Falco Privatstiftung and Thomas Rabitsch v Gisela Weller-Lindhorst (ECJ (Fourth Chamber); C-533/07; 23.04.09)

The reference was made in proceedings between Falco Privatstiftung (“F”) a foundation established in Vienna and Mr Rabitsch (“R”) residing in Vienna and Ms Weller-Lindhorst (“ML”) domiciled in Munich. F and R were responsible for administering the copyright of the late Austrian rap star Falco. F and R brought proceedings in Austria against ML for the payment of royalties, calculated by reference to, inter alia, video recordings and audio recordings. F and R’s claim in relation to the video recordings was based on the terms of a contract. The claim in relation to the audio recordings was based on copyright infringement.

At first instance, the Handelsgericht Wien (Commercial Court, Vienna), held that it had jurisdiction to rule on both claims. Since the audio recordings were sold in Austria the Court declared itself competent to hear the copyright infringement allegation. Given the close connection between the copyright infringement action and the claim for royalties under the licence for the video recordings, the Court concluded that it also had jurisdiction to hear this part, pursuant to Article 5(3) of Regulation 44/2001. Article 5(3) provides that, in matters relating to tort, a person domiciled in one Member State may be sued in courts of another Member State if the harmful event occurred (or may occur) there. On appeal, the Oberlandesgericht Wien (Higher Regional Court, Vienna) confirmed jurisdiction of the copyright claim. However, it held that Article 5(3) was not applicable to contractual rights. The Court also held that the second indent of Article 5(1)(b) (which provides that, in contracts for the provision of services, a person domiciled in one Member State may be sued in the courts of another Member State where the services were, or should have been, provided) was not applicable, since the contract in question was not a contract for the provision of services within the meaning of that provision.

An appeal on a point of law was brought before the Oberster Gerichtshof (Supreme Court). The Court noted that the concept of ‘provision of services’ was not defined in Regulation 44/2001 and referred three questions to the ECJ. The second question fell away as a result of the answer to the first.

(1) The ECJ, agreeing with the Advocate General and the observations of the German, Italian and UK governments, held that a contract under which the owner of an intellectual property right grants the other contracting party the right to use that right (a licence agreement) is not a contract regarding ‘the provision of services’ within the meaning of Article 5(1)(b). This was because Article 5(1)(b) was a rule of special jurisdiction (as opposed the general rule of domiciled-based jurisdiction). Accordingly, as an exception to the general rule, it should not be interpreted too broadly.

The concept of ‘service’ implied, as a minimum, that the party who provided the service carried out a particular activity in return for remuneration. It could not be inferred from a contract under which the owner of an intellectual property right grants the right to use that right in return for remuneration that such an activity was involved. The only obligation which the owner of the right undertook with regard to its contractual partner was not to challenge the use of that right by the latter.

(2) In order to determine, under Article 5(1)(a), which Court has jurisdiction over an application for remuneration owed pursuant to a contract of the type described in (1) above, reference must continue to be made to the principles which result from the Court’s case law relating to Article 5(1) of the Brussels Convention.

This was because of the near-identical copy of the wording of the two pieces of legislation. Although Regulation 44/2001 was intended to update the Brussels Convention, it sought at the same time to retain its structure and basic principles and to ensure its continuity. Moreover, the continuity of interpretation was consistent with the requirements of legal certainty which dictated that the long-standing case law of the Court, which the Community legislature did not intend to alter, should not be called into question.