joined Cases C‑403/08 and C‑429/08 Football Association Premier League and Others [2011] ECR I‑9083, paragraph 195).

83      Second, the Court has already identified certain aspects of the concept of public.

84      In that regard, the Court has held that the term ‘public’ within the meaning of Article 3(1) of Directive 2001/29 refers to an indeterminate number of potential listeners, and, in addition, implies a fairly large number of persons (see, to that effect, Case C‑89/04 Mediakabel[2005] ECR I‑4891, paragraph 30; Case C‑192/04 Lagardère Active Broadcast [2005] ECR I‑7199, paragraph 31, and SGAE, paragraphs 37 and 38).

85      As regards, to begin with, the ‘indeterminate’ nature of the public, the Court has observed that, according to the definition of the concept of ‘communication to the public’ given by the WIPO glossary, which, while not legally binding, none the less sheds light on the interpretation of the concept of public, it means ‘making a work … perceptible in any appropriate manner to persons in general, that is, not restricted to specific individuals belonging to a private group’.

86      Next, as regards, the criterion of ‘a fairly large number of people’, this is intended to indicate that the concept of public encompasses a certain de minimis threshold, which excludes from the concept groups of persons which are too small, or insignificant.

87      In order to determine that number, the Court took account of the cumulative effects of making works available to potential audiences (SGAE, paragraph 39). In that connection, not only is it relevant to know how many persons have access to the same work at the same time but it is also necessary to know how many of them have access to it in succession.

88      Third, in paragraph 204 of the judgment in Football Association Premier League and Others, the Court held that it is not irrelevant that a ‘communication’ within the meaning of Article 3(1) of Directive 2001/29 is of a profit-making nature.

89      It follows that this must be all the more true in the case of the right to equitable remuneration provided for in Article 8(2) of directive 92/100 given its essentially financial nature.

90      More specifically, the Court has held that the action by a hotel operator by which it gives access to a broadcast work to its customers must be considered an additional service performed with the aim of obtaining some benefit, since the provision of that service has an influence on the hotel’s standing and, therefore, on the price of rooms. Similarly, the Court has held that the transmission of broadcast works by the operator of a public house is made with the intention that it should, and is likely to, have an effect upon the number of people going to that establishment and, ultimately, on its financial results (see, to that effect, SGAE, paragraph 44, and Football Association Premier League and Others, paragraph 205).

91      It is thus understood that the public which is the subject of the communication is both targeted by the user and receptive, in one way or another, to that communication, and not merely ‘caught’ by chance.

92      It is in the light of those criteria in particular that it must be determined whether, in a case such as that at issue in the main proceedings, a dentist who broadcasts phonograms to his patients, by way of background music, is making a communication to the public within the meaning of Article 8(2) of Directive 92/100.

93      Although, as was pointed out in paragraph 80 of the present judgment, it is, in principle, for the national courts to determine whether that is the situation in a particular case and to make all definitive findings of fact in that regard, it must none the less be held that the Court has all the evidence necessary in relation to the case in the main proceedings to assess whether there is such an act of communication to the public.

94      It must be observed, first, that, as in the cases leading to the judgments in SGAE and Football Association Premier League and Others, although the patients of a dentist are in the area covered by the signal conveying the phonograms, they are able to listen to those phonograms only as a result of the deliberate intervention of that dentist. Therefore such a dentist must be considered to be intervening deliberately in the broadcasting of those phonograms.

95      Next, as regards the patients of a dentist such as the one in the case in the main proceedings, it must be observed that they generally form a very consistent group of persons and thus constitute a determinate circle of potential recipients, as other people do not, as a rule, have access to treatment by that dentist. Consequently, they are not ‘persons in general’ as defined in paragraph 85 of the present judgment.

96      As regards, further, having regard to paragraph 84 of the present judgment, the number of persons to whom the same broadcast phonogram is made audible by the dentist, it must be held that, in the case of the patients of a dentist, the number of persons is not large, indeed it is insignificant, given that the number of persons present in his practice at the same time is, in general, very limited. Moreover, although there are a number of patients in succession, the fact remains that, as those patients attend one at a time, they do not generally hear the same phonograms, or the broadcast phonograms, in particular.

97      Finally, it cannot be disputed that, in a situation such as that in the main proceedings, a dentist who broadcasts phonograms, by way of background music, in the presence of his patients cannot reasonably either expect a rise in the number of patients because of that broadcast alone or increase the price of the treatment he provides. Therefore, such a broadcast is not liable, in itself, to have an impact on the income of that dentist.

98      The patients of a dentist visit a dental practice with the sole objective of receiving treatment, as the broadcasting of phonograms is in no way a part of dental treatment. They have access to certain phonograms by chance and without any active choice on their part, according to the time of their arrival at the practice and the length of time they wait and the nature of the treatment they undergo. Accordingly, it cannot be presumed that the usual customers of a dentist are receptive as regards the broadcast in question.

99      Consequently such a broadcast is not of a profit-making nature, and thus does not fulfil the criterion set out in paragraph 90 of the present judgment.

100    It follows from all the foregoing considerations that a dentist such as the one in question in the case in the main proceedings who broadcasts phonograms free of charge in his dental practice, for the benefit of his clients and enjoyed by them without any active choice on their part, is not making a ‘communication to the public’ for the purposes of the application of Article 8(2) of Directive 92/100.

101    It follows that the requirement set out in Article 8(2) of Directive 92/100 for the payment of equitable remuneration by the user, namely that the user makes a ‘communication to the public’ within the meaning of that provision, is not met in a situation such as that in the main proceedings.

102    Accordingly, the answer to the fourth and fifth questions is that the concept of ‘communication to the public’ for the purposes of Article 8(2) of Directive 92/100 must be interpreted as meaning that it does not cover the broadcasting, free of charge, of phonograms within private dental practices engaged in professional economic activity, such as the one at issue in the main proceedings, for the benefit of patients of those practices and enjoyed by them without any active choice on their part. Therefore such an act of transmission does not entitle the phonogram producers to the payment of remuneration.

 Costs

103    Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Third Chamber) hereby rules:

1.      The provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights, which constitutes Annex 1C to the Agreement establishing the World Trade Organisation (WTO) signed at Marrakesh on 15 April 1994 and approved by Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) and of the World Intellectual Property Organisation (WIPO) Performances and Phonograms Treaty of 20 December 1996 are applicable in the legal order of the European Union.

As the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations, adopted at Rome on 26 October 1961, does not form part of the legal order of the European Union it is not applicable there; however, it has indirect effects within the European Union.

Individuals may not rely directly either on that convention or on the agreement or the treaty mentioned above.

The concept of ‘communication to the public’ which appears in Council Directive 92/100/EEC of 19 November 1992 on rental right and lending right and on certain rights related to copyright in the field of intellectual property and Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted in the light of the equivalent concepts contained in the convention, the agreement and the treaty mentioned above and in such a way that it is compatible with those agreements, taking account of the context in which those concepts are found and the purpose of the relevant provisions of the agreements as regards intellectual property.

2.      The concept of ‘communication to the public’ for the purposes of Article 8(2) of Directive 92/100 must be interpreted as meaning that it does not cover the broadcasting, free of charge, of phonograms within private dental practices engaged in professional economic activity, such as the one at issue in the main proceedings, for the benefit of patients of those practices and enjoyed by them without any active choice on their part. Therefore such an act of transmission does not entitle the phonogram producers to the payment of remuneration.

JUDGMENT OF THE COURT (Third Chamber)

15 March 2012 (*)

(Copyright and related rights — Directive 2006/115/EC — Articles 8 and 10 — Concepts of ‘user’ and ‘communication to the public’ — Installation in hotel bedrooms of televisions and/or radios to which the hotelier distributes a broadcast signal)

In Case C‑162/10,

REFERENCE for a preliminary ruling under Article 267 TFEU, from the High Court (Commercial Division) (Ireland), made by decision of 23 March 2010, received at the Court on 7 April 2010, in the proceedings

Phonographic Performance (Ireland) Limited

v

Ireland,

Attorney General,

THE COURT (Third Chamber),

composed of K. Lenaerts, President of the Chamber, J. Malenovský (Rapporteur), E. Juhász, G. Arestis and T. von Danwitz, Judges,

Advocate General: V. Trstenjak,

Registrar: A. Impellizzeri, Administrator,

having regard to the written procedure and further to the hearing on 7 April 2011,

after considering the observations submitted on behalf of:

–        Phonographic Performance (Ireland) Limited, by H. Sheehy, solicitor, and J. Newman, BL,

–        Ireland, by D. O’Hagan, acting as Agent, and E. Fitzsimons and J. Jeffers, BL,

–        the Greek Government, by G. Papadaki, M. Germani and G. Alexaki, acting as Agents,

–        the Italian Government, by P. Gentili, acting as Agent,

–        the French Government, by J. Gstalter, acting as Agent,

–        European Commission, by J. Samnadda and S. La Pergola, acting as Agents.

after hearing the Opinion of the Advocate General at the sitting on 29 June 2011

gives the following

Judgment

1        This reference for a preliminary ruling relates to the interpretation of Articles 8 and 10 of Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ 2006 L 376, p. 28).

2        The reference has been made in the course of proceedings between Phonographic Performance (Ireland) Limited (‘PPL’) and Ireland.

 Legal context

 International law

3        The World Intellectual Property Organisation (‘WIPO’) adopted in Geneva, on 20 December 1996, the WIPO Performances and Phonograms Treaty (‘the WPPT’) and the WIPO Copyright Treaty. Those two treaties were approved on behalf of the European Community by Council Decision 2000/278/EC of 16 March 2000 (OJ 2000 L 89, p. 6).

4        Under Article 2(b), (d) and (g) of the WPPT:

‘For the purposes of this Treaty:

(b)      “phonogram” means the fixation of the sounds of a performance or of other sounds, or of a representation of sounds, other than in the form of a fixation incorporated in a cinematographic or other audiovisual work;

...

(d)      “producer of a phonogram” means the person, or the legal entity, who or which takes the initiative and has the responsibility for the first fixation of the sounds of a performance or other sounds, or the representations of sounds.

...

(g)      “communication to the public” of a performance or a phonogram means the transmission to the public by any medium, otherwise than by broadcasting, of sounds of a performance or the sounds or the representations of sounds fixed in a phonogram. For the purposes of Article 15, “communication to the public” includes making the sounds or representations of sounds fixed in a phonogram audible to the public.’

5        Article 15 of the WPPT reads:

‘(1)      Performers and producers of phonograms shall enjoy the right to a single equitable remuneration for the direct or indirect use of phonograms published for commercial purposes for broadcasting or for any communication to the public.

(2)      Contracting Parties may establish in their national legislation that the single equitable remuneration shall be claimed from the user by the performer or by the producer of a phonogram or by both. Contracting Parties may enact national legislation that, in the absence of an agreement between the performer and the producer of a phonogram, sets the terms according to which performers and producers of phonograms shall share the single equitable remuneration.

(3)      Any Contracting Party may, in a notification deposited with the Director-General of WIPO, declare that it will apply the provisions of paragraph (1) only in respect of certain uses, or that it will limit their application in some other way, or that it will not apply these provisions at all.

(4)      For the purposes of this Article, phonograms made available to the public by wire or wireless means in such a way that members of the public may access them from a place and at a time individually chosen by them shall be considered as if they had been published for commercial purposes.’

 European Union law

6        According to recitals 5, 7 and 16 of the preamble to Directive 2006/115:

‘(5)      The creative and artistic work of authors and performers necessitates an adequate income as a basis for further creative and artistic work, and the investments required particularly for the production of phonograms and films are especially high and risky. The possibility of securing that income and recouping that investment can be effectively guaranteed only through adequate legal protection of the rightholders concerned.

…

(7)      The legislation of the Member States should be approximated in such a way as not to conflict with the international conventions on which the copyright and related rights laws of many Member States are based.

…

(16)      Member States should be able to provide for more far-reaching protection for owners of rights related to copyright than that required by the provisions laid down in this Directive in respect of broadcasting and communication to the public.’

7        Article 7 of Directive 2006/115 provides:

‘1.      Member States shall provide for performers the exclusive right to authorise or prohibit the fixation of their performances.

2.      Member States shall provide for broadcasting organisations the exclusive right to authorise or prohibit the fixation of their broadcasts, whether these broadcasts are transmitted by wire or over the air, including by cable or satellite.

3.      A cable distributor shall not have the right provided for in paragraph 2 where it merely retransmits by cable the broadcasts of broadcasting organisations.’

8        Article 8(2) of that directive provides:

‘Member States shall provide a right in order to ensure that a single equitable remuneration is paid by the user, if a phonogram published for commercial purposes, or a reproduction of such phonogram, is used for broadcasting by wireless means or for any communication to the public, and to ensure that this remuneration is shared between the relevant performers and phonogram producers. Member States may, in the absence of agreement between the performers and phonogram producers, lay down the conditions as to the sharing of this remuneration between them.’

9        Article 10 of that directive is worded as follows:

‘1.      Member States may provide for limitations to the rights referred to in this Chapter in respect of:

(a)      private use;

…

2.      Irrespective of paragraph 1, any Member State may provide for the same kinds of limitations with regard to the protection of performers, producers of phonograms, broadcasting organisations and of producers of the first fixations of films, as it provides for in connection with the protection of copyright in literary and artistic works.

However, compulsory licences may be provided for only to the extent to which they are compatible with the Rome Convention.

3.      The limitations referred to in paragraphs 1 and 2 shall be applied only in certain special cases which do not conflict with a normal exploitation of the subject matter and do not unreasonably prejudice the legitimate interests of the rightholder.’

10      Directive 2006/115 codified and repealed Council Directive 92/100/EEC of 19 November 1992 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ 1992 L 346, p. 61).

11      According to recital 9 of the preamble to Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10):

‘Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation. Their protection helps to ensure the maintenance and development of creativity in the interests of authors, performers, producers, consumers, culture, industry and the public at large. Intellectual property has therefore been recognised as an integral part of property.’

12      Article 3 of that directive states:

‘1.      Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them.

2.      Member States shall provide for the exclusive right to authorise or prohibit the making available to the public, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them:

(a)      for performers, of fixations of their performances;

(b)      for phonogram producers, of their phonograms;

(c)       for the producers of the first fixations of films, of the original and copies of their films;

(d)      for broadcasting organisations, of fixations of their broadcasts, whether these broadcasts are transmitted by wire or over the air, including by cable or satellite.

3.      The rights referred to in paragraphs 1 and 2 shall not be exhausted by any act of communication to the public or making available to the public as set out in this Article.’

 National law

13      The Copyright and Related Rights Act 2000, (‘the 2000 Act’) provides in Section 97:

‘1.       Subject to subsection (2), it is not an infringement of the copyright in a sound recording, broadcast or cable programme to cause a sound recording, broadcast or cable programme to be heard or viewed where it is heard or viewed:

(a)       in part of the premises where sleeping accommodation is provided for the residents or inmates, and

(b)      as part of the amenities provided exclusively or mainly for residents or inmates.

2.      Subsection (1) does not apply in respect of any part of premises to which subsection (1) applies where there is a discrete charge made for admission to the part of the premises where a sound recording, broadcast or cable programme is to be heard or viewed.’

 The dispute in the main proceedings and the questions referred for a preliminary ruling

14      PPL is a collecting society which represents the rights which phonogram producers hold over sound recordings or phonograms in Ireland.

15      The main proceedings concern an action brought by PPL against Ireland for a declaration that Ireland, in adopting and maintaining in force Section 97 of the Act of 2000, has acted in breach of Article 4 TEU and for damages for that breach.

