Commentary on AKM/Zürs.net

Marijn Kingma wrote a commentary on the AKM/Zürs.net judgment of the European Court of Justice (26 March 2017, C‑138/16) for the IER (intellectual property and advertising law) law journal. Below you will find an English translation of the commentary. If you have any questions or comments, please contact Marijn Kingma.

Commentary on AKM/Zürs.net

By passing this judgement, the Court of Justice again added a new element to its (unpredictable) structure of legal precedents regarding the concept ‘communication to the public’.

In this case, it concerns the operator of a (small) cable network in Austria; operating under the name Zürs.net. The cable operator transmits radio and television signals to approximately 130 subscribers. The Austrian Copyright Act stipulates that the simultaneous, complete and unaltered transmission of broadcasts from the national broadcasting corporation ORF using cables sited on national territory should be deemed an integral part of the original broadcasts (as a result of which no separate copyright permission needs to be applied for). In addition, the Austrian Copyright Act stipulates that the transmission of broadcasts in general (therefore, also those from foreign broadcasting stations) via a communal antenna installation to which fewer than 500 subscribers are connected cannot be classified as a new broadcast.

AKM, a collective management organisation, claimed copyright fees in respect of Zürs.net’s transmission and contended that the Austrian provision was in conflict with EU law. The Handelsgericht Wien (the commercial court in Vienna) submitted this to the Court of Justice.

The Court first considered whether the Austrian rule that the simultaneous, complete and unaltered cable transmission of broadcasts from ORF should be seen as part of the original broadcast is in conflict with European Union Law. To this end, the Court assessed whether the transmission by the cable operator could be viewed as a communication to the public. The Court found that this was not the case, and reached this conclusion in two – what can only be described as remarkable – steps.

Other technical means

In paragraph 26 of the ruling, the Court established that the transmission is made by “technical means different from that used for the initial broadcast transmission”. On the grounds of its own case-law, the Court was, therefore, no longer required to examine the question as to whether there was a “new public”. The “new public” criterion – which was introduced by the Court in the ruling SGAE/Rafael Hoteles[1], and appeared to be based on an incorrect reading of the Berne Convention[2] – is not applicable if a transmission takes place via another technical means. In the ruling ITV/TVCatchup[3], which involved a catch-up broadcast service on internet, the Court ruled:

“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” (paragraph 39).

Despite the fact that in AKM/Zürs.net the transmission is made by different technical means, the Court apparently deems the question as to whether there is a new public relevant (paragraph 27). In doing so, the Court is either confused and has forgotten its earlier judgement in ITV/Catchup – and had no Advocate-General to remind it of this – or is reversing its earlier decision in this judgment (but not doing so explicitly).

The operative part of the ruling would point to the first scenario. In this operative part, the Court suddenly refers to transmission which “form a purely technical means of communication”. Does the Court mean that transmissions by Zürs.net should only be viewed as the “mere provision of physical facilities for enabling or improving the initial broadcast in the reception area”, as referred to in recital 27 of the Copyright Directive? However, in that case, there would be no question of communication to the public at all, so it would make no difference whether or not there was a new public. Or is the Court confusing recital 27 with the “other technical means” criterion? What it was the Court exactly wanted to say is a puzzle, but it would appear an error has been made.

It is, in any case, unlikely that the Court meant to retract ITV/Catchup. In the judgments in the cases Filmspeler[4] and The Pirate Bay[5], both of which were issued after AKM, the criterion from ITV/Catchup was expressly cited.

In any event, the Court made an incorrect decision in the AKM case in my opinion by deeming the new public criterion applicable. There was no scope to apply this criterion as there is a new transmission by “un autre organisme que celui d’origine” in the sense of article 11bis (1)(ii) of the Berne Convention. In addition, the Court ignored – where it did take account of it in ITV/Catchup – the fact that the Satellite and Cable Directive[6] implies that new permission is required for a simultaneous, unaltered and unabridged retransmission, by satellite or cable, of an initial broadcast of radio or television programmes which contain protected works. Although this directive is not taken account of in this ruling, it does show that the Union legislator does not consider the question whether or not there is a new public relevant to the transmission of television programmes by satellite or cable.

