Can a company be sued for copyright infringement committed by its employee, a member or an agent if the offender committed the infringement while acting within the scope of the company's activities? Does the well-settled domestic case law on infringement of personality rights allow proceedings to be brought against both the legal person and the offender applicable? This article analyses a recent decision of the Hungarian Supreme Court(1) that provides answers to these questions.
The plaintiff of the litigation was an instructor of a training course for public procurement officers and the sole author of a lecture material on public procurement. The lecture material is a PowerPoint file consisting of hundreds of slides with text, tables and figures. The plaintiff permitted exclusive use of the lecture material by its own company.
The defendant is an educational institution that has been organising training courses for public procurement officers for several years with the assistance of its proxy instructor. The defendant authorised the instructor to provide lectures, exercises and examinations for public procurement officer training courses.
In early 2016, the instructor obtained the plaintiff's lecture material, copied it to his own computer and partially modified it. He deleted the plaintiff's name and added a section of 24 slides. The instructor used this modified lecture material in the defendant's public procurement officer training courses from February 2016.
Claim and defendant's defence
In his claim, the plaintiff requested the court to declare that the defendant had infringed his copyright by reproducing the plaintiff's lecture material without his permission, publicly performing it in the classroom and communicating it to the students during the training courses the defendant had provided from February 2016 to the end of December 2017.
Among other things, the plaintiff requested that defendant be restrained from further infringement and be ordered to pay restitution for the enrichment achieved by the infringement.
The defendant's principal defence was that the acts of use alleged by plaintiff had not been committed by the defendant, but by the instructor. In this regard, the defendant emphasised that its internal correspondence system did not contain either the plaintiff's lecture material or any modified version thereof, and that the defendant had a separate textbook for exam preparation.
In its judgment, the first-instance court found that the defendant had infringed upon the plaintiff's copyright by the defendant instructor's reproduction, public performance in class and public communication to students of the plaintiff's lecture material without the plaintiff's permission in February 2016. The first-instance court held that the defendant was liable under the rules of liability for vicarious agents(2) for the acts of use committed by its instructor.
The first-instance court, in addition to finding infringement, also granted the plaintiff's pecuniary claim for the restitution of enrichment. The defendant appealed against the first-instance court's judgment.
The second-instance court set aside the judgment of the first-instance court and dismissed the claim. The second-instance court emphasised that the authorship of the plaintiff in respect of the lecture material, which is a copyrighted work, was not disputed.
Considering that only the private email correspondence of the defendant's instructor contained the plaintiff's lecture material, the first-instance court correctly concluded that the acts of use alleged by the plaintiff had not been committed by the defendant, but by the instructor.
However, the second-instance court did not find the defendant to be liable for the instructor under the rules of liability for vicarious agents.
The second-instance court explained that the rights of the author shall be interpreted in the context of intellectual creations. Intellectual creations are protected by law, which everyone is obliged to respect and to refrain from infringing.
The legal protection of intellectual creations, which has an absolute structure, results in an objective legal relationship between the rights holder and the possible infringer, to which the rules of liability for vicarious agents in the Civil Code are clearly not applicable since they are designed for the relative legal relationships of the commercial trade of goods.
According to the second-instance court, the first-instance court had wrongly concluded, based on the foregoing, that the defendant, which employed the instructor under an agency contract, was liable for any infringement by the instructor. The applicant lodged an application with the Supreme Court for judicial review against the second-instance court's judgment.
Based on the request for judicial review, the Supreme Court had to determine whether the defendant, as an educational institution, could be held liable for infringement by its instructor's unlawful use of the plaintiff's copyright-protected lecture material.
According to the plaintiff, the principle used in the case of infringement of personality rights, applied by the domestic case law,(3) is also applicable to copyright infringement. The domestic case law states that if a member, employee or representative of a legal person, acting within the scope of the legal person's activities, infringes the personality rights of another person, both the natural person who has committed the infringement and the legal person are liable for the objective penalties of the infringement.
As a starting point, the Court stated that both copyright infringement under the Copyright Act(4) and infringement of personality rights under the Civil Code are based on objective liability independent of fault.
However, in the Court's view, it cannot be ignored that the Copyright Act regulates the claims that may be brought in the event of copyright infringement as a separate legal instrument from the Civil Code, with different provisions and in a different manner, which is also justified by the difference in the subject matter of the right to be protected (eg, protection of intellectual creations and protection of personality).
The amendment of the Copyright Act, following the implementation of the EU Enforcement Directive,(5) changed the scope of civil claims for copyright infringement and added the provision that the author may bring a claim "against the infringer".
According to the Court, this amendment makes it clear that a claim for copyright infringement can only be brought against the person who actually committed the infringing act, regardless of whether the infringer is a natural or legal person.
According to the Court, it was therefore necessary to examine whether the defendant itself had used the plaintiff's lecture material.
Since the case did not reveal any other data or evidence that supported any use of the copyright creation by the defendant, the Court upheld the second-instance court's judgment by rejecting the plaintiff's request for judicial review.
In the case law of the Civil Code on personality rights infringements, the person of the "infringer" has a broader definition than the actual offender.
Where the actual offender is a member, agent or employee of a legal person, and the latter acts within the scope of the legal person's activities, the injured party may sue both the offender and the legal person for the objective penalties of the infringement of personality rights, such as:
- a declaration of the infringement;
- injunction prohibiting the infringement, granting redress; and
- restitution to the original condition.(6)
As the Civil Code is the background legislation of the Copyright Act,(7) the central question of the case was whether the abovementioned judicial practice of the Civil Code, which is favourable to the injured party, can be applied to copyright infringements covered by the Copyright Act.
Since the Copyright Act does not specify the definition of a "copyright infringer", the Court had to interpret this definition in this case.
In its decision, the Court interpreted the definition of a copyright infringer narrowly, explaining that the amendment of the Copyright Act, due to the EU Enforcement Directive, clearly distinguished between the narrower circle of persons, against whom the objective penalties for copyright infringement can be claimed, and the broader circle of persons against whom the objective penalties for infringement of personality rights can be claimed under the Civil Code.
The Court supported its position with a teleological (purpose-oriented) and grammatical interpretation of the Civil Code, but its legal interpretation is disputable on several points.
On the one hand, the EU Enforcement Directive does not provide for a specific definition of "copyright infringer", so a narrow interpretation of this definition cannot be derived from the Directive.
On the other hand, in practice, in the case of copyright infringements, it is generally easier to establish in whose interest the infringement was committed, but more difficult to prove who actually committed the infringement and in what manner.
By not following the established case law in the field of personality rights infringement, which takes into account not only the actual offender of the infringement but also the person in whose interest the infringement was committed, the Court has clearly placed the difficulty of proof in this case on the victim.
The correctness of this decision is also questionable because the victim of a copyright infringement is often a natural person (eg, a composer or writer) who has more limited financial resources and means to trace and identify the actual offender of the infringement.
For further information on this topic please contact Richard Schmidt or Péter Korózs at SMARTLEGAL Schmidt & Partners by telephone (+36 1 490 09 49) or email ([email protected] or [email protected]). The SMARTLEGAL Schmidt & Partners website can be accessed at smartlegal.hu.
(1) Judicial decision No. 2022.1.15.
(2) Section 6:148(1) of the Civil Code.
(3) Judicial Decision No. EBH2010.2126.
(4) Section 94(1) of the Copyright Act.
(5) Directive 2004/48/EC of the European Parliament and of the Council.
(6) Judicial Decision No. EBH2010.2126.