16      PPL alleges that it was on the ground of the exemption from liability provided for by Section 97(1) of the Act of 2000 that the operators of hotels and guesthouses (collectively ‘hotels’) did not pay equitable remuneration to it for the use, in hotel bedrooms in Ireland, of phonograms included amongst those made available under licence to PPL, by means of apparatus provided by persons responsible for the operation of those hotels as part of the service they provide.

17      The exemption from liability for hoteliers broadcasting protected phonograms infringes certain European directives adopted in the area of rights related to copyright, which provide for the right of phonogram producers to equitable remuneration when their phonograms are used under certain circumstances.

18      The High Court (Commercial Division) makes clear that the main proceedings concern only sound recordings or phonograms heard by guests in hotel bedrooms in Ireland and not in other parts of those establishments. Nor do the proceedings concern the use by hotel guests of transmissions which are interactive or on-demand.

19      Moreover, according to the referring court, if a hotel in Ireland provides televisions or radios in its bedrooms and, by cable or other technology, distributes to those televisions and radios a signal received centrally, then that hotel is not required by reason of Section 97(1) of the Act of 2000 to make any payment of equitable remuneration to phonogram producers for sound recordings included in TV or radio broadcasts.

20      Similarly, if a hotel places in its bedrooms other apparatus and makes available sound recordings in physical or digital form which may be played by guests thereon, that hotel is, likewise, not obliged to pay equitable remuneration to phonogram producers by reason of Section 97(1) of the Act of 2000.

21      Moreover, whilst the claim in the main proceedings only relates to use of sound recordings in hotel bedrooms, the referring court points out that Section 97(1) of the Act of 2000 also has the effect of removing the requirement of equitable remuneration for such use in hospitals, nursing homes, residential care facilities, prisons and all other similar institutions.

22      Finally, it makes clear that the sound recordings at issue in the proceedings are phonograms published for commercial purposes.

23      Against that background, the referring court took the view that, having regard to the differences between the rights protected by Article 3(1) of Directive 2001/29 and Article 8(2) of Directive 2006/115, to the context in which the phrase ‘communication to the public’ is used in each, and the purpose of the respective provisions, that court should not apply to the concept ‘communication to the public’ the same meaning as the Court of Justice gave it in Case C‑306/05 SGAE [2006] ECR I‑11519).

24      It is in those circumstances that the High Court (Commercial Division) decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

‘(1)      Is a hotel operator which provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal a “user” making a “communication to the public” of a phonogram which may be played in a broadcast for the purposes of Article 8(2) of Codified Directive 2006/115/EC …?

(2)      If the answer to paragraph (1) is in the affirmative, does Article 8(2) of Directive 2006/115/EC … oblige Member States to provide a right to payment of equitable remuneration from the hotel operator in addition to equitable remuneration from the broadcaster for the playing of the phonogram?

(3)      If the answer to paragraph (1) is in the affirmative, does Article 10 of Directive 2006/115/EC … permit Member States to exempt hotel operators from the obligation to pay “single equitable remuneration” on the grounds of “private use” within the meaning of Article 10(1)(a)?

(4)      Is a hotel operator which provides in a guest bedroom apparatus (other than a television or radio) and phonograms in physical or digital form which may be played on or heard from such apparatus a “user” making a “communication to the public” of the phonograms within the meaning of Article 8(2) of Directive 2006/115/EC …?

(5)      If the answer to paragraph (4) is in the affirmative, does Article 10 of Directive 2006/115/EC … permit Member States to exempt hotel operators from the obligation to pay “a single equitable remuneration” on the grounds of “private use” within the meaning of Article 10(1)(a) of Directive 2006/115/EC?’

 The questions referred for a preliminary ruling

 The first question

25      By its first question, the referring court essentially wishes to know whether a hotel operator which provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal a ‘user’ making a ‘communication to the public’ of a broadcast phonogram for the purposes of Article 8(2) of Directive 2006/115/EC.

26      As a preliminary point, it must be borne in mind that, under Article 8(2) of Directive 2006/115, Member States are to provide a right in order to ensure that a single equitable remuneration is paid by the user, if a phonogram published for commercial purposes, or a reproduction of such phonogram, is used for broadcasting by wireless means or for any communication to the public.

27      It follows from that provision that anyone who uses a phonogram for a broadcast or for communication to the public must be considered to be a ‘user’ for the purposes of that provision.

28      In those circumstances, it must be assessed whether, in a case such as that at issue in the main proceedings, there has been ‘communication to the public’.

29      As regards the concept of ‘communication to the public’ within the meaning of Article 8(2) of Directive 92/100, codified by Directive 2006/115, the Court held in Case C‑135/10 SCF ECR [2012], paragraph 76, that it requires an individual assessment. The same applies as regards the identity of the user and the question of the use of the phonogram at issue (SCF, paragraph 78).

30      Moreover, the Court made clear that, for the purposes of such an assessment, account has to be taken of several complementary criteria, which are not autonomous and are interdependent. Consequently, they must be applied individually and in their interaction with one another, given that they may, in different situations, be present to widely varying degrees (see SCF, paragraph 79).

31      Of those criteria, the Court emphasised, first and foremost, the indispensable role played by the user. The user makes an act of communication when it intervenes, in full knowledge of the consequences of its action, to give access to a broadcast containing the protected work to its customers. In the absence of that intervention, its customers, although physically within the area covered by the broadcast, would not, in principle, be able to enjoy the broadcast work (SCF, paragraph 82).

32      Second, the Court clarified certain aspects of the concept of ‘public’.

33      According to the Court, the term ‘public’ refers to an indeterminate number of potential listeners and a fairly large number of people (see, to that effect, SCF, paragraph 84).

34      As regards, to begin with, the ‘indeterminate’ nature of the public, the Court has observed that, according to the definition of the concept of ‘communication to the public’ given by the WIPO glossary, which, while not legally binding, none the less sheds light on the interpretation of the concept of public, it means ‘making a work … perceptible in any appropriate manner to persons in general, that is, not restricted to specific individuals belonging to a private group’ (SCF, paragraph 85).

35      Next, as regards, the criterion of ‘a fairly large number of people’, the Court has made clear that this is intended to indicate that, on the one hand, the concept of public encompasses a certain de minimis threshold, which excludes from the concept groups of persons which are too small, or insignificant (SCF, paragraph 86). On the other hand, in order to determine that number, account must be taken of the cumulative effects of making works available to potential audiences. In that connection, not only is it relevant to know how many persons have access to the same work at the same time but it is also necessary to know how many of them have access to it in succession (SCF, paragraphs 86 and 87).

36      Third, the Court has held that if it is relevant that a ‘communication’ within the meaning of Article 3(1) of Directive 2001/29 is of a profit-making nature, this must be all the more true in the case of the essentially economic right to equitable remuneration of the performers and phonogram producers under Article 8(2) of Directive 2006/115 (see, to that effect, SCF, paragraphs 88 and 89).

37      According to the Court, it is thus understood that the public which is the subject of the communication is both targeted by the user and receptive, in one way or another, to that communication, and not merely ‘caught’ by chance (SCF, paragraph 91).

38      It is in the light, inter alia, of those criteria and in accordance with the need for an individual assessment established in paragraph 29 of this judgment that it must be assessed whether, in a case such as that at issue in the main proceedings, a hotel operator which provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal is making a communication to the public within the meaning of Article 8(2) of Directive 2006/115.

39      Although it is, in principle, for the national courts to determine whether that is the situation in a particular case and to make all definitive findings of fact in that regard, it must none the less be held that the Court has all the evidence necessary in relation to the case in the main proceedings to assess whether there is such an act of communication to the public.

40      It must be observed, first, that in the situation contemplated by the referring court, in which a hotel operator provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal, just as in the case leading to the judgment in SGAE (paragraph 42), although the guests of a hotel are in the area covered by the signal conveying the phonograms, they are able to listen to those phonograms only as a result of the deliberate intervention of that operator. Its role is thus indispensable, within the meaning of paragraph 31 of the present judgment.

41      As regards, next, the guests of a hotel such as those at issue in the main proceedings, it must be observed that they constitute an indeterminate number of potential listeners, insofar as the access of those guests to the services of that establishment is the result of their own choice and is limited only by the capacity of the establishment in question. In such a situation they are thus ‘persons in general’ in the sense of paragraph 34 of this judgment.

42      As regards, further, the number of potential listeners referred to in paragraph 33 of the present judgment, it must be observed that the Court has held that the guests of a hotel constitute a fairly large number of persons, such that they must be considered to be a public (SGAE, paragraph 38).

43      Finally, as regards the profit-making nature of the broadcast referred to in paragraphs 36 and 37 of this judgment, it must be held that the guests of a hotel may be described as ‘targeted’ and ‘receptive’.

44      Indeed, the action of the hotel by which it gives access to the broadcast work to its customers constitutes an additional service which has an influence on the hotel’s standing and, therefore, on the price of rooms (see, to that effect, SGAE, paragraph 44). Moreover, it is likely to attract additional guests who are interested in that additional service (see, by analogy, Joined Cases C‑403/08 and C‑429/08 Football Association Premier League and Others [2011] ECR I‑9083, paragraph 205).

45      It follows that, in the present case, the broadcasting of phonograms by a hotel operator is of a profit-making nature.

46      It follows from the foregoing considerations that, in a case such as that in the main proceedings, a hotel operator is making a ‘communication to the public’ within the meaning of Article 8(2) of Directive 2006/115.

47      Having regard to the foregoing, the answer to the first question is that a hotel operator which provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal is a ‘user’ making a ‘communication to the public’ of a phonogram which may be played in a broadcast for the purposes of Article 8(2) of Directive 2006/115.

 The second question

48      By its second question the referring court asks, essentially, whether a hotel operator which provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal is obliged to pay equitable remuneration under Article 8(2) of Directive 2006/115 in addition to that paid by the broadcaster.

49      It should be recalled, at the outset, that the Court has already made clear, as regards the concept of ‘communication to the public’ for the purposes of Article 3(1) of Directive 2001/29, that a hotel operator which carries out an act of communication to the public transmits a protected work to a new public, that is to say, to a public which was not taken into account by the authors of the protected work when they authorised its use by communication to the original public (see, to that effect, SGAE paragraphs 40 and 42).

50      It must be pointed out that the notion of ‘new public’ derived from the case‑law cited in the previous paragraph must also be taken into account in the context of the application of Article 8(2) of Directive 2006/115.

51      When a hotel operator communicates a broadcast phonogram in its guest bedrooms, it is using that phonogram in an autonomous way and transmitting it to a public which is distinct from and additional to the one targeted by the original act of communication. Moreover, as observed in paragraph 45 of the present judgment, the hotel operator derives economic benefits from that transmission which are independent of those obtained by the broadcaster or the producer of the phonograms.

52      Consequently, in such a situation, a hotel operator is required, under Article 8(2) of Directive 2006/115, to pay equitable remuneration for the communication to the public of that phonogram in addition to that paid by the broadcaster.

53      In that respect, Ireland’s argument that it follows from the words ‘or’ and ‘single’ in Article 8(2) of Directive 2006/115 that a hotel operator is not required to pay any remuneration for the indirect communication of phonograms to the public if a radio or television broadcaster has already paid equitable remuneration for the use of the phonograms in its broadcasts cannot succeed.

54      By using the word ‘single’ in that provision, the European Union legislature merely wished to make clear that it is not necessary for the Member States to make provision for the user to pay separate remuneration several times for the same act of communication to the public, as that single remuneration will, as is clear from the second sentence of that provision, be shared amongst the different beneficiaries of the equitable remuneration, that is to say, the performers and the phonogram producers. The conjunction ‘or’ in the expression ‘by wireless means or for any communication to the public’ must be interpreted as meaning that remuneration is due both in the case of a broadcast and in the case of communication to the public.

55      Having regard to the foregoing observations, the answer to the second question is that a hotel operator which provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal is obliged to pay equitable remuneration under Article 8(2) of Directive 2006/115 for the broadcast of a phonogram, in addition to that paid by the broadcaster.

 The fourth question

56      By its fourth question, which should be examined third, the referring court asks, essentially, whether a hotel operator which provides in guest bedrooms, not televisions and/or radios, but other apparatus and phonograms in physical or digital format capable of being broadcast or heard by means of that apparatus, is a ‘user’ making a ‘communication to the public’ of a phonogram, for the purposes of Article 8(2) of Directive 2006/115.

57      In those circumstances, the Court is required to verify that the considerations underlying its reply to the first question are still relevant even in a situation where a hotel operator provides apparatus for his clients other than a television or radio, and phonograms in a physical or digital format capable of being broadcast or heard by means of that apparatus.

58      In that regard, it must be pointed out that the concept of ‘communication to the public’ in Article 8(2) of Directive 2006/115 must be interpreted with due regard for the equivalent concepts used, inter alia, by the WPPT, and in a manner compatible with those concepts, and taking account of the context in which they are used and the objective pursued by the relevant provisions of conventions (SCF, paragraph 55).

59      Article 2(g) of the WPPT, concerning communication to the public and referring to Article 15 of the WPPT stipulates that such communication includes making the sounds or representations of sounds fixed in a phonogram audible to the public.

60      In those circumstances, the concept of ‘communication to the public’ in Article 8(2) of Directive 2006/115 must be interpreted as meaning that it also includes making the sounds or representations of sounds fixed in a phonogram audible to the public.

61      Moreover, that finding is borne out by the wording itself of Article 8(2) of Directive 2006/115 which states that it concerns ‘any’ communication to the public, and thus all forms of communication which can be envisaged and carried out.

62      So, a hotel operator which provides in guest bedrooms apparatus other than a television or radio, and phonograms in a physical or digital format capable of being broadcast or heard by means of that apparatus, is providing the two elements making it possible to make the sounds or representations of sounds fixed in a phonogram audible to the public, that is to say, phonograms.

63      Consequently, that form of communication falls within the scope of Article 8(2) of Directive 2006/115 interpreted in the light of Articles 2(g) and 15 of the WPPT read together.

64      Since, as is clear from paragraph 57 of this judgment, the fourth question differs from the first only as regards the form of transmission of the phonograms, it may be inferred that the operator and his customers are the same for the purposes of those two questions.

65      It may thus be presumed, first, that the operator of that hotel must be considered to be the ‘user’ for the purposes of Article 8(2) of Directive 2006/115 and, second, that the customers of that establishment must be considered to be a ‘public’ for the purposes of that provision, unless there is specific evidence which is such as to lead the Court to a different conclusion.

66      In that regard it must be assessed whether the particular form of transmission, by apparatus and by phonograms in physical or digital form which can be broadcast or heard by means of that apparatus, is such as to lead to a different conclusion from that reached in paragraph 40 of this judgment.

67      That is not the case. Since a hotel operator which installs such apparatus and such phonograms in the bedrooms of its hotel thereby provides its customers with the two elements necessary to enjoy the works in question, it follows that, without its intervention, the customers would not have access to those works. The role of that hotel operator is thus indispensable.

68      In the absence of any other specific evidence requiring examination, it must be concluded that, in a situation like that at issue in the main proceedings, there has been an act of ‘communication to the public’ of a phonogram, for the purposes of Article 8(2) of Directive 2006/115.

69      Having regard to the foregoing, the answer to the fourth question is that a hotel operator which provides in guest bedrooms, not televisions and/or radios to which it distributes a broadcast signal, but other apparatus and phonograms in physical or digital form which may be played on or heard from such apparatus, is a ‘user’ making a ‘communication to the public’ of a phonogram within the meaning of Article 8(2) of Directive 2006/115/EC. It is therefore obliged to pay ‘equitable remuneration’ under that provision for the transmission of those phonograms.

 The third and fifth questions

70      By its third and fifth questions, which should be examined together, the referring court asks, essentially, whether Article 10(1)(a) of Directive 2006/115, which provides for a limitation of the right to equitable remuneration in the case of ‘private use’, allows the Member States to exempt a hotel operator who makes a ‘communication to the public’ of a phonogram, within the meaning of Article 8(2) of that directive, from the obligation to pay such remuneration.