No new public

Nevertheless, in AKM, the Court made no comment about its earlier decision in ITV/Catchup and announced – without any further substantiation – that consideration should be given to whether there is a new public. Equally remarkable is the finding the Court subsequently reached: because, when granting consent to the broadcasting station, the rights’ holders are aware that the broadcasts can be received by anyone residing within the national territory, there is no question of a new public. The rights’ holders could – so reasoned the Court – already have taken account of this transmission when they gave their consent (paragraph 29).

Just as in Svensson[7] (also decided without an opinion from the Advocate-General), the Court makes the question of whether there is a communication to the public dependent on the intention of the rights’ holders at the time they gave their consent. This appears to me as the world upside down. Usually, it is first established whether there is any question of a relevant copyright-related action, such as a communication to the public, and subsequently consideration is given to whether this action infringes any copyrights. If (implicit) consent is given in respect of the communication to the public – in this case: if AKM had also given permission for retransmission by Zürs.net – there would be no infringement. However, in the methodology the Court applied, the question of whether there is any infringement is never even raised. The Court deals with this question by already discussing the consent which forms the basis of the initial communication in the context of the question of whether there is a communication to the public.

Scope

The exact scope of this ruling is questionable. Does this now mean that cable transmissions in the reception area are free from copyrights?[8] Surely that cannot be the intention? Previously the Court ruled in respect of (for example) cable transmissions to rooms in hotels[9] and rehabilitation centres,[10] that there is a new public, despite the hotel guests finding themselves in the reception area of the initial broadcast. In those cases, the Court established that without the intervention of the hotelier or the rehabilitation centre, the guests would not have been able to enjoy the broadcast works. The grounds of the AKM ruling fail to make clear why this reasoning would not apply to the subscribers of a cable network, who without a subscription would have no access to the works.

It could be that the Court has taken account of the fact that under Austrian law retransmission is deemed to be part of the initial broadcast. In that case, this retransmission would be included in the consent already given to the ORF and in the fee requested by AKM. If this is indeed the background to the decision, it creates a vicious circle: because under Austrian law the fiction exists that cable retransmission is not a separate communication to the public, AKM is deemed to have taken account of that when it gave its original consent, and because AKM has, therefore, taken account of this, there is, according to the Court, no question of a separate communication to the public.[11]

The Court also commented that it was clear from the assertions put forward by Zürs.net, which were not contested by AKM, that when a broadcasting authorisation is given to ORF, the rights’ holders concerned are aware that the broadcasts may be received by all persons within the national territory (paragraph 28). From this, it could be deduced that the Court’s decisions would have been different if AKM had contested this assertion, and, for example, shown that nothing had been paid for the cable retransmission of the broadcast. According to the order for reference, AKM did argue that the Austrian rule resulted in the need for ORF to acquire rights or pay a fee when it has no interest itself (this probably means: that ORF must pay for the subscriptions of third parties).[12] According to AKM, the rights’ holders do not, in practice, receive an appropriate extra fee (as I understand it: from ORF) for the cable retransmission by third parties.[13] However, the Court does not appear to have considered this assertion.

Szpunar explains

In his findings on the case VCAST/R.T.I., Advocate-General Szpunar did not assume[14] that the AKM/Zürs.net ruling would have many consequences. In this case – which, in brief, concerned making a (home) copy of television broadcasts in the cloud – the question arose as to whether it involved a copy from a legal source. In this context, one of the significant questions was whether the making available of the (source of the) reproduction could be viewed as a (separate) communication to the public of the relevant television broadcast. Szpunar concluded that was the case and that the judgement of the Court in AKM does not alter that fact. He did accept that the standpoint of the Court in ITV/Catchup appeared to have been “weakened” by AKM, but that could have been because the rights’ holders had, in that case, actually taken account of the retransmission by Zürs.net when they gave their consent.[15] Szpunar also deemed the ruling lacked clarity, but concluded that any other explanation than that this ruling was motivated by specific circumstances would imply a reversal in respect of ITV/Catchup, and he believed there was nothing to show that this was what the Court wanted.[16] More importantly, he concluded that a general rule stipulating that the transmission of an already broadcast work by another organisation is not a communication to the public, would appear to be contrary to Article 11bis (1) (ii) of the Berne Convention.[17]

