A new judgement issued by the Court of Justice of the European Union (CJEU)[1] requires a business offering television or radio programs in its facilities to pay license fees to national collecting societies if the programming provides a competitive advantage to the business.

On May 31, 2016, the CJEU issued its judgement in the case C-117/15 between Reha Training Gesellschaft für Sport- und Unfallrehabilitation mbH (Reha Training) and the German collecting society GEMA. In the judgement, the CJEU clarified what constitutes a "communication to the public" within the meaning of the so-called Copyright Directive[2] and the so-called Rental Directive,[3] respectively. Although it found that a profit-making nature does not conclusively determine the classification of a broadcast as "communication to the public," an increase in the attractiveness of the organization through the offering of, for example, television programs in the facilities, might also increase the number of customers and therefore serve as a competitive advantage of the organization. This competitive advantage can trigger the right of artists to receive remuneration for the communication of their works.

The factual background

Reha Training operates a rehabilitation center for post-operative treatments. It has installed several TV sets in its training room and its two waiting rooms in order to entertain its patients with TV shows.

The legal background

When GEMA sued Reha Training for payment of its regular license fees, the German Regional Court, within whose jurisdiction the case fell, found itself unable to render a decision.[4] It referred back to a similar case in which the CJEU found that playing music in a dental practice did not constitute a "communication to the public" and, consequently, that the dentist was not required to pay license fees.[5] In this judgment, the CJEU argued that the patients constituted a small and private group not willingly listening to the music. The broadcasting of radio programs to them did not constitute a "communication to the public" as patients of a dentist generally do not give any importance to such a broadcast, and therefore the broadcast does not have any impact on the attractiveness of the dental practice. The German Regional Court saw similarities to the present case and, hence, referred it to the CJEU.

The key points of the CJEU's decision

The CJEU decided that the use of TV sets in the rehabilitation center constitutes a "communication to the public". As a consequence, Reha Training is basically obligated to pay the collecting society's license fees or discontinue its TV entertainment for the patients. The CJEU found that the broadcasting of television programs on television sets was intended to create a diversion for the patients and therefore constitutes the supply of additional services having an impact on the organization's standing and attractiveness, thereby giving it a competitive advantage.

At the outset of its judgment, the CJEU stated that the term "communication to the public" must be interpreted identically when referring to the works of authors, performers and phonogram producers. As their rights are codified in two different Directives, the Copyright Directive and the Rental Directive,[6] this had previously not been clear.

The CJEU then enumerated the requirements for a "communication to the public" to occur, indicating that the term must be interpreted broadly:

  • There must be an act of communication, meaning a transmission of the protected works.[7]
  • The communication must be public in that it must be made to an indeterminate and fairly large number of potential recipients. The CJEU stated that the first is the case where the group is not constituted of specific individuals belonging to a private set of people. In order to determine whether there are a fairly large number of recipients, both persons who have access to the work at the same time and those who have access in succession must be taken into account. Their number must exceed a "de minimis threshold".[8]
  • The communication must be made to a new public, meaning to people who were not taken into account by the rights holders when authorizing the communication of their work to the original public. For this to be the case, the user must target these new recipients with the works.[9]
  • Lastly, the profit-making nature of the communication must be considered, although it is not decisive. If the organization becomes more attractive due to the offering of broadcasts, this must also be taken into account. Depending on the receptivity of the customers, the accompanying increase in the attractiveness of the organization may lead to a growth in the number of customers which would strengthen the artists' rights to receive remuneration for such a communication.[10]

Consequences of the decision

The CJEU equated the rehabilitation center to a café-restaurant, a hotel or a spa establishment. In making this connection, it emphasized that the obligation to pay license fees particularly depends on the customers' understanding of the broadcasting as an additional service. However, the CJEU has refrained from giving clear guidelines on when the broadcast constitutes such an additional service. Media offerings like the one by Reha Training to its patients become more and more usual and customers seem to increasingly take them for granted instead of considering them as additional service with positive effects on the relevant business' attractiveness. Although, the CJEU clarified the requirements for a "communication to the public", it remains unclear in which cases additional entertainment in the form of TV sets increases the attractiveness of the business and constitutes an additional service. The use of entertainment and the receptivity of the customers may vary considerably depending on the individual business and circumstances. Additionally, may it also be of relevance that certain customers of the same business may consider the broadcast as entertainment and other as simple distractions in the background? This emphasizes the importance of the factual circumstances of each individual case and their (potential) development over time. It will be up to the national courts to apply the criteria of the CJEU in each dispute individually and on the basis of the obvious – or in most cases probably not so obvious – specific characteristics of each business, broadcast and customer group.