71      As a preliminary point, it must be made clear that, as the Advocate General observed in point 153 of her Opinion, it is not the private nature or otherwise of the use of the work by guests of a hotel which is relevant in order to determine whether a hotel operator may rely on the limitation based on ‘private use’ within the meaning of Article 10(1)(a) of Directive 2006/115, but whether the use made of the work by the operator himself is private or not.

72      However, the ‘private use’ of a protected work communicated to the public by its user constitutes a contradiction in terms, since ‘public’ is, by definition, ‘not private’.

73      Accordingly, in the case of a communication to the public within the meaning of Article 8(2) of Directive 2006/115, the limitation based on ‘private use’ within the meaning of Article 10(1)(a) of that directive, cannot apply.

74      However, that interpretation is not such as to deprive that provision of all practical effect. Rather, that provision retains a wider scope by covering uses other than communication to the public, such as ‘fixation’ within the meaning of Article 7 of that directive.

75      Moreover, to allow the user to benefit from the limitation referred to in Article 10(1)(e) of Directive 2006/115, when he makes a communication such as that at issue in the case in the main proceedings, would run counter to the provisions of Article 10(3) of that directive under which that limitation is applicable only in certain special cases which do not prejudice the normal exploitation of the work or other protected object or cause unjustified harm to the legitimate interests of the rightholder.

76      Such an interpretation would allow the user to evade the obligation to pay equitable remuneration for forms of use of the work which amount to commercial exploitation of it, which would cause unjustified harm to the legitimate interests of protected artists or performers precisely as a result of the right to equitable remuneration.

77      Having regard to the foregoing, the answer to the third and fifth questions is that Article 10(1)(a) of Directive 2006/115, which provides for a limitation to the right to equitable remuneration provided for by Article 8(2) of that directive in the case of ‘private use’, does not allow Member States to exempt a hotel operator which makes a ‘communication to the public’ of a phonogram, within the meaning of Article 8(2) of that directive, from the obligation to pay such remuneration.

 Costs

78      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Third Chamber) hereby rules:

1.      A hotel operator which provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal is a ‘user’ making a ‘communication to the public’ of a phonogram which may be played in a broadcast for the purposes of Article 8(2) of Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property.

2.      A hotel operator which provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal is obliged to pay equitable remuneration under Article 8(2) of Directive 2006/115 for the broadcast of a phonogram, in addition to that paid by the broadcaster.

3.      A hotel operator which provides in guest bedrooms, not televisions and/or radios to which it distributes a broadcast signal, but other apparatus and phonograms in physical or digital form which may be played on or heard from such apparatus, is a ‘user’ making a ‘communication to the public’ of a phonogram within the meaning of Article 8(2) of Directive 2006/115/EC. It is therefore obliged to pay ‘equitable remuneration’ under that provision for the transmission of those phonograms.

4.      Article 10(1)(a) of Directive 2006/115, which provides for a limitation to the right to equitable remuneration provided for by Article 8(2) of that directive in the case of ‘private use’, does not allow Member States to exempt a hotel operator which makes a ‘communication to the public’ of a phonogram, within the meaning of Article 8(2) of that directive, from the obligation to pay such remuneration.

JUDGMENT OF THE COURT (Ninth Chamber)

26 March 2015 (*)

(Reference for a preliminary ruling — Approximation of laws — Copyright and related rights — Directive 2001/29/EC — Information society — Harmonisation of certain aspects of copyright and related rights — Article 3(2) — Direct broadcast of a sporting fixture on an internet site)

In Case C‑279/13,

REQUEST for a preliminary ruling under Article 267 TFEU from the Högsta domstolen (Sweden), made by decision of 15 May 2013, received at the Court on 22 May 2013, in the proceedings

C More Entertainment AB

v

Linus Sandberg,

THE COURT (Ninth Chamber),

composed of K. Jürimäe, President of the Chamber, J. Malenovský (Rapporteur) and A. Prechal, Judges,

Advocate General: E. Sharpston,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after considering the observations submitted on behalf of:

–        C More Entertainment AB, by P. Bratt and S. Feinsilber, advokater,

–        Mr Sandberg, by L. Häggström, advokat,

–        the Finnish Government, by S. Hartikainen, acting as Agent,

–        the European Commission, by J. Enegren and J. Samnadda, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1        This request for a preliminary ruling concerns the interpretation of Article 3(2) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10).

2        The request has been made in proceedings between C More Entertainment AB (‘C More Entertainment’) and Mr Sandberg concerning the placing by him on an internet site of clickable links by means of which internet users can gain access to the live broadcast, on another site, of ice hockey games without having to pay the sum asked by the operator of the other site.

 Legal context

 Directive 2001/29

3        Recitals 1, 7, 20, 23 and 25 of Directive 2001/29 state:

‘(1)      The [EC] Treaty provides for the establishment of an internal market and the institution of a system ensuring that competition in the internal market is not distorted. Harmonisation of the laws of the Member States on copyright and related rights contributes to the achievement of these objectives.

…

(7)      The Community legal framework for the protection of copyright and related rights must, therefore, also be adapted and supplemented as far as is necessary for the smooth functioning of the internal market. To that end, those national provisions on copyright and related rights which vary considerably from one Member State to another or which cause legal uncertainties hindering the smooth functioning of the internal market and the proper development of the information society in Europe should be adjusted, and inconsistent national responses to the technological developments should be avoided, whilst differences not adversely affecting the functioning of the internal market need not be removed or prevented.

…

(20)      This Directive is based on principles and rules already laid down in the Directives currently in force in this area, in particular [Council Directive 92/100/EEC of 19 November 1992 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ 1992 L 346, p. 61), as amended by Council Directive 93/83/EEC of 29 October 1993 (OJ 1993 L 290, p. 9; ‘Directive 92/100’). It] develops those principles and rules and places them in the context of the information society. The provisions of this Directive should be without prejudice to the provisions of those Directives, unless otherwise provided in this Directive.

…

(23)      This Directive should harmonise further the author’s right of communication to the public. This right should be understood in a broad sense covering all communication to the public not present at the place where the communication originates. This right should cover any such transmission or retransmission of a work to the public by wire or wireless means, including broadcasting. This right should not cover any other acts.

…

(25)      The legal uncertainty regarding the nature and the level of protection of acts of on-demand transmission of copyright works and subject-matter protected by related rights over networks should be overcome by providing for harmonised protection at Community level. It should be made clear that all rightholders recognised by this Directive should have an exclusive right to make available to the public copyright works or any other subject-matter by way of interactive on-demand transmissions. Such interactive on-demand transmissions are characterised by the fact that members of the public may access them from a place and at a time individually chosen by them.’

4        Article 1 of Directive 2001/29, entitled ‘Scope’, provides in paragraph 2:

‘Except in the cases referred to in Article 11, this Directive shall leave intact and shall in no way affect existing Community provisions relating to:

…

(b)      rental right, lending right and certain rights related to copyright in the field of intellectual property;

…’

5        Article 3 of that directive, entitled ‘Right of communication to the public of works and right of making available to the public other subject-matter’, states:

‘1.      Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them.

2.      Member States shall provide for the exclusive right to authorise or prohibit the making available to the public, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them:

…

(d)      for broadcasting organisations, of fixations of their broadcasts, whether these broadcasts are transmitted by wire or over the air, including by cable or satellite.’

 Directive 2006/115/EC

6        Directive 92/100, in force at the time of the adoption of Directive 2001/29, was repealed and replaced by Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ 2006 L 376, p. 28). Directive 2006/115 codifies and reiterates, in terms analogous to those of Directive 92/100, the provisions of that directive.

7        Under recital 16 in the preamble to Directive 2006/115:

‘Member States should be able to provide for more far-reaching protection for owners of rights related to copyright than that required by the provisions laid down in this Directive in respect of broadcasting and communication to the public.’

8        Article 8 of that directive, entitled ‘Broadcasting and communication to the public’, provides in paragraph 3:

‘Member States shall provide for broadcasting organisations the exclusive right to authorise or prohibit the rebroadcasting of their broadcasts by wireless means, as well as the communication to the public of their broadcasts if such communication is made in places accessible to the public against payment of an entrance fee.’

9        Article 12 of Directive 2006/115, entitled ‘Relation between copyright and related rights’, states:

‘Protection of copyright-related rights under this Directive shall leave intact and shall in no way affect the protection of copyright.’

 The dispute in the main proceedings and the question referred

10      C More Entertainment is a pay-TV station which, inter alia, broadcasts live on its internet site, for payment of a fee, ice hockey matches.

11      In autumn 2007, C More Entertainment broadcast on that internet site a number of ice hockey matches, to which persons interested could have access by paying the sum of SEK 89 (approximately EUR 9.70) per match.

12      On his internet site, Mr Sandberg created links enabling the paywall put in place by C More Entertainment to be circumvented. Via those links, internet users could thus access the live broadcasts of two ice hockey matches by C More Entertainment on 20 October and 1 November 2007 for free.

13      Before the first of those matches, C More Entertainment had contacted Mr Sandberg by telephone and asked him to remove the link without success. After that match, C More Entertainment warned Mr Sandberg in a letter that it regarded the placing of those links as an infringement of the company’s rights.

14      During the second ice hockey match, C More Entertainment equipped the webcast with a technical protection which prevented any access to that broadcast via the links created by Mr Sandberg.

15      Mr Sandberg was prosecuted before the Hudiksvalls tingsrätt (District Court, Hudiksvall) for offences against the Law (1960:729) on Copyright in Literary and Artistic Works (lagen (1960:729) om upphovsrätt till litterära och konstnärliga verk (‘upphovsrättslagen’)). On 10 November 2010, the accused was found guilty of an infringement of the copyright of which, in the view of that court, C More Entertainment was the holder and was fined and ordered to pay damages and interest to that company.

16      Both Mr Sandberg and C More Entertainment appealed against that judgment before the Hovrätten för Nedre Norrland (Court of Appeal of Nedre Norrland).

17      By a decision of 20 June 2011, that court found that no part of the commentators’, cameramen’s or picture producers’ work on the broadcasts of the ice hockey matches, taken on its own merits or some or all of those parts taken together, reached the level of originality required for copyright protection under the upphovsrättslagen. Next, it held that, as regards the broadcasts at issue in the main proceedings, C More Entertainment was not the holder of a copyright, but of related rights, which had been infringed. Consequently, that court ordered Mr Sandberg to pay fines higher than those imposed at first instance, but slightly reduced the compensation awarded to C More Entertainment.

18      C More Entertainment brought an appeal against that judgment before the Högsta domstolen (Supreme Court), seeking a declaration that it is the holder of copyright and to have the amount of damages due to it reviewed and increased.

19      That court took the view that it does not follow from either the wording of Directive 2001/29 or the case-law of the Court that the insertion of a hypertext link on an internet site constitutes an act of communication to the public. In addition, that court noted that the relevant national legislation provides for wider related rights than those set out in Article 3(2) of Directive 2001/29 since, unlike that provision, the protection conferred by Swedish law is not restricted to acts of making works available ‘on demand’. In those circumstances, the Högsta domstolen decided to stay the proceedings and to refer five questions to the Court for a preliminary ruling.

20      By a letter of 26 March 2014, the Registry of the Court sent to the Högsta domstolen a copy of the judgment in Svensson and Others (C‑466/12, EU:C:2014:76), in which a number of questions concerning whether the placing, on an internet site, of a clickable link may be classified as an act of communication to the public were examined, requesting that court to inform it whether, having regard to that judgment, it wished to maintain its request for a preliminary ruling.

21      By a decision of 20 October 2014, the Högsta domstolen decided to withdraw the first four questions referred for a preliminary ruling and to maintain only the fifth question, which reads as follows:

‘May the Member States give wider protection to the exclusive right of authors by enabling “communication to the public” to cover a greater range of acts than provided for in Article 3(2) of [Directive 2001/29]?’

 The question referred for a preliminary ruling

22      It is apparent from the file that the main proceedings concern the provision, on an internet site, of links enabling internet users to access, on the site of a broadcasting organisation, live broadcasts of ice hockey matches, without having to pay the fee required by that organisation for that access. In those circumstances, the question referred by the referring court must be understood as relating, in essence, to whether Article 3(2) of Directive 2001/29 must be interpreted as precluding national legislation extending the exclusive right of the broadcasting organisations referred to in Article 3(2)(d) as regards acts of communication to the public which broadcasts of sporting fixtures made live on internet, such as those at issue in the main proceedings, may constitute.

23      As a preliminary point, it must be noted that, in accordance with Article 3(2)(d) of Directive 2001/29, Member States are to provide for the exclusive right for broadcasting organisations to authorise or prohibit the making available of fixations of their broadcasts to the public, in such a way that members of the public may access them from a place and at a time individually chosen by them.

24      Firstly, as follows from the wording of Article 3(1) of Directive 2001/29, and in particular from the terms ‘any communication to the public of their works, … including the making available to the public’, the concept of ‘making available to the public’, also used in Article 3(2) of that directive, forms part of the wider ‘communication to the public’.

25      Secondly, it is apparent from Article 3(2) of that directive that, in order to be classified as an act of ‘making available to the public’ within the meaning of that article, an act must meet, cumulatively, both conditions set out in that provision, namely that members of the public may access the protected work from a place and at a time individually chosen by them.

26      As is clear from the explanatory memorandum to the Commission Proposal of 10 December 1997 (COM(97) 628), which led to the adoption of Directive 2001/29, confirmed by recital 25 in the preamble to that directive, ‘making available to the public’, for the purposes of Article 3 of the directive, is intended to refer to ‘interactive on-demand transmissions’ characterised by the fact that members of the public may access them from a place and at a time individually chosen by them (see, to that effect, judgment in SCF, C‑135/10, EU:C:2012:140, paragraph 59).

27      That is not the case of transmissions broadcast live on internet, such as those at issue in the main proceedings.

28      The referring court asks none the less whether Article 3(2) of Directive 2001/29 is to be understood as precluding the Member States also granting the broadcasting organisations referred to in Article 3(2)(d) an exclusive right as regards acts which, such as those at issue in the main proceedings, could be classified as acts of communication to the public but which do not constitute acts of making available to the public the fixations of their broadcasts in such a way that members of the public may access them from a place and at a time individually chosen by them.

29      In that regard, first of all, as is apparent from recital 7 in the preamble to Directive 2001/29, the objective of that directive is to harmonise copyright and related rights as far as is necessary for the smooth functioning of the internal market. It follows from that recital that the objective of that directive is not to remove or prevent differences between the national legislations which do not adversely affect the functioning of the internal market. Thus, and as is also clear from the heading of that directive, the EU legislature has harmonised copyright and related rights only in part.

30      It follows from recitals 23 and 25 in the preamble to that directive that the EU legislature sought, firstly, to harmonise further the author’s right of communication to the public and, secondly, to overcome the legal uncertainty regarding the nature and the level of protection of acts of on-demand transmission by providing for harmonised protection at Community level for that type of act.

31      However, neither Article 3(2) of Directive 2001/29 nor any other provision thereof states that the EU legislature sought to harmonise and, in consequence, prevent or remove any differences between the national legislations as regards the extent of the protection which the Member States may grant to the holders of the rights referred to in Article 3(2)(d) with regard to certain acts, such as those at issue in the main proceedings, which are not expressly referred to in that provision.

32      Furthermore, in accordance with recital 20 in the preamble to Directive 2001/29, that directive is based on principles and rules already laid down in the directives in force in the area of intellectual property, including Directive 92/100 (see judgment in Football Association Premier League and Others, C‑403/08 and C‑429/08, EU:C:2011:631, paragraph 187).

