Copyright holders and their licensees will be affected by two recent rulings which have shown the pan-European nature of the law surrounding their rights and obligations.

The International Confederation of Authors and Composers Societies (CISAC) and some of its members have successfully overturned a European Commission Decision against them. Separately, the Newspaper Licensing Agency (NLA) has had a copyright claim against customers of Meltwater (a news aggregator) stayed by the UK Supreme Court, pending a reference from the Court of Justice of the European Union (CJEU).

In its ruling on the CISAC cases, the General Court of the European Union overruled the Commission’s findings that CISAC and several of its member collecting societies breached Article 101 TFEU (the prohibition on agreements which distort competition) in the way they organised music licensing in the EEA. The General Court held that the Commission had failed to prove its case. Interestingly, some collecting societies failed in their appeals or did not bring them in time and so it appears that they are technically still bound by the Commission’s original Decision.

Just over a week later, the UK Supreme Court ruled on a long-running battle between customers of a headline-scraping service and the NLA. The case concerned whether the customers of the service needed to purchase a licence to view copyright newspaper material provided by the service. The Court stayed the case, pending a reference to the CJEU.

At the hysterical end of the range of possible answers which the CJEU could give would be to suggest, in effect, that viewers of online newspapers should purchase licences. These licences would authorise them to store the copies of the copyrighted materials in the various caches, in their own computers and in their computer networks, in order to facilitate browsing. More realistically, the CJEU could make a ruling which affects the time copyrighted cached information is retained before it must be deleted automatically by a browser.

1 CISAC at the European Court: case not proven

1.1 Background

The Commission had originally decided that CISAC and its member societies had breached Article 101 of the EU Treaty (forbidding anticompetitive agreements) with respect to the Reciprocal Representation Agreements (RRAs) entered bilaterally between CISAC member societies.

The Commission's statement of objections (SO) stated the following measures in the RRAs harmed competition:-

  • Membership clauses making it difficult for authors to join a society other than their national collecting society.
  • Exclusivity clauses granting exclusive rights for the licensee to grant public performances of an author's work in a given territory. The exclusivity clause was, the Commission said, reinforced by a non-intervention clause (which did not harm competition on its own) that had the effect of foreclosing the domestic market of collecting societies.
  • Territorial limits in RRAs along national lines, with the effect that no RRA would allow a licensee to grant sub-licences in any other country but their own.

CISAC and its members had proposed commitments to the Commission under which they would no longer recommend exclusivity and membership clauses and remove them within 30 days. Additionally, licences by members for internet services and satellite/cable services would be granted on an EEA-wide basis, the latter across the territory where the satellite/cable services are provided. Internet licensing on this basis would be put into effect within six months and satellite/cable licensing would be put into effect in nine months.

The Commission consulted on these commitments, but, based on the comments it received, decided not to accept them. CISAC and 22 of its 24 member collecting societies appealed the Commission's Decision.

1.2 Appeals

Several of the national collecting societies brought their own appeals, which failed for various reasons. For example, the Swedish collecting society had unsuccessfully tried to argue that exclusive national agreements protected less mainstream cultures and allowed authors from those cultures access to foreign markets with the assurance the copyright on their works was protected. These arguments failed for several reasons, not least because the Swedish society had failed to prove that the anticompetitive measures were necessary to provide the protection that they sought

The argument which was successful was the main argument advanced by CISAC and 20 member societies, and this successful argument has resulted in the partial annulment of the Commission's Decision.

CISAC and the 20 member societies argued that the Commission had not proved the existence of a concerted practice, choosing instead to infer one on national territorial limits. The Commission had also chosen not to criticise the existence of the model RRA, the need for (lawful) cooperation between members nor even the territorial limits themselves.

The Commission had also chosen only to hold that unlawful concerted practices existed for the newer satellite, cable and internet forms of exploitation and not for more traditional forms of exploitation (for example, national radio).

The Commission had attempted to infer anticompetitive conduct. However, the Court held that this would only be enough if CISAC and the 20 members failed to show legitimate reasons for their parallel conduct that could not be put down to collusion.