33      It is apparent from recital 16 in the preamble to Directive 2006/115, which replaced Directive 92/100, that the Member States should be able to provide for more far-reaching protection for owners of rights related to copyright than that required by the provisions laid down in that directive in respect of broadcasting and communication to the public.

34      Article 8 of that directive, entitled ‘Broadcasting and communication to the public’, states in paragraph 3, in particular, that Member States are to provide for broadcasting organisations the exclusive right to authorise or prohibit the rebroadcasting of their broadcasts by wireless means, as well as the communication to the public of their broadcasts if such communication is made in places accessible to the public against payment of an entrance fee.

35      Thus, it must be held that Directive 2006/115 gives the Member States the option of providing for more protective provisions with regard to the broadcasting and communication to the public of transmissions made by broadcasting organisations than those which must be instituted in accordance with Article 8(3) of that directive. Such an option implies that the Member States may grant broadcasting organisations an exclusive right to authorise or prohibit acts of communication to the public of their transmissions on conditions different from those laid down in Article 8(3) and in particular transmissions to which members of the public may obtain access from a place individually chosen by them, it still being understood that, as provided for in Article 12 of Directive 2006/115, such a right must not affect the protection of copyright in any way.

36      It follows that Article 3(2) of Directive 2001/29 must be interpreted as not affecting the option open to the Member States, set out in Article 8(3) of Directive 2006/115, read in conjunction with recital 16 to that directive to grant broadcasting organisations the exclusive right to authorise or prohibit acts of communication to the public of their transmissions provided that such protection does not undermine that of copyright.

37      Having regard to all the foregoing considerations, the answer to the question referred is that Article 3(2) of Directive 2001/29 must be interpreted as not precluding national legislation extending the exclusive right of the broadcasting organisations referred to in Article 3(2)(d) as regards acts of communication to the public which broadcasts of sporting fixtures made live on internet, such as those at issue in the main proceedings, may constitute, provided that such an extension does not undermine the protection of copyright.

 Costs

38      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court hereby rules:

Article 3(2) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as not precluding national legislation extending the exclusive right of the broadcasting organisations referred to in Article 3(2)(d) as regards acts of communication to the public which broadcasts of sporting fixtures made live on internet, such as those at issue in the main proceedings, may constitute, provided that such an extension does not undermine the protection of copyright.

JUDGMENT OF THE COURT (Third Chamber)

16 June 2011 (*)

(Approximation of laws – Copyright and related rights – Directive 2001/29/EC – Reproduction right – Exceptions and limitations – Exception of copying for private use – Article 5(2)(b) and (5) – Fair compensation – Person responsible for paying the levy earmarked for financing of that compensation – Distance selling between two persons resident in different Member States)

In Case C‑462/09,

REFERENCE for a preliminary ruling under Article 234 EC from the Hoge Raad der Nederlanden (Netherlands), made by decision of 20 November 2009, received at the Court on 25 November 2009, in the proceedings

Stichting de Thuiskopie

v

Opus Supplies Deutschland GmbH,

Mijndert van der Lee,

Hananja van der Lee,

THE COURT (Third Chamber),

composed of K. Lenaerts, President of the Chamber, R. Silva de Lapuerta, G. Arestis, J. Malenovský (Rapporteur) and T. von Danwitz, Judges,

Advocate General: N. Jääskinen,

Registrar: M. Ferreira, Principal Administrator,

having regard to the written procedure and further to the hearing on 15 December 2010,

after considering the observations submitted on behalf of:

–        the Stichting de Thuiskopie, by T. Cohen Jehoram and V. Rörsch, advocaten,

–        Opus Supplies Deutschland GmbH and Mr and Mrs van der Lee, by D. Visser and A. Quaedvlieg, advocaten,

–        the Belgian Government, by T. Materne and J.-C. Halleux, acting as Agents,

–        the Spanish Government, by N. Díaz Abad, acting as Agent,

–        the Lithuanian Government, by D. Kriaučiūnas and L. Liubertaitė, acting as Agents,

–        the Austrian Government, by E. Riedl and G. Kunnert, acting as Agents,

–        the Finnish Government, by J. Heliskoski, acting as Agent,

–        the European Commission, by A. Nijenhuis and J. Samnadda, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 10 March 2011,

gives the following

Judgment

1        This reference for a preliminary ruling concerns the interpretation of Article 5(2)(b) and (5) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10).

2        The reference has been made in proceedings between the Stichting de Thuiskopie (‘the Stichting’), on the one hand, and Opus Supplies Deutschland GmbH (‘Opus’) and Mr and Mrs van der Lee, two managing directors of Opus, on the other hand, concerning payment by Opus of the levy intended to finance the fair compensation paid to copyright holders on the basis of the exception for copying for private use (‘private copying levy’).

 Legal context

 Directive 2001/29

3        Recitals 9, 10, 31, 32, 35 and 38 in the preamble to Directive 2001/29 are worded as follows:

‘(9)      Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation. Their protection helps to ensure the maintenance and development of creativity in the interests of authors, performers, producers, consumers, culture, industry and the public at large. Intellectual property has therefore been recognised as an integral part of property.

(10)      If authors or performers are to continue their creative and artistic work, they have to receive an appropriate reward for the use of their work, as must producers in order to be able to finance this work. …

…

(31)      A fair balance of rights and interests between the different categories of rightholders, as well as between the different categories of rightholders and users of protected subject-matter must be safeguarded. …

(32)      This Directive provides for an exhaustive enumeration of exceptions and limitations to the reproduction right and the right of communication to the public. Some exceptions or limitations only apply to the reproduction right, where appropriate. This list takes due account of the different legal traditions in Member States, while, at the same time, aiming to ensure a functioning internal market. Member States should arrive at a coherent application of these exceptions and limitations, which will be assessed when reviewing implementing legislation in the future.

…

(35)      In certain cases of exceptions or limitations, rightholders should receive fair compensation to compensate them adequately for the use made of their protected works or other subject-matter. When determining the form, detailed arrangements and possible level of such fair compensation, account should be taken of the particular circumstances of each case. When evaluating these circumstances, a valuable criterion would be the possible harm to the rightholders resulting from the act in question. In cases where rightholders have already received payment in some other form, for instance as part of a licence levy, no specific or separate payment may be due. The level of fair compensation should take full account of the degree of use of technological protection measures referred to in this Directive. In certain situations where the prejudice to the rightholder would be minimal, no obligation for payment may arise.

…

(38)      Member States should be allowed to provide for an exception or limitation to the reproduction right for certain types of reproduction of audio, visual and audio-visual material for private use, accompanied by fair compensation. This may include the introduction or continuation of remuneration schemes to compensate for the prejudice to rightholders. …’

4        Under Article 2 of Directive 2001/29, headed ‘Reproduction right’:

‘Member States shall provide for the exclusive right to authorise or prohibit direct or indirect, temporary or permanent reproduction by any means and in any form, in whole or in part:

(a)      for authors, of their works;

(b)      for performers, of fixations of their performances;

(c)      for phonogram producers, of their phonograms;

(d)      for the producers of the first fixations of films, in respect of the original and copies of their films;

(e)      for broadcasting organisations, of fixations of their broadcasts, whether those broadcasts are transmitted by wire or over the air, including by cable or satellite.’

5        Article 5 of Directive 2001/29, entitled ‘Exceptions and limitations’, states in subparagraph 2(b):

‘Member States may provide for exceptions or limitations to the reproduction right provided for in Article 2 in the following cases:

…

(b)      in respect of reproductions on any medium made by a natural person for private use and for ends that are neither directly nor indirectly commercial, on condition that the rightholders receive fair compensation which takes account of the application or non-application of technological measures referred to in Article 6 to the work or subject-matter concerned.’

6        Article 5(5) of that directive provides:

‘The exceptions and limitations provided for in paragraphs 1, 2, 3 and 4 shall only be applied in certain special cases which do not conflict with a normal exploitation of the work or other subject-matter and do not unreasonably prejudice the legitimate interests of the rightholder.’

 National legislation

7        According to Article 16c(1) to (3) of the Law on copyright (Auteurswet, Staatsblad 2008, No 538):

‘1.      The reproduction of a literary, scientific or artistic work on an item designed for the reproduction of a work shall not be regarded as an infringement of the copyright in that work if the reproduction is made for ends that are neither directly nor indirectly commercial and serves exclusively for the own practice, study or use of the natural person making the reproduction.

2.      Payment of a fair remuneration in respect of the reproduction referred to in paragraph 1 shall be due to the maker of the work or his legal successor. The manufacturer or importer of the items referred to in paragraph 1 shall be liable for payment of the remuneration.

3.      The manufacturer’s payment obligation arises when the items manufactured by him are put on the market. The importer’s obligation arises at the time of importation.’

 The dispute in the main proceedings and the questions referred for a preliminary ruling

8        As is apparent from Article 16c(1) of the Law on copyright, the Kingdom of the Netherlands has introduced an exception into its national law for copying for private use. According to Article 16(2) of that law, the manufacturer or importer of the item used for reproduction is responsible for paying the private copying levy.

9        The Stichting is the Netherlands body responsible for the recovery of the private copying levy.

10      Opus is a company based in Germany which sells, via the internet, blank media. Its operations are focused in particular on the Netherlands by means of Dutch-language websites which target Netherlands consumers.

11      The contract of sale established by Opus provides that, where a Netherlands consumer makes an order online, that order is processed in Germany and the goods are delivered from Germany to the Netherlands, on behalf of and in the name of the customer, by a carrier, that carrier however in fact being engaged by Opus.

12      Opus does not pay a private copying levy in respect of the media delivered to its customers in the Netherlands, either in that Member State or in Germany. In addition, the referring court states that the cost of the reproduction media thus sold by Opus does not include the private copying levy.

13      Arguing that Opus had to be regarded as the ‘importer’ and, consequently, responsible for paying the private copying levy, the Stichting brought an action against Opus before the Netherlands courts, seeking payment of that levy.

14      Referring to the provisions of the sales contract, Opus denied that it could be classified as an importer into the Netherlands of the reproduction media sold by it. It argues that it is the Netherlands purchasers, that is, individual consumers, who must be classified as importers.

15      That argument relied upon by Opus in its defence was accepted by the Netherlands courts at first instance and then on appeal, which dismissed the Stichting’s action for payment. The Stichting then pursued an appeal in cassation before the referring court.

16      The referring court questions whether the solution proposed by those courts to the dispute in the main proceedings is compatible with Directive 2001/29. According to it, to consider the purchaser, that is the individual consumer, to be the importer and, therefore, the person responsible for paying the private copying levy, is tantamount to admitting that that levy cannot in fact be recovered, since the individual purchaser cannot in practice easily be identified. It then raises the question whether the concept of ‘importer’ should not be defined in a broader manner than that resulting from the purely linguistic meaning of the word, also taking into account the final use of the media, which is also clear to the commercial seller.

17      In those circumstances, the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1)      Does Directive [2001/29], in particular Article 5(2)(b) and (5) thereof, provide any assistance in determining who should be regarded under national law as owing the “fair compensation” referred to in Article 5(2)(b)? If so, what assistance does it provide?

(2)      In a case of distance selling in which the buyer is established in a different Member State to that of the seller, does Article 5(5) of Directive [2001/29] require national law to be interpreted so broadly that a person owing the “fair compensation” referred to in Article 5(2)(b) of the directive who is acting on a commercial basis owes such compensation in at least one of the Member States involved in the distance selling?’

 Consideration of the questions referred

 The first question

18      By its first question, the referring court asks whether the provisions of Directive 2001/29, in particular Article 5(2)(b) and (5) thereof, must be interpreted as containing criteria which make it possible to determine who must be regarded as responsible for paying fair compensation on the basis of the exception of copying for private use.

19      As a preliminary point, it must be recalled that, under Article 2 of Directive 2001/29, Member States grant, in principle, to authors the exclusive right to authorise or prohibit direct or indirect, temporary or permanent, reproduction by any means and in any form, in whole or in part, of their works.

20      However, under Article 5(2)(b) of that directive, Member States may provide for an exception to the author’s reproduction right in relation to his work in respect of reproductions on any medium made by a natural person for private use and for ends that are neither directly nor indirectly commercial (so-called ‘private copying’ exception).

21      Article 5(5) of Directive 2001/29 nevertheless makes the introduction of the private copying exception subject to three conditions, that is, first, that the exception applies only in certain special cases, second, that it does not conflict with a normal exploitation of the work and, finally, that it does not unreasonably prejudice the legitimate interests of the copyright holder.

22      Thus, with regard to that last condition, the Member States, if they decide to introduce the private copying exception into their national law, are, in particular, required to provide, in application of Article 5(2)(b) of Directive 2001/29, for the payment of ‘fair compensation’ to rightholders (see, also, Case C-467/08 Padawan [2010] ECR I-0000, paragraph 30).

23      With regard to the answer to the question of the identification of the person who must be regarded as responsible for paying the fair compensation, the provisions of Directive 2001/29 do not expressly address the issue of who is to pay that compensation, meaning that the Member States enjoy broad discretion when determining who must discharge that obligation.

24      That being the case, the Court has already held that the notion and level of fair compensation are linked to the harm resulting for the author from the reproduction for private use of his protected work without his authorisation. From that perspective, fair compensation must be regarded as recompense for the harm suffered by the author (Padawan, paragraph 40).

25      In addition, as is apparent from recital 31 in the preamble to Directive 2001/29 and from paragraph 43 of Padawan, a ‘fair balance’ must be maintained between the rights and interests of the authors, who are to receive the fair compensation, on one hand, and those of the users of protected works, on the other.

26      Since the person who has caused the harm to the holder of the exclusive reproduction right is the person who, for his private use, reproduces a protected work without seeking prior authorisation from that rightholder, it is, in principle, for that person to make good the harm related to that copying by financing the compensation which will be paid to that rightholder (Padawan, paragraph 45).

27      The Court has however admitted that, given the practical difficulties in identifying private users and obliging them to compensate rightholders for the harm caused to them, it is open to the Member States to establish a ‘private copying levy’ for the purposes of financing fair compensation, chargeable not to the private persons concerned but to those who have the digital reproduction equipment, devices and media and who, on that basis, in law or in fact, make that equipment available to private users or who provide copying services for them. Under such a system, it is the persons having that equipment who must discharge the private copying levy (Padawan, paragraph 46).

28      The Court has again pointed out that, since that system enables the persons responsible for payment to pass on the amount of the private copying levy in the price charged for making the reproduction equipment, devices and media available, or in the price for the copying service supplied, the burden of the levy will ultimately be borne by the private user who pays that price, in a way consistent with the ‘fair balance’ between the interests of authors and those of the users of the protected subject-matter (Padawan, paragraphs 48 and 49).

29      In the light of the foregoing considerations, the answer to the first question is that Directive 2001/29, in particular Article 5(2)(b) and (5) thereof, must be interpreted as meaning that the final user who carries out, on a private basis, the reproduction of a protected work must, in principle, be regarded as the person responsible for paying the fair compensation provided for in Article 5(2)(b). However, it is open to the Member States to establish a private copying levy chargeable to the persons who make reproduction equipment, devices and media available to that final user, since they are able to pass on the amount of that levy in the price paid by the final user for that service.

 The second question

30      By its second question, the referring court asks, in essence, whether, in a case of distance selling between a purchaser and a commercial seller of reproduction equipment, devices and media, who are established in different Member States, Directive 2001/29 requires national law to be interpreted so that fair compensation can be recovered from the person responsible for payment who is acting on a commercial basis.

31      In that regard, it must be noted that Article 5(5) of Directive 2001/29, which lays down the cumulative conditions for the application, inter alia, of the private copying exception, does not contain, as such, any specific statement such as to allow a particular interpretation with regard to the person to be regarded as responsible for paying the fair compensation owed to the authors on the basis of the private copying exception in the context of a distance selling arrangement such as that at issue in the main proceedings.

32      It should however be recalled that, according to recital 9 in the preamble to Directive 2001/29, the European Union legislature expressed its desire for a high level of protection to be guaranteed for copyright and related rights, since they are crucial to intellectual creation. Their protection helps to ensure the maintenance and development of creativity in the interests of authors, performers, producers, consumers, culture, industry and the public at large. Thus, according to recital 10 in the preamble to Directive 2001/29, if authors or performers are to continue their creative and artistic work, they have to receive an appropriate reward for the use of their work.

33      In particular, it is apparent from Article 5(2)(b) of and recital 35 in the preamble to Directive 2001/29 that, in those Member States which have introduced the private copying exception, rightholders must receive fair compensation to compensate them adequately for the use made of their protected works or other subject-matter without their permission. Furthermore, in accordance with Article 5(5) of Directive 2001/29, the introduction of the private copying exception may not unreasonably prejudice the legitimate interests of the copyright holder.

34      It follows that, unless they are to be deprived of all practical effect, those provisions impose on a Member State which has introduced the private copying exception into its national law an obligation to achieve a certain result, meaning that it must guarantee, within the framework of its competences, the effective recovery of the fair compensation intended to compensate the authors harmed for the prejudice sustained, in particular if that harm arose on the territory of that Member State.

35      Since, as stated in paragraph 26 of the present judgment, it is in principle for the final users who, for their private use, reproduce a protected work without seeking prior authorisation from the rightholder, thereby causing him harm, to make good that harm, it can be assumed that the harm for which reparation is to be made arose on the territory of the Member State in which those final users reside.

36      It follows from the foregoing that, if a Member State has introduced an exception for private copying into its national law and if the final users who, on a private basis, reproduce a protected work reside on its territory, that Member State must ensure, in accordance with its territorial competence, the effective recovery of the fair compensation for the harm suffered by the authors on the territory of that State.

37      With regard to the case in the main proceedings, it is agreed that the harm suffered by the authors arose on the territory of the Netherlands, since the purchasers as final users, on a private basis, of the protected works reside there. It is also common ground that the Kingdom of the Netherlands has chosen to introduce a system of recovery of fair compensation, owed on the basis of the private copying exception, from the manufacturer or importer of the media intended for reproduction of the protected works.

38      According to the information contained in the order for reference, in relation to contracts such as those at issue in the main proceedings, it appears to be impossible, in practice, to recover such compensation from the final users as importers of those media in the Netherlands.

39      If that is the case, and in the light of the fact that the system of recovery chosen by the Member State concerned cannot relieve that Member State of the obligation to achieve the certain result of ensuring that the authors who have suffered harm actually receive payment of fair compensation for the prejudice which arose on its territory, it is for the authorities, in particular the courts, of that Member State to seek an interpretation of national law which is consistent with that obligation to achieve a certain result and guarantees the recovery of that compensation from the seller who contributed to the importation of those media by making them available to the final users.

40      In that regard, in circumstances such as those stated in particular in paragraph 12 of the present judgment, it is of no bearing on that obligation on the said Member State that, in the case of distance selling arrangements such as those at issue in the main proceedings, the commercial seller who makes available reproduction equipment, devices and media to purchasers residing on the territory of that Member State, as final users, is established in another Member State.

41      In the light of the foregoing considerations, the answer to the second question is that Directive 2001/29, in particular Article 5(2)(b) and (5) thereof, must be interpreted as meaning that it is for the Member State which has introduced a system of private copying levies chargeable to the manufacturer or importer of media for reproduction of protected works, and on the territory of which the harm caused to authors by the use for private purposes of their work by purchasers who reside there occurs, to ensure that those authors actually receive the fair compensation intended to compensate them for that harm. In that regard, the mere fact that the commercial seller of reproduction equipment, devices and media is established in a Member State other than that in which the purchasers reside has no bearing on that obligation to achieve a certain result. It is for the national court, where it is impossible to ensure recovery of the fair compensation from the purchasers, to interpret national law in order to allow recovery of that compensation from the person responsible for payment who is acting on a commercial basis.

 Costs

42      Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Third Chamber) hereby rules:

1.      Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, in particular Article 5(2)(b) and (5) thereof, must be interpreted as meaning that the final user who carries out, on a private basis, the reproduction of a protected work must, in principle, be regarded as the person responsible for paying the fair compensation provided for in Article 5(2)(b). However, it is open to the Member States to establish a private copying levy chargeable to the persons who make reproduction equipment, devices and media available to that final user, since they are able to pass on the amount of that levy in the price paid by the final user for that service.

2.      Directive 2001/29, in particular Article 5(2)(b) and (5) thereof, must be interpreted as meaning that it is for the Member State which has introduced a system of private copying levies chargeable to the manufacturer or importer of media for reproduction of protected works, and on the territory of which the harm caused to authors by the use for private purposes of their work by purchasers who reside there occurs, to ensure that those authors actually receive the fair compensation intended to compensate them for that harm. In that regard, the mere fact that the commercial seller of reproduction equipment, devices and media is established in a Member State other than that in which the purchasers reside has no bearing on that obligation to achieve a certain result. It is for the national court, where it is impossible to ensure recovery of the fair compensation from the purchasers, to interpret national law in order to allow recovery of that compensation from the person responsible for payment who is acting on a commercial basis.

JUDGMENT OF THE COURT (Grand Chamber)

4 October 2011 (*)

Table of contents

I –  Legal context

A –  International law

B –  European Union law

1.  Broadcasting directives

2.  Intellectual property directives

C –  National legislation

II –  The disputes in the main proceedings and the questions referred for a preliminary ruling

A –  Licensing of the broadcasting rights for Premier League matches

B –  Broadcasting of Premier League matches

III –  Consideration of the questions referred

A –  Rules relating to the reception of encrypted broadcasts from other Member States

1.  Introductory remarks

2.  Conditional Access Directive

a)  Interpretation of ‘illicit device’ within the meaning of Article 2(e) of the Conditional Access Directive (Question 1 in Case C-403/08 and Questions 1 and 2 in Case C‑429/08)

b)  Interpretation of Article 3(2) of the Conditional Access Directive (Question 3 in Case C-429/08)

c)  The other questions concerning the Conditional Access Directive

3.  Rules of the FEU Treaty concerning free movement of goods and services

a)  Prohibition on the import, sale and use of foreign decoding devices (Question 8(b) and the first part of Question 9 in Case C-403/08 and Question 6(i) in Case C-429/08)

i)  Identification of the applicable provisions

ii)  Existence of a restriction on the freedom to provide services

iii)  Justification of a restriction on the freedom to provide services by an objective of protecting intellectual property rights

–  Observations submitted to the Court

–  The Court’s response

iv)  Justification of a restriction on the freedom to provide services by the objective of encouraging the public to attend football stadiums

b)  Use of foreign decoding devices following the giving of a false identity and a false address and use of such devices for commercial purposes (Question 8(c) in Case C‑403/08 and Question 6(ii) and (iii) in Case C-429/08)

c)  The other questions relating to free movement (the second part of Question 9 in Case C‑403/08 and Question 7 in Case C‑429/08)

4.  Rules of the FEU Treaty concerning competition

B –  Rules relating to the use of the broadcasts once they are received

1.  Introductory remarks

2.  The reproduction right provided for in Article 2(a) of the Copyright Directive (Question 4 in Case C‑403/08)

3.  The exception in Article 5(1) of the Copyright Directive to the reproduction right (Question 5 in Case C-403/08)

a)  Introductory remarks

b)  Compliance with the conditions laid down in Article 5(1) of the Copyright Directive

4.  ‘Communication to the public’ within the meaning of Article 3(1) of the Copyright Directive (Question 6 in Case C-403/08)

5.  Effect of the Satellite Broadcasting Directive (Question 7 in Case C‑403/08)

IV –  Costs

(Satellite broadcasting – Broadcasting of football matches – Reception of the broadcast by means of satellite decoder cards – Satellite decoder cards lawfully placed on the market in one Member State and used in another Member State – Prohibition on marketing and use in a Member State – Visualisation of broadcasts in disregard of the exclusive rights granted – Copyright – Television broadcasting right – Exclusive licences to broadcast in a single Member State – Freedom to provide services – Article 56 TFEU – Competition – Article 101 TFEU – Restriction of competition by object – Protection of services based on conditional access – Illicit device – Directive 98/84/EC – Directive 2001/29/EC – Reproduction of works within the memory of a satellite decoder and on a television screen – Exception to the reproduction right – Communication of works to the public in public houses – Directive 93/83/EEC)

In Joined Cases C‑403/08 and C‑429/08,

REFERENCES for a preliminary ruling under Article 234 EC from the High Court of Justice of England and Wales, Chancery Division, and from the High Court of Justice of England and Wales, Queen’s Bench Division (Administrative Court), made by decisions of 11 and 28 July 2008, received at the Court on 17 and 29 September 2008 respectively, in the proceedings

Football Association Premier League Ltd,

NetMed Hellas SA,

Multichoice Hellas SA

v

QC Leisure,

David Richardson,

AV Station plc,

Malcolm Chamberlain,

Michael Madden,

SR Leisure Ltd,

Philip George Charles Houghton,

Derek Owen (C-403/08)

and

Karen Murphy

v

Media Protection Services Ltd (C-429/08),

THE COURT (Grand Chamber),

composed of V. Skouris, President, A. Tizzano, J.N. Cunha Rodrigues, K. Lenaerts, J.-C. Bonichot, A. Arabadjiev and J.-J. Kasel, Presidents of Chambers, A. Borg Barthet, M. Ilešič, J. Malenovský (Rapporteur) and T. von Danwitz, Judges,

Advocate General: J. Kokott,

Registrar: L. Hewlett, Principal Administrator,

having regard to the written procedure and further to the hearing on 5 October 2010,

after considering the observations submitted on behalf of:

–        Football Association Premier League Ltd, NetMed Hellas SA and Multichoice Hellas SA, by J. Mellor QC, N. Green QC, C. May and A. Robertson, Barristers, and S. Levine, M. Pullen and R. Hoy, Solicitors,

–        QC Leisure, Mr Richardson, AV Station plc, Mr Chamberlain, Mr Madden, SR Leisure Ltd, Mr Houghton and Mr Owen, by M. Howe QC, A. Norris, S. Vousden, T. St Quentin and M. Demetriou, Barristers, and P. Dixon and P. Sutton, Solicitors,

–        Ms Murphy, by M. Howe QC, W. Hunter QC, M. Demetriou, Barrister, and P. Dixon, Solicitor,

–        Media Protection Services Ltd, by J. Mellor QC, N. Green QC, H. Davies QC and C. May, A. Robertson and P. Cadman, Barristers,

–        the United Kingdom Government, by V. Jackson and S. Hathaway, acting as Agents, and J. Stratford QC,

–        the Czech Government, by K. Havlíčková, acting as Agent,

–        the Spanish Government, by N. Díaz Abad, acting as Agent,

–        the French Government, by G. de Bergues and B. Beaupère-Manokha, acting as Agents,

–        the Italian Government, by G. Palmieri, acting as Agent, and L. D’Ascia, avvocato dello Stato,

–        the European Parliament, by J. Rodrigues and L. Visaggio, acting as Agents,

–        the Council of the European Union, by F. Florindo Gijón and G. Kimberley, acting as Agents,

–        the European Commission, by X. Lewis, H. Krämer, I.V. Rogalski, J. Bourke and J. Samnadda, acting as Agents,

–        the EFTA Surveillance Authority, by O.J. Einarsson and M. Schneider, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 3 February 2011,

gives the following

Judgment

1        These references for a preliminary ruling concern the interpretation of:

–        Directive 98/84/EC of the European Parliament and of the Council of 20 November 1998 on the legal protection of services based on, or consisting of, conditional access (OJ 1998 L 320, p. 54; ‘the Conditional Access Directive’),

–        Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission (OJ 1993 L 248, p. 15; ‘the Satellite Broadcasting Directive’),

–        Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities (OJ 1989 L 298, p. 23), as amended by Directive 97/36/EC of the European Parliament and of the Council of 30 June 1997 (OJ 1997 L 202, p. 60) (‘the Television without Frontiers Directive’),

–        Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10, corrigendum at OJ 2002 L 6, p. 70; ‘the Copyright Directive’) and

–        Articles 34 TFEU, 36 TFEU, 56 TFEU and 101 TFEU.

2        The references have been made in proceedings between Football Association Premier League Ltd (‘FAPL’), NetMed Hellas SA (‘NetMed Hellas’) and Multichoice Hellas SA (‘Multichoice Hellas’) (collectively ‘FAPL and others’) and QC Leisure, Mr Richardson, AV Station plc (‘AV Station’), Mr Chamberlain, Mr Madden, SR Leisure Ltd, Mr Houghton and Mr Owen (collectively ‘QC Leisure and others’) (in Case C-403/08), and between Ms Murphy and Media Protection Services Ltd (‘MPS’) (in Case C‑429/08), concerning the marketing and use in the United Kingdom of decoding devices which give access to the satellite broadcasting services of a broadcaster, are manufactured and marketed with that broadcaster’s authorisation, but are used, in disregard of its will, outside the geographical area for which they have been issued (‘foreign decoding devices’).

I –  Legal context

A –  International law

3        The Agreement on Trade-Related Aspects of Intellectual Property Rights, which constitutes Annex 1 C to the Agreement establishing the World Trade Organisation, signed in Marrakech on 15 April 1994, was approved by Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (OJ 1994 L 336, p. 1).

4        Article 9(1) of the Agreement on Trade-Related Aspects of Intellectual Property Rights provides:

‘Members shall comply with Articles 1 through 21 of the Berne Convention (1971) and the Appendix thereto. However, Members shall not have rights or obligations under this Agreement in respect of the rights conferred under Article 6bis of that Convention or of the rights derived therefrom.’

5        Article 11(1) of the Berne Convention for the Protection of Literary and Artistic Works (Paris Act of 24 July 1971), as amended on 28 September 1979 (‘the Berne Convention’), states:

‘Authors of dramatic, dramatico-musical and musical works shall enjoy the exclusive right of authorising:

(i)      the public performance of their works, including such public performance by any means or process;

(ii)      any communication to the public of the performance of their works.’

6        Article 11bis(1) of the Berne Convention provides:

‘Authors of literary and artistic works shall enjoy the exclusive right of authorising:

(i)      the broadcasting of their works or the communication thereof to the public by any other means of wireless diffusion of signs, sounds or images;

(ii)      any communication to the public by wire or by rebroadcasting of the broadcast of the work, when this communication is made by an organisation other than the original one;

(iii)      the public communication by loudspeaker or any other analogous instrument transmitting, by signs, sounds or images, the broadcast of the work.’

7        The World Intellectual Property Organisation (WIPO) adopted in Geneva on 20 December 1996 the WIPO Performances and Phonograms Treaty (‘the Performances and Phonograms Treaty’) and the WIPO Copyright Treaty (‘the Copyright Treaty’). Those two treaties were approved on behalf of the Community by Council Decision 2000/278/EC of 16 March 2000 (OJ 2000 L 89, p. 6).

8        Article 2(g) of the Performances and Phonograms Treaty provides:

‘For the purposes of this Treaty:

...

(g)      “communication to the public” of a performance or a phonogram means the transmission to the public by any medium, otherwise than by broadcasting, of sounds of a performance or the sounds or the representations of sounds fixed in a phonogram. For the purposes of Article 15, “communication to the public” includes making the sounds or representations of sounds fixed in a phonogram audible to the public.’

9        Article 15(1) of that treaty states:

‘Performers and producers of phonograms shall enjoy the right to a single equitable remuneration for the direct or indirect use of phonograms published for commercial purposes for broadcasting or for any communication to the public.’