The collecting societies argued that national licensing was best for ensuring that works were not used in an unauthorised fashion. The Court accepted this, as the Commission had not explained how effective monitoring and enforcement of copyright could be achieved without licensing nationally. Further, the Commission had not explained how societies with overlapping territories for licensing would be able to compete to grant licences. The Commission had also failed to provide convincing alternative technical solutions for how this monitoring and licensing would work absent national licensing.

1.3 What now?

This has been a long saga. RTL's original complaint that sparked the Commission’s investigation was made in 2000. The reality of today's market is that rights societies are much more likely to license works on an international basis than they once were. A person wishing to purchase the pan-European licence that RTL had been refused is unlikely to be turned away today.

One interesting aspect of the ruling, however, is that the Court clearly disapproved of the existence of discrimination by the rights societies against authors from another society's territory. The Court held that these clauses did have an anticompetitive effect and so there is nothing to prevent the Commission from coming to a new Decision addressing the membership clauses for each appellant.

Further, the Commission's Decision was only annulled insofar as it affects the successful appellants. This is largely a feature of the appeal by each collecting society being decided in a separate judgment. Despite its flaws, the Decision still stands for the Belgian, Dutch, Spanish and Swedish societies due to these societies' failures to mount successful appeals (or, in the case of the Belgian and Dutch societies, to mount any appeal at all).

2 The Newspaper Licensing Agency at the Supreme Court: be careful what you cache for

2.1 Background

In a separate development to the CISAC case on Wednesday 17 April, the UK Supreme Court referred a case between customers of the Meltwater Group and the NLA to the CJEU on a point of EU law.

Meltwater provides its members with software which creates daily indexes of words on newspapers' websites. Meltwater's users provide search terms which are then used to create a monitoring report for each user, based on the named search terms.

The NLA had previously objected to Meltwater's refusal to purchase a licence from it in order to use UK newspapers' content in its products. Meltwater has now accepted, however, that it is required to purchase a licence from the NLA. The parties to the Supreme Court proceedings also agreed that Meltwater's customers would need to purchase a licence from the NLA for the use of Meltwater’s service in its current form as well. This is because Meltwater's reports were currently delivered by email, meaning copyright material was downloaded permanently to customers’ systems. Meltwater's customers (represented by the Public Relations Consultants Association) do not, however, agree with the NLA that those customers of Meltwater who merely viewed their Meltwater-generated report online require a licence.

2.2 The question referred to the CJEU

Whether a licence is required for the online version of a Meltwater report turns on the interpretation of Article 5.1 of Directive 2001/29/EC (given effect in English law by the amended Copyright, Designs and Patents Act 1988). Article 5.1 qualifies the rights of copyright holders with respect to "temporary acts of reproduction" of their work which are "transient or incidental [and] an integral and essential part of a technical process whose sole purpose is to enable (a) the 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".

Given that this point raises an issue on the interpretation of an EU Directive, the Court has stayed the claim and referred the issue of interpretation to the CJEU. The question that will be asked is whether the requirements of Article 5.1 of the Directive are that acts of reproduction should be:

  1. temporary;
  2. transient or incidental; and
  3. an integral and essential part of the technological process, having regard in particular to copies of the document often remaining in a computer's cache after the browsing session that generated them has ended until overlaid by other material, and the fact that the screen copy of the document remains on screen until the browsing session terminates.

2.3 The Supreme Court’s own view

At the same time as making the reference, the Supreme Court has expressed its own (non-binding) view on the questions referred. In the Court’s opinion, users of Meltwater's services who merely view content on their screens benefit from the Article 5.1 temporary reproduction qualification to copyright. The Court suggested that it was more sensible for the person who puts copyright material on the internet to pay one large licence fee than for tiny sums to be collected from the material’s large numbers of online viewers.

It remains to be seen whether or not the CJEU will agree with the Supreme Court: a ruling is not expected for several months.