10      Article 1(4) of the Copyright Treaty provides that Contracting Parties are to comply with Articles 1 to 21 of and the Appendix to the Berne Convention.

B –  European Union law

1.           Broadcasting directives

11      The third recital in the preamble to the Television without Frontiers Directive states:

‘... broadcasts transmitted across frontiers by means of various technologies are one of the ways of pursuing the objectives of the Community; … measures should be adopted to permit and ensure the transition from national markets to a common programme production and distribution market and to establish conditions of fair competition without prejudice to the public interest role to be discharged by the television broadcasting services’.

12      Recital 21 in the preamble to Directive 97/36 states:

‘… events of major importance for society should, for the purposes of this Directive, meet certain criteria, that is to say be outstanding events which are of interest to the general public in the European Union or in a given Member State or in an important component part of a given Member State and are organised in advance by an event organiser who is legally entitled to sell the rights pertaining to that event’.

13      Recitals 3, 5, 7, 14, 15 and 17 in the preamble to the Satellite Broadcasting Directive state:

‘(3)      … broadcasts transmitted across frontiers within the Community, in particular by satellite and cable, are one of the most important ways of pursuing [the] Community objectives, which are at the same time political, economic, social, cultural and legal;

…

(5)      … holders of rights are exposed to the threat of seeing their works exploited without payment of remuneration or that the individual holders of exclusive rights in various Member States block the exploitation of their rights; … the legal uncertainty in particular constitutes a direct obstacle in the free circulation of programmes within the Community;

…

(7)      … the free broadcasting of programmes is further impeded by the current legal uncertainty over whether broadcasting by a satellite whose signals can be received directly affects the rights in the country of transmission only or in all countries of reception together; …

…

(14)      … the legal uncertainty regarding the rights to be acquired which impedes cross-border satellite broadcasting should be overcome by defining the notion of communication to the public by satellite at a Community level; … this definition should at the same time specify where the act of communication takes place; … such a definition is necessary to avoid the cumulative application of several national laws to one single act of broadcasting; …

(15)      … the acquisition on a contractual basis of exclusive broadcasting rights should comply with any legislation on copyright and rights related to copyright in the Member State in which communication to the public by satellite occurs;

…

(17)      … in arriving at the amount of the payment to be made for the rights acquired, the parties should take account of all aspects of the broadcast, such as the actual audience, the potential audience and the language version’.

14      Article 1(2)(a) to (c) of the Satellite Broadcasting Directive states:

‘(a)      For the purpose of this Directive, “communication to the public by satellite” means the act of introducing, under the control and responsibility of the broadcasting organisation, the programme-carrying signals intended for reception by the public into an uninterrupted chain of communication leading to the satellite and down towards the earth.

(b)      The act of communication to the public by satellite occurs solely in the Member State where, under the control and responsibility of the broadcasting organisation, the programme-carrying signals are introduced into an uninterrupted chain of communication leading to the satellite and down towards the earth.

(c)      If the programme-carrying signals are encrypted, then there is communication to the public by satellite on condition that the means for decrypting the broadcast are provided to the public by the broadcasting organisation or with its consent.’

15      Article 2 of the Satellite Broadcasting Directive provides:

‘Member States shall provide an exclusive right for the author to authorise the communication to the public by satellite of copyright works, subject to the provisions set out in this chapter.’

16      Recitals 2, 3, 6 and 13 in the preamble to the Conditional Access Directive state:

‘(2)      … the cross-border provision of broadcasting and information society services may contribute, from the individual point of view, to the full effectiveness of freedom of expression as a fundamental right and, from the collective point of view, to the achievement of the objectives laid down in the Treaty;

(3)      … the Treaty provides for the free movement of all services which are normally provided for remuneration; … this right, as applied to broadcasting and information society services, is also a specific manifestation in Community law of a more general principle, namely freedom of expression as enshrined in Article 10 of the European Convention for the Protection of Human Rights and Fundamental Freedoms; … that Article explicitly recognises the right of citizens to receive and impart information regardless of frontiers and … any restriction of that right must be based on due consideration of other legitimate interests deserving of legal protection;

…

(6)      … the opportunities offered by digital technologies provide the potential for increasing consumer choice and contributing to cultural pluralism, by developing an even wider range of services within the meaning of Articles [56 TFEU and 57 TFEU]; … the viability of those services will often depend on the use of conditional access in order to obtain the remuneration of the service provider; … accordingly, the legal protection of service providers against illicit devices which allow access to these services free of charge seems necessary in order to ensure the economic viability of the services;

…

(13)      … it seems necessary to ensure that Member States provide appropriate legal protection against the placing on the market, for direct or indirect financial gain, of an illicit device which enables or facilitates without authority the circumvention of any technological measures designed to protect the remuneration of a legally provided service’.

17      Article 2 of the Conditional Access Directive provides:

‘For the purposes of this Directive:

(a)      protected service shall mean any of the following services, where provided against remuneration and on the basis of conditional access:

–        television broadcasting, as defined in Article 1(a) of [the Television without Frontiers Directive],

…

(b)      conditional access shall mean any technical measure and/or arrangement whereby access to the protected service in an intelligible form is made conditional upon prior individual authorisation;

(c)      conditional access device shall mean any equipment or software designed or adapted to give access to a protected service in an intelligible form;

…

(e)      illicit device shall mean any equipment or software designed or adapted to give access to a protected service in an intelligible form without the authorisation of the service provider;

(f)      field coordinated by this Directive shall mean any provision relating to the infringing activities specified in Article 4.’

18      As set out in Article 3 of the Conditional Access Directive:

‘1.      Each Member State shall take the measures necessary to prohibit on its territory the activities listed in Article 4, and to provide for the sanctions and remedies laid down in Article 5.

2.      Without prejudice to paragraph 1, Member States may not:

(a)      restrict the provision of protected services, or associated services, which originate in another Member State; or

(b)      restrict the free movement of conditional access devices;

for reasons falling within the field coordinated by this Directive.’

19      Article 4 of the Conditional Access Directive states:

‘Member States shall prohibit on their territory all of the following activities:

(a)      the manufacture, import, distribution, sale, rental or possession for commercial purposes of illicit devices;

(b)      the installation, maintenance or replacement for commercial purposes of an illicit device;

(c)      the use of commercial communications to promote illicit devices.’

2.           Intellectual property directives

20      Recitals 9, 10, 15, 20, 23, 31 and 33 in the preamble to the Copyright Directive state:

‘(9)      Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation. …

(10)      If authors or performers are to continue their creative and artistic work, they have to receive an appropriate reward for the use of their work …

…

(15)      … This Directive … serves to implement a number of the new international obligations [arising from the Copyright Treaty and the Performances and Phonograms Treaty].

…

(20)      This Directive is based on principles and rules already laid down in the Directives currently in force in [the area of intellectual property], in particular [Council Directive 92/100/EEC of 19 November 1992 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ 1992 L 346, p. 61)], and it develops those principles and rules and places them in the context of the information society. The provisions of this Directive should be without prejudice to the provisions of those Directives, unless otherwise provided in this Directive.

...

(23)      This Directive should harmonise further the author’s right of communication to the public. This right should be understood in a broad sense covering all communication to the public not present at the place where the communication originates. This right should cover any such transmission or retransmission of a work to the public by wire or wireless means, including broadcasting. This right should not cover any other acts.

…

(31)      A fair balance of rights and interests between the different categories of rightholders, as well as between the different categories of rightholders and users of protected subject-matter must be safeguarded …

…

(33)      The exclusive right of reproduction should be subject to an exception to allow certain acts of temporary reproduction, which are transient or incidental reproductions, forming an integral and essential part of a technological process and carried out for the sole purpose of enabling either efficient transmission in a network between third parties by an intermediary, or a lawful use of a work or other subject-matter to be made. The acts of reproduction concerned should have no separate economic value on their own. To the extent that they meet these conditions, this exception should include acts which enable browsing as well as acts of caching to take place, including those which enable transmission systems to function efficiently, provided that the intermediary does not modify the information and does not interfere with the lawful use of technology, widely recognised and used by industry, to obtain data on the use of the information. A use should be considered lawful where it is authorised by the rightholder or not restricted by law.’

21      As set out in Article 2(a) and (e) of the Copyright Directive:

‘Member States shall provide for the exclusive right to authorise or prohibit direct or indirect, temporary or permanent reproduction by any means and in any form, in whole or in part:

(a)      for authors, of their works;

…

(e)      for broadcasting organisations, of fixations of their broadcasts, whether those broadcasts are transmitted by wire or over the air, including by cable or satellite.’

22      Article 3(1) of the Copyright Directive provides:

‘Member States shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them.’

23      Article 5 of the Copyright Directive states:

‘1.      Temporary acts of reproduction referred to in Article 2, which are transient or incidental, which are an integral and essential part of a technological process and the sole purpose of which is to enable:

(a)      a transmission in a network between third parties by an intermediary, or

(b)      a lawful use

of a work or other subject-matter to be made, and which have no independent economic significance, shall be exempted from the reproduction right provided for in Article 2.

…

3.      Member States may provide for exceptions or limitations to the rights provided for in Articles 2 and 3 in the following cases:

…

(i)      incidental inclusion of a work or other subject-matter in other material;

…

5.      The exceptions and limitations provided for in paragraphs 1, 2, 3 and 4 shall only be applied in certain special cases which do not conflict with a normal exploitation of the work or other subject-matter and do not unreasonably prejudice the legitimate interests of the rightholder.’

24      According to recital 5 in the preamble to Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (codified version) (OJ 2006 L 376, p. 28; ‘the Related Rights Directive’):

‘The creative and artistic work of authors and performers necessitates an adequate income as a basis for further creative and artistic work, and the investments required particularly for the production of phonograms and films are especially high and risky. …’

25      Under Article 7(2) of the Related Rights Directive, Member States are to provide for broadcasting organisations the exclusive right to authorise or prohibit the fixation of their broadcasts, whether these broadcasts are transmitted by wire or over the air, including by cable or satellite.

26      Article 8(3) of the Related Rights Directive is worded as follows:

‘Member States shall provide for broadcasting organisations the exclusive right to authorise or prohibit the rebroadcasting of their broadcasts by wireless means, as well as the communication to the public of their broadcasts if such communication is made in places accessible to the public against payment of an entrance fee.’

27      Recital 5 in the preamble to, and Articles 7(2) and 8(3) of, the Related Rights Directive essentially reproduce the seventh recital in the preamble to, and Articles 6(2) and 8(3) of, Directive 92/100.

C –  National legislation

28      Section 297(1) of the Copyright, Designs and Patents Act 1988 (‘the Copyright, Designs and Patents Act’) provides:

‘A person who dishonestly receives a programme included in a broadcasting service provided from a place in the United Kingdom with intent to avoid payment of any charge applicable to the reception of the programme commits an offence and is liable on summary conviction to a fine not exceeding level 5 on the standard scale.’

29      Section 298 of the Copyright, Designs and Patents Act states:

‘(1)      A person who–

(a)      makes charges for the reception of programmes included in a broadcasting service provided from a place in the United Kingdom or any other Member State,

(b)      sends encrypted transmissions of any other description from a place in the United Kingdom or any other Member State, or

…

is entitled to the following rights and remedies.

(2)      He has the same rights and remedies against a person–

(a)      who–

(i)      makes, imports, distributes, sells or lets for hire, offers or exposes for sale or hire, or advertises for sale or hire,

(ii)      has in his possession for commercial purposes, or

(iii) instals, maintains or replaces for commercial purposes,

any apparatus designed or adapted to enable or assist persons to access the programmes or other transmissions or circumvent conditional access technology related to the programmes or other transmissions when they are not entitled to do so, …

…

as a copyright owner has in respect of an infringement of copyright.

…’

II –  The disputes in the main proceedings and the questions referred for a preliminary ruling

30      FAPL runs the Premier League, the leading professional football league competition for football clubs in England.

31      FAPL’s activities include organising the filming of Premier League matches and exercising in their regard television broadcasting rights, that is to say, rights to make the audiovisual content of sporting events available to the public by means of television broadcasting (‘broadcasting rights’).

A –  Licensing of the broadcasting rights for Premier League matches

32      FAPL grants licences in respect of those broadcasting rights for live transmission, on a territorial basis and for three-year terms. In that regard, FAPL’s strategy is to bring the competition to viewers throughout the world while maximising the value of the rights to its members, the clubs.

33      Those rights are thus awarded to broadcasters under an open competitive tender procedure which begins with the invitation to tenderers to submit bids on a global, regional or territorial basis. Demand then determines the territorial basis on which FAPL sells its international rights. However, as a rule, that basis is national since there is only a limited demand from bidders for global or pan-European rights, given that broadcasters usually operate on a territorial basis and serve the domestic market either in their own country or in a small cluster of neighbouring countries with a common language.

34      Where a bidder wins, for an area, a package of broadcasting rights for the live transmission of Premier League matches, it is granted the exclusive right to broadcast them in that area. This is necessary, according to FAPL, in order to realise the optimum commercial value of all of the rights, broadcasters being prepared to pay a premium to acquire that exclusivity as it allows them to differentiate their services from those of their rivals and therefore enhances their ability to generate revenue.

35      In order to protect the territorial exclusivity of all broadcasters, they each undertake, in their licence agreement with FAPL, to prevent the public from receiving their broadcasts outside the area for which they hold the licence. This requires, first, each broadcaster to ensure that all of its broadcasts capable of being received outside that territory – in particular those transmitted by satellite – are encrypted securely and cannot be received in unencrypted form. Second, broadcasters must ensure that no device is knowingly authorised so as to permit anyone to view their transmissions outside the territory concerned. Therefore, broadcasters are in particular prohibited from supplying decoding devices that allow their broadcasts to be decrypted for the purpose of being used outside the territory for which they hold the licence.

B –  Broadcasting of Premier League matches

36      As part of its activities, FAPL is also responsible for organising the filming of Premier League matches and transmission of the signal to the broadcasters that have the rights for those matches.

37      For this purpose, the images and ambient sound captured at the match are transmitted to a production facility which adds logos, video sequences, on-screen graphics, music and English commentary.

38      The signal is sent, by satellite, to a broadcaster which adds its own logo and possibly some commentary. The signal is then compressed and encrypted, and then transmitted by satellite to subscribers, who receive the signal using a satellite dish. The signal is, finally, decrypted and decompressed in a satellite decoder which requires a decoding device such as a decoder card for its operation.

39      In Greece, the holder of the sub-licence to broadcast Premier League matches is NetMed Hellas. The matches are broadcast via satellite on SuperSport channels on the NOVA platform, the owner and operator of which is Multichoice Hellas.

40      Viewers who have subscribed to the NOVA satellite package have access to those channels. Every subscriber must have been able to provide a name, a Greek address and a Greek telephone number. Subscriptions can be taken out for private or commercial purposes.

41      In the United Kingdom, at the material time the licensee for live Premier League broadcasting was BSkyB Ltd. Where a natural or legal person wishes to screen Premier League matches in the United Kingdom, he may take out a commercial subscription from that company.

42      However, in the United Kingdom certain restaurants and bars have begun to use foreign decoding devices to access Premier League matches. They buy from a dealer a card and a decoder box which allow them to receive a satellite channel broadcast in another Member State, such as the NOVA channels, the subscription to which is less expensive than BSkyB Ltd’s subscription. Those decoder cards have been manufactured and marketed with the authorisation of the service provider, but they are subsequently used in an unauthorised manner, since the broadcasters have made their issue subject to the condition – in accordance with the undertakings set out in paragraph 35 of the present judgment – that customers do not use them outside the national territory concerned.

43      FAPL has taken the view that such activities are harmful to its interests because they undermine the exclusivity of the rights granted by licence in a given territory and hence the value of those rights. Indeed, according to FAPL, the broadcaster selling the cheapest decoder cards has the potential to become, in practice, the broadcaster at European level, which would result in broadcast rights in the European Union having to be granted at European level. This would lead to a significant loss in revenue for both FAPL and the broadcasters, and would thus undermine the viability of the services that they provide.

44      Consequently, FAPL and others have brought, in Case C-403/08, what they consider to be three test cases before the High Court of Justice of England and Wales, Chancery Division. Two of the actions are against QC Leisure, Mr Richardson, AV Station and Mr Chamberlain, suppliers to public houses of equipment and satellite decoder cards that enable the reception of programmes of foreign broadcasters, including NOVA, which transmit live Premier League matches.

45      The third action is brought against Mr Madden, SR Leisure Ltd, Mr Houghton and Mr Owen, licensees or operators of four public houses that have screened live Premier League matches by using a foreign decoding device.

46      FAPL and others allege that those persons are infringing their rights protected by section 298 of the Copyright, Designs and Patents Act by trading in or, in the case of the defendants in the third action, being in possession for commercial purposes of foreign decoding devices designed or adapted to give access to the services of FAPL and others without authorisation.

47      In addition, the defendants in the third action have allegedly infringed their copyrights by creating copies of the works in the internal operation of the satellite decoder and by displaying the works on screen, as well as by performing, playing or showing the works in public and communicating them to the public.

48      Furthermore, QC Leisure and AV Station have allegedly infringed the copyrights by authorising the acts perpetrated by the defendants in the third action, as well as by other persons to whom they have supplied decoder cards.

49      In the view of QC Leisure and others, the actions are unfounded because they are not using pirate decoder cards, all of the cards in question having been issued and placed upon the market, in another Member State, by the relevant satellite broadcaster.

50      In Case C‑429/08, Ms Murphy, manager of a public house, procured a NOVA decoder card to screen Premier League matches.

51      Agents from MPS, a body mandated by FAPL to conduct a campaign of prosecutions against public house managers using foreign decoding devices, found that Ms Murphy was receiving, in her public house, broadcasts of Premier League matches transmitted by NOVA.

52      Consequently, MPS brought Ms Murphy before Portsmouth Magistrates’ Court, which convicted her of two offences under section 297(1) of the Copyright, Designs and Patents Act on the ground that she had dishonestly received a programme included in a broadcasting service provided from a place in the United Kingdom with intent to avoid payment of any charge applicable to the reception of the programme.

53      After Portsmouth Crown Court had essentially dismissed her appeal, Ms Murphy brought an appeal by way of case stated before the High Court of Justice, taking a position similar to that adopted by QC Leisure and others.

54      In those circumstances, the High Court of Justice of England and Wales, Chancery Division, decided to stay proceedings and to refer the following questions to the Court for a preliminary ruling in Case C-403/08:

‘(1)      (a)   Where a conditional access device is made by or with the consent of a service provider and sold subject to a limited authorisation to use the device only to gain access to the protected service in particular circumstances, does that device become an “illicit device” within the meaning of Article 2(e) of [the Conditional Access Directive] if it is used to give access to that protected service in a place or in a manner or by a person outside the authorisation of the service provider?

(b)      What is the meaning of “designed or adapted” within Article 2(e) of the Directive?

(2)      When a first service provider transmits programme content in encoded form to a second service provider who broadcasts that content on the basis of conditional access, what factors are to be taken into account in determining whether the interests of the first provider of a protected service are affected, within the meaning of Article 5 of [the Conditional Access Directive]?

In particular:

Where a first undertaking transmits programme content (comprising visual images, ambient sound and English commentary) in encoded form to a second undertaking which in turn broadcasts to the public the programme content (to which it has added its logo and, on occasion, an additional audio commentary track):

(a)      Does the transmission by the first undertaking constitute a protected service of “television broadcasting” within the meaning of Article 2(a) of [the Conditional Access Directive] and Article 1(a) of [the Television without Frontiers Directive]?

(b)      Is it necessary for the first undertaking to be a broadcaster within the meaning of Article 1(b) of [the Television without Frontiers Directive] in order to be considered as providing a protected service of “television broadcasting” within the first indent of Article 2(a) of [the Conditional Access Directive]?

(c)      Is Article 5 of [the Conditional Access Directive] to be interpreted as conferring a civil right of action on the first undertaking in respect of illicit devices which give access to the programme as broadcast by the second undertaking, either:

(i)      because such devices are to be regarded as giving access via the broadcast signal to the first undertaking’s own service; or

(ii)      because the first undertaking is the provider of a protected service whose interests are affected by an infringing activity (because such devices give unauthorised access to the protected service provided by the second undertaking)?

(d)      Is the answer to (c) affected by whether the first and second service providers use different decryption systems and conditional access devices?

(3)      Does “possession for commercial purposes” in Article 4(a) of the [Conditional Access] Directive relate only to possession for the purposes of commercial dealings in (for example, sales of) illicit devices, or does it extend to the possession of a device by an end user in the course of a business of any kind?

(4)      Where sequential fragments of a film, musical work or sound recording (in this case frames of digital video and audio) are created (i) within the memory of a decoder or (ii) in the case of a film on a television screen, and the whole work is reproduced if the sequential fragments are considered together but only a limited number of fragments exist at any point in time:

(a)      Is the question of whether those works have been reproduced in whole or in part to be determined by the rules of national copyright law relating to what constitutes an infringing reproduction of a copyright work, or is it a matter of interpretation of Article 2 of [the Copyright Directive]?

(b)      If it is a matter of interpretation of Article 2 of [the Copyright Directive], should the national court consider all of the fragments of each work as a whole, or only the limited number of fragments which exist at any point in time? If the latter, what test should the national court apply to the question of whether the works have been reproduced in part within the meaning of that Article?

(c)      Does the reproduction right in Article 2 extend to the creation of transient images on a television screen?

(5)      (a)   Are transient copies of a work created within a satellite television decoder box or on a television screen linked to the decoder box, and whose sole purpose is to enable a use of the work not otherwise restricted by law, to be regarded as having “independent economic significance” within the meaning of Article 5(1) of [the Copyright Directive] by reason of the fact that such copies provide the only basis upon which the rights holder can extract remuneration for the use of his rights?

(b)      Is the answer to Question 5(a) affected by (i) whether the transient copies have any inherent value; or (ii) whether the transient copies comprise a small part of a collection of works and/or other subject-matter which otherwise may be used without infringement of copyright; or (iii) whether the exclusive licensee of the rights holder in another Member State has already received remuneration for use of the work in that Member State?

(6)      (a)   Is a copyright work communicated to the public by wire or wireless means within the meaning of Article 3 of [the Copyright Directive] where a satellite broadcast is received at a commercial premises (for example a bar) and communicated or shown at those premises via a single television screen and speakers to members of the public present in those premises?

(b)      Is the answer to Question 6(a) affected if:

(i)      the members of the public present constitute a new public not contemplated by the broadcaster (in this case because a domestic decoder card for use in one Member State is used for a commercial audience in another Member State)?

(ii)      the members of the public are not a paying audience according to national law?

(iii) the television broadcast signal is received by an aerial or satellite dish on the roof of or adjacent to the premises where the television is situated?

(c)      If the answer to any part of (b) is yes, what factors should be taken into account in determining whether there is a communication of the work which has originated from a place where members of the audience are not present?

(7)      Is it compatible with [the Satellite Broadcasting Directive] or with Articles 28 and 30 or 49 of the EC Treaty if national copyright law provides that when transient copies of works included in a satellite broadcast are created inside a satellite decoder box or on a television screen, there is an infringement of copyright under the law of the country of reception of the broadcast? Does it affect the position if the broadcast is decoded using a satellite decoder card which has been issued by the provider of a satellite broadcasting service in another Member State on the condition that the satellite decoder card is only authorised for use in that other Member State?

(8)      (a)   If the answer to [Question 1] is that a conditional access device made by or with the consent of the service provider becomes an “illicit device” within the meaning of Article 2(e) of [the Conditional Access Directive] when it is used outside the scope of the authorisation of the service provider to give access to a protected service, what is the specific subject-matter of the right by reference to its essential function conferred by the Conditional Access Directive?

(b)      Do Articles 28 or 49 of the EC Treaty preclude enforcement of a provision of national law in a first Member State which makes it unlawful to import or sell a satellite decoder card which has been issued by the provider of a satellite broadcasting service in another Member State on the condition that the satellite decoder card is only authorised for use in that other Member State?

(c)      Is the answer affected if the satellite decoder card is authorised only for private and domestic use in that other Member State but used for commercial purposes in the first Member State?

(9)      Do Articles 28 and 30 or 49 of the EC Treaty preclude enforcement of a provision of national copyright law which makes it unlawful to perform or play in public a musical work where that work is included in a protected service which is accessed[,] and [that work is] played in public[,] by use of a satellite decoder card where that card has been issued by the service provider in another Member State on the condition that the decoder card is only authorised for use in that other Member State? Does it make a difference if the musical work is an unimportant element of the protected service as a whole and the showing or playing in public of the other elements of the service are not prevented by national copyright law?

(10)      Where a programme content provider enters into a series of exclusive licences each for the territory of one or more Member States under which the broadcaster is licensed to broadcast the programme content only within that territory (including by satellite) and a contractual obligation is included in each licence requiring the broadcaster to prevent its satellite decoder cards which enable reception of the licensed programme content from being used outside the licensed territory, what legal test should the national court apply and what circumstances should it take into consideration in deciding whether the contractual restriction contravenes the prohibition imposed by Article 81(1) [EC]?

In particular:

(a)      must Article 81(1) [EC] be interpreted as applying to that obligation by reason only of it being deemed to have the object of preventing, restricting or distorting competition?

(b)      if so, must it also be shown that the contractual obligation appreciably prevents, restricts or distorts competition in order to come within the prohibition imposed by Article 81(1) [EC]?’

55      In Case C-429/08, the High Court of Justice of England and Wales, Queen’s Bench Division (Administrative Court), decided to stay proceedings and to refer the following questions to the Court for a preliminary ruling:

‘(1)      In what circumstances is a conditional access device an “illicit device” within the meaning of Article 2(e) of [the Conditional Access Directive]?

(2)      In particular, is a conditional access device an “illicit device” if it is acquired in circumstances where:

(i)      the conditional access device was made by or with the consent of a service provider and originally supplied subject to limited contractual authorisation to use the device to gain access to a protected service only in a first Member State and was used to gain access to that protected service received in another Member State? and/or

(ii)      the conditional access device was made by or with the consent of a service provider and was originally procured and/or enabled by the provision of a false name and residential address in the first Member State thereby overcoming contractual territorial restrictions imposed on the export of such devices for use outside the first Member State? and/or

(iii) the conditional access device was made by or with the consent of a service provider and was originally supplied subject to a contractual condition that it be used only for domestic or private use rather than commercial use (for which a higher subscription charge is payable), but was used in the United Kingdom for commercial purposes, namely showing live football broadcasts in a public house?

(3)      If the answer to any part of Question 2 is “no”, does Article 3(2) of that Directive preclude a Member State from invoking a national law that prevents use of such conditional access devices in the circumstances set out in Question 2 above?

(4)      If the answer to any part of Question 2 is “no”, is Article 3(2) of that Directive invalid:

(a)      for the reason that it is discriminatory and/or disproportionate; and/or

(b)      for the reason that it conflicts with free movement rights under the Treaty; and/or

(c)      for any other reason?

(5)      If the answer to Question 2 is “yes”, are Articles 3(1) and 4 of that Directive invalid for the reason that they purport to require the Member States to impose restrictions on the importation from other Member States of and other dealings with “illicit devices” in circumstances where those devices may lawfully be imported and/or used to receive cross-border satellite broadcasting services by virtue of the rules on the free movement of goods under Articles 28 and 30 of the EC Treaty and/or the freedom to provide and receive services under Article 49 of the EC Treaty?

(6)      Do Articles 28, 30 and/or 49 EC preclude enforcement of a national law (such as section 297 of the [Copyright, Designs and Patents Act]) which makes it a criminal offence dishonestly to receive a programme included in a broadcasting service provided from a place in the United Kingdom with intent to avoid payment of any charge applicable to the reception of the programme, in any of the following circumstances:

(i)      where the conditional access device was made by or with the consent of a service provider and originally supplied subject to limited contractual authorisation to use the device to gain access to a protected service only in a first Member State and was used to gain access to that protected service received in another Member State (in this case the UK)? and/or

(ii)      where the conditional access device was made by or with the consent of a service provider and was originally procured and/or enabled by the provision of a false name and residential address in the first Member State thereby overcoming contractual territorial restrictions imposed on the export of such devices for use outside the first Member State? and/or

(iii) where the conditional access device was made by or with the consent of a service provider and was originally supplied subject to a contractual condition that it be used only for domestic or private use rather than commercial use (for which a higher subscription charge is payable), but was used in the United Kingdom for commercial purposes, namely showing live football broadcasts in a public house?

(7)      Is enforcement of the national law in question in any event precluded on the ground of discrimination contrary to Article 12 EC or otherwise, because the national law applies to programmes included in a broadcasting service provided from a place in the United Kingdom but not from any other Member State?

(8)      Where a programme content provider enters into a series of exclusive licences each for the territory of one or more Member States under which the broadcaster is licensed to broadcast the programme content only within that territory (including by satellite) and a contractual obligation is included in each licence requiring the broadcaster to prevent its satellite decoder cards which enable reception of the licensed programme content from being used outside the licensed territory, what legal test should the national court apply and what circumstances should it take into consideration in deciding whether the contractual restriction contravenes the prohibition imposed by Article 81(1) [EC]?

In particular:

(a)      must Article 81(1) [EC] be interpreted as applying to that obligation by reason only of it being deemed to have the object of preventing, restricting or distorting competition?

(b)      if so, must it also be shown that the contractual obligation appreciably prevents, restricts or distorts competition in order to come within the prohibition imposed by Article 81(1) [EC]?’

56      By order of the President of the Court of 3 December 2008, Cases C-403/08 and C-429/08 were joined for the purposes of the written and oral procedure and the judgment.

III –  Consideration of the questions referred

A –  Rules relating to the reception of encrypted broadcasts from other Member States

1.           Introductory remarks

57      First of all, it should be made clear that the present cases concern only the satellite broadcasting of Premier League matches to the public by broadcasting organisations, such as Multichoice Hellas. Thus, the only part of the audiovisual communication that is relevant here is the part which consists in the transmission of those broadcasts by the broadcasting organisations to the public in accordance with Article 1(2)(a) and (b) of the Satellite Broadcasting Directive, that operation being carried out from the Member State where the programme-carrying signals are introduced into a chain of satellite communication (‘the Member State of broadcast’), in this instance the Hellenic Republic in particular.

58      On the other hand, the upstream part of the communication, between FAPL and those broadcasters, which consists in the transmission of audiovisual data containing those matches, is irrelevant here, that communication indeed being capable of being effected by means of telecommunication other than those used by the parties to the main proceedings.

59      Second, it is apparent from the documents before the Court that, under the licence agreements between FAPL and the broadcasters concerned, the broadcasts in question are intended solely for the public of the Member State of broadcast and that those broadcasters must therefore ensure that their satellite transmissions can be received only in that State. Consequently, the broadcasters must encrypt their transmissions and supply decoding devices only to persons resident in the Member State of broadcast.

60      Finally, it is not in dispute that proprietors of public houses use such decoding devices outside that Member State and therefore they use them in disregard of the broadcasters’ will.

61      It is in this context that the referring courts inquire, by the first part of their questions, whether such use of decoding devices falls within the Conditional Access Directive and what its effect is on that use. Next, should this aspect not be harmonised by the Conditional Access Directive, they seek to ascertain whether Articles 34 TFEU, 36 TFEU, 56 TFEU and 101 TFEU preclude national legislation and licence agreements that prohibit the use of foreign decoding devices.

2.           Conditional Access Directive

a)            Interpretation of ‘illicit device’ within the meaning of Article 2(e) of the Conditional Access Directive (Question 1 in Case C-403/08 and Questions 1 and 2 in Case C‑429/08)

62      By these questions, the referring courts ask, in essence, whether ‘illicit device’ within the meaning of Article 2(e) of the Conditional Access Directive must be interpreted as also covering foreign decoding devices, including those procured or enabled by the provision of a false name and address and those used in breach of a contractual limitation permitting their use only for private purposes.

63      First, Article 2(e) of the Conditional Access Directive defines ‘illicit device’ as any equipment or software ‘designed’ or ‘adapted’ to give access to a protected service in an intelligible form without the authorisation of the service provider.

64      This wording is thus limited solely to equipment which has been the subject of manual or automated operations prior to commencement of its use and enables protected services to be received without the consent of providers of those services. Consequently, the wording refers only to equipment that has been manufactured, manipulated, adapted or readjusted without the authorisation of the service provider, and it does not cover the use of foreign decoding devices.

65      Second, recitals 6 and 13 in the preamble to the Conditional Access Directive, which contain explanation of the concept of ‘illicit device’, refer to the need to combat both illicit devices ‘which allow access … free of charge’ to protected services and the placing on the market of illicit devices which enable or facilitate ‘without authority the circumvention of any technological measures’ designed to protect the remuneration of a legally provided service.

66      Neither of those categories covers foreign decoding devices, foreign decoding devices procured or enabled by the provision of a false name and address or foreign decoding devices which have been used in breach of a contractual limitation permitting their use only for private purposes. All those devices are manufactured and placed on the market with the authorisation of the service provider, they do not allow access free of charge to protected services and they do not enable or facilitate the circumvention of a technological measure designed to protect the remuneration of those services, given that remuneration has been paid in the Member State where they have been placed on the market.

67      In light of the foregoing, the answer to the questions referred is that ‘illicit device’ within the meaning of Article 2(e) of the Conditional Access Directive must be interpreted as not covering foreign decoding devices, foreign decoding devices procured or enabled by the provision of a false name and address or foreign decoding devices which have been used in breach of a contractual limitation permitting their use only for private purposes.

b)           Interpretation of Article 3(2) of the Conditional Access Directive (Question 3 in Case C-429/08)

68      By this question, the referring court asks, in essence, whether Article 3(2) of the Conditional Access Directive precludes national legislation which prevents the use of foreign decoding devices, including those procured or enabled by the provision of a false name and address or those which have been used in breach of a contractual limitation permitting their use only for private purposes.

69      Under Article 3(2) of the Conditional Access Directive, Member States may not restrict the free movement of protected services and conditional access devices for reasons falling within the field coordinated by that directive, without prejudice to the obligations flowing from Article 3(1).

70      Article 3(1) of the Conditional Access Directive imposes obligations in the field coordinated by the directive – which is defined in Article 2(f) as any provision relating to the infringing activities specified in Article 4 – by requiring in particular that the Member States prohibit the activities listed in Article 4.

71      However, Article 4 concerns only activities which are infringing because they result in the use of illicit devices within the meaning of the directive.

72      Foreign decoding devices, including those procured or enabled by the provision of a false name and address and those used in breach of a contractual limitation permitting their use only for private purposes, do not constitute such illicit devices, as is apparent from paragraphs 63 to 67 of the present judgment.

73      Consequently, neither activities resulting in the use of those devices nor national legislation prohibiting those activities fall within the field coordinated by the Conditional Access Directive.

74      Accordingly, the answer to the question referred is that Article 3(2) of the Conditional Access Directive does not preclude national legislation which prevents the use of foreign decoding devices, including those procured or enabled by the provision of a false name and address or those used in breach of a contractual limitation permitting their use only for private purposes, since such legislation does not fall within the field coordinated by that directive.

c)           The other questions concerning the Conditional Access Directive

75      In light of the answers to Question 1 in Case C‑403/08 and to Questions 1, 2 and 3 in Case C-429/08, there is no need to examine Questions 2, 3 and 8(a) in Case C‑403/08 or Questions 4 and 5 in Case C‑429/08.

3.           Rules of the FEU Treaty concerning free movement of goods and services

a)           Prohibition on the import, sale and use of foreign decoding devices (Question 8(b) and the first part of Question 9 in Case C-403/08 and Question 6(i) in Case C-429/08)

76      By these questions, the referring courts ask in essence whether, on a proper construction of Articles 34 TFEU, 36 TFEU and 56 TFEU, those articles preclude legislation of a Member State which makes it unlawful to import into and sell and use in that State foreign decoding devices which give access to an encrypted satellite broadcasting service from another Member State that includes subject-matter protected by the legislation of that first State.

i)           Identification of the applicable provisions

77      National legislation such as that at issue in the main proceedings concerns both the cross-border provision of encrypted broadcasting services and the movement within the European Union of foreign decoding devices which enable those services to be decoded. In those circumstances, the question arises whether the legislation must be examined from the point of view of the freedom to provide services or from that of the free movement of goods.

78      It is clear from the case-law that, where a national measure relates to both the free movement of goods and the freedom to provide services, the Court will in principle examine it in the light of one only of those two fundamental freedoms if it is apparent that one of them is entirely secondary in relation to the other and may be considered together with it (see Case C‑275/92 Schindler [1994] ECR I‑1039, paragraph 22, and Case C-108/09 Ker-Optika [2010] ECR I-0000, paragraph 43).

79      However, in the field of telecommunications, those two aspects are often intimately linked, one not capable of being regarded as entirely secondary in relation to the other. That is so in particular where national legislation governs the supply of telecommunications equipment, such as decoding devices, in order to specify the requirements which that equipment must meet or to lay down the conditions under which it can be marketed, so that it is appropriate, in such a case, to examine both fundamental freedoms simultaneously (see, to this effect, Case C‑390/99 Canal Satélite Digital [2002] ECR I-607, paragraphs 29 to 33).

80      That said, where legislation concerns, in this field, an activity in respect of which the services provided by the economic operators are particularly prominent, whilst the supply of telecommunications equipment is related thereto in only a purely secondary manner, it is appropriate to examine that activity in the light of the freedom to provide services alone.

81      That is so, inter alia, where making such equipment available constitutes only a specific step in the organisation or operation of a service and that activity does not display an end in itself, but is intended to enable the service to be obtained. In those circumstances, the activity which consists in making such equipment available cannot be assessed independently of the activity linked to the service to which that first activity relates (see, by analogy, Schindler, paragraphs 22 and 25).

82      In the main proceedings, the national legislation is not directed at decoding devices in order to determine the requirements which they must meet or to lay down conditions under which they can be marketed. It deals with them only as an instrument enabling subscribers to obtain the encrypted broadcasting services.

83      Given that the national legislation thus concerns, above all, the freedom to provide services, whilst the free movement of goods aspect is entirely secondary in relation to the freedom to provide services, that legislation must be assessed from the point of view of the latter freedom.

84      It follows that such legislation must be examined in the light of Article 56 TFEU.

ii)        Existence of a restriction on the freedom to provide services

85      Article 56 TFEU requires the abolition of all restrictions on the freedom to provide services, even if those restrictions apply without distinction to national providers of services and to those from other Member States, when they are liable to prohibit, impede or render less advantageous the activities of a service provider established in another Member State where it lawfully provides similar services. Moreover, the freedom to provide services is for the benefit of both providers and recipients of services (see Case C-42/07 Liga Portuguesa de Futebol Profissional and Bwin International [2009] ECR I‑7633, paragraph 51 and the case-law cited).

86      In the main proceedings, the national legislation prohibits foreign decoding devices – which give access to satellite broadcasting services from another Member State – from being imported into, and sold and used in, national territory.

87      Given that access to satellite transmission services such as those at issue in the main proceedings requires possession of such a device whose supply is subject to the contractual limitation that it may be used only in the Member State of broadcast, the national legislation concerned prevents those services from being received by persons resident outside the Member State of broadcast, in this instance those resident in the United Kingdom. Consequently, that legislation has the effect of preventing those persons from gaining access to those services.

88      It is true that the actual origin of the obstacle to the reception of such services is to be found in the contracts concluded between the broadcasters and their customers, which in turn reflect the territorial restriction clauses included in contracts concluded between those broadcasters and the holders of intellectual property rights. However, as the legislation confers legal protection on those restrictions and requires them to be complied with on pain of civil-law and pecuniary sanctions, it itself restricts the freedom to provide services.

89      Consequently, the legislation concerned constitutes a restriction on the freedom to provide services that is prohibited by Article 56 TFEU unless it can be objectively justified.

iii)        Justification of a restriction on the freedom to provide services by an objective of protecting intellectual property rights

–       Observations submitted to the Court

90      FAPL and others, MPS and the United Kingdom, French and Italian Governments submit that the restriction underlying the legislation at issue in the main proceedings can be justified in light of the rights of holders of intellectual property rights, because it is necessary in order to ensure that those holders remain appropriately remunerated; this requires that they be entitled to demand appropriate remuneration for the use of their works or other subject-matter in each Member State and to grant territorial exclusivity in respect of their use.

91      Those parties contend in particular in this regard that, if there were no protection of that territorial exclusivity, the holder of intellectual property rights would no longer be able to obtain appropriate licence fees from the broadcasters given that the live broadcast of sporting events would have lost part of its value. Broadcasters are not interested in acquiring licences outside the territory of the Member State of broadcast. Acquiring licences for all the national territories where potential customers reside is not financially attractive, because of the extremely high cost of such licences. Thus, broadcasters acquire licences to transmit the works concerned in the territory of a single Member State. They are prepared to pay a substantial premium provided that they are guaranteed territorial exclusivity, because that exclusivity enables them to stand out from their competitors and thereby to attract additional customers.

92      QC Leisure and others, Ms Murphy, the Commission and the EFTA Surveillance Authority contend that such a restriction on the freedom to provide broadcasting services cannot be justified, because it results in a partitioning of the internal market.

–       The Court’s response

93      When examining the justification for a restriction, such as that at issue in the main proceedings, it is to be recalled that a restriction on fundamental freedoms guaranteed by the Treaty cannot be justified unless it serves overriding reasons in the public interest, is suitable for securing the attainment of the public interest objective which it pursues and does not go beyond what is necessary in order to attain it (see, to this effect, Case C-222/07 UTECA [2009] ECR I‑1407, paragraph 25 and the case-law cited).

94      As regards the justifications which are capable of being accepted, it is apparent from settled case-law that such a restriction may be justified, in particular, by overriding reasons in the public interest which consist in the protection of intellectual property rights (see, to this effect, Case 62/79 Coditel and Others (‘Coditel I’) [1980] ECR 881, paragraphs 15 and 16, and Joined Cases 55/80 and 57/80 Musik-Vertrieb membran and K-tel International [1981] ECR 147, paragraphs 9 and 12).

95      It should thus be determined at the outset whether FAPL can invoke such rights capable of justifying the fact that the national legislation at issue in the main proceedings establishes in its favour protection which constitutes a restriction on the freedom to provide services.

96      FAPL cannot claim copyright in the Premier League matches themselves, as they cannot be classified as works.

97      To be so classified, the subject-matter concerned would have to be original in the sense that it is its author’s own intellectual creation (see, to this effect, Case C‑5/08 Infopaq International [2009] ECR I‑6569, paragraph 37).

98      However, sporting events cannot be regarded as intellectual creations classifiable as works within the meaning of the Copyright Directive. That applies in particular to football matches, which are subject to rules of the game, leaving no room for creative freedom for the purposes of copyright.

99      Accordingly, those events cannot be protected under copyright. It is, moreover, undisputed that European Union law does not protect them on any other basis in the field of intellectual property.

100    None the less, sporting events, as such, have a unique and, to that extent, original character which can transform them into subject-matter that is worthy of protection comparable to the protection of works, and that protection can be granted, where appropriate, by the various domestic legal orders.

101    In this regard, it is to be noted that, under the second subparagraph of Article 165(1) TFEU, the European Union is to contribute to the promotion of European sporting issues, while taking account of the specific nature of sport, its structures based on voluntary activity and its social and educational function.

102    Accordingly, it is permissible for a Member State to protect sporting events, where appropriate by virtue of protection of intellectual property, by putting in place specific national legislation, or by recognising, in compliance with European Union law, protection conferred upon those events by agreements concluded between the persons having the right to make the audiovisual content of the events available to the public and the persons who wish to broadcast that content to the public of their choice.

103    It should be added that the European Union legislature has envisaged exercise of that power by a Member State inasmuch as it refers, in recital 21 in the preamble to Directive 97/36, to events organised by an organiser who is legally entitled to sell the rights pertaining to that event.

104    Therefore, if the national legislation concerned is designed to confer protection on sporting events – a matter which it is for the referring court to establish – European Union law does not preclude, in principle, that protection and such legislation is thus capable of justifying a restriction on the free movement of services such as that at issue in the main proceedings.

105    However, it is also necessary that such a restriction does not go beyond what is necessary in order to attain the objective of protecting the intellectual property at issue (see, to this effect, UTECA, paragraphs 31 and 36).

106    In this regard, it should be pointed out that derogations from the principle of free movement can be allowed only to the extent to which they are justified for the purpose of safeguarding the rights which constitute the specific subject-matter of the intellectual property concerned (see, to this effect, Case C‑115/02 Rioglass and Transremar [2003] ECR I‑12705, paragraph 23 and the case-law cited).

107    It is clear from settled case-law that the specific subject-matter of the intellectual property is intended in particular to ensure for the right holders concerned protection of the right to exploit commercially the marketing or the making available of the protected subject-matter, by the grant of licences in return for payment of remuneration (see, to this effect, Musik-Vertrieb membran and K-tel International, paragraph 12, and Joined Cases C‑92/92 and C‑326/92 Phil Collins and Others [1993] ECR I‑5145, paragraph 20).

108    However, the specific subject-matter of the intellectual property does not guarantee the right holders concerned the opportunity to demand the highest possible remuneration. Consistently with its specific subject-matter, they are ensured – as recital 10 in the preamble to the Copyright Directive and recital 5 in the preamble to the Related Rights Directive envisage – only appropriate remuneration for each use of the protected subject-matter.

109    In order to be appropriate, such remuneration must be reasonable in relation to the economic value of the service provided. In particular, it must be reasonable in relation to the actual or potential number of persons who enjoy or wish to enjoy the service (see, by analogy, Case C-61/97 FDV [1998] ECR I-5171, paragraph 15, and Case C-52/07 Kanal 5 and TV 4 [2008] ECR I-9275, paragraphs 36 to 38).

110    Thus, with regard to television broadcasting, such remuneration must in particular – as recital 17 in the preamble to the Satellite Broadcasting Directive confirms – be reasonable in relation to parameters of the broadcasts concerned, such as their actual audience, their potential audience and the language version (see, to this effect, Case C-192/04 Lagardère Active Broadcast [2005] ECR I‑7199, paragraph 51).

111    In this context, it is to be noted, first of all, that the right holders at issue in the main proceedings are remunerated for the broadcasting of the protected subject-matter from the Member State of broadcast in which the act of broadcasting is deemed to take place, in accordance with Article 1(2)(b) of the Satellite Broadcasting Directive, and in which the appropriate remuneration is therefore payable.

112    Next, when such remuneration is agreed between the right holders concerned and the broadcasters in an auction, there is nothing to prevent the right holder from asking, at that time, for an amount which takes account of the actual audience and the potential audience both in the Member State of broadcast and in any other Member State in which the broadcasts including the protected subject-matter are also received.