It is to be hoped that the Court (explicitly) includes these grounds in its judgment so that an end can come to the lack of clarity created in the AKM case. As long as the Court fails to do so, AKM and Svensson would appear to suggest that the question of whether there is a new communication to the public depends on the intention and knowledge of the rights’ holders at the time they made agreements with the party making the initial broadcast. Consequently, whether or not there is a question of a communication to the public would seem to depend on the circumstances of the case. And this gives rise to legal uncertainty.

Until there is more clarity in this respect, it would be advisable – for safety’s sake – for any (representatives of) rights’ holders who are concluding contracts to take account of the fact that the Court deems their intentions and knowledge at the time they gave their consent important. One option would be to explicitly include which situations the consent has not taken account of; consequently, if these situations should arise they would, as it were, be deemed a new communication to the public.

Transmission to fewer than 500 subscribers

Subsequently, the Court answers the question as to whether the regulation which stipulates that the transmission of broadcasts via a communal antenna installation to which fewer than 500 subscribers are connected cannot be classified as a new broadcast, is in conflict with EU law. The Court ruled that such a regulation is not permissible.

In its judgement, the Court concluded that such a regulation could result in there being several network installations with fewer than 500 subscribers, as a result of which, cumulatively, a large number of subscribers could simultaneously have access to the broadcasts retransmitted in this way. Even without this situation arising, it would seem correct to me that a group of residents of and visitors to 500 households is a public. Any other judgement would indicate a de minimis exception in the copyright, whereby no consent would need to be asked for a communication to (in any case) [18] fewer than 500 people.[19] In my opinion this would be contrary to the high level of protection that the Copyright Directive intends to offer and would have significant consequences for the earnings model of the rights’ holders.

M.E. Kingma
[1] Court of Justice EU 7 December 2006, C-306/05, AMI 2007/2, p. 45-40, with notes from Koelman (SGAE/Rafael Hoteles).[2] For a more extensive analysis, please refer to ALAI, opinion on the criterion “New Public”, developed by the Court of Justice of the European Union (CJEU), put in the context of making available andcommunication to the public, 17 September 2014 (to be found at: www.alai.org/en/assets/files/resolutions/2014-opinion-new-public.pdf, referred to on 10 September 2017).[3] EU Court of Justice 7 March 2013, C-607/11[4] EU Court of Justice 26 April 2017, C‑527/15 (Brein/Filmspeler), par. 33.[5] EU Court of Justice 14 June 2017, C-610/15 (Brein/Ziggo & XS4ALL), par. 28.[6] Articles 2 and 8 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 transmission.[7] EU Court of Justice 13 February 2014, C-466/12 (Svensson/Retriever).[8] As was suggested in D.J.G. Visser, ‘Kabeldoorgifte in ontvangstgebied vrij van auteursrecht!?’ (Cable transmission free from copyright in reception area) in Mr. 20 March 2017.[9] Court of Justice EU 7 December 2006, C-306/05 (SGAE/Rafael Hoteles), EU Court of Justice 18 March 2010, C-136/09 (Divani), EU Court of Justice 15 March 2012, C-162/10 (PPL Ireland).[10] EU Court of Justice 31 May 2016, C-117/15 (Reha Training)[11] Dirk Visser also drew attention to the fact that there was the threat of a vicious circle: see his annotation to AKM/Zürs.net, AMI 2017/2, p. 94-101.[12] Order for reference from the Handelsgericht Wien 16 February 2016, can be found at: www.minbuza.nl/binaries/content/assets/ecer/ecer/import/hof_van_justitie/nieuwe_hofzaken_inclusief_verwijzingsuitspraak/2016/c-zakennummers/c-138-16-verwijzingsbeschikking.pdf (referred to on 10 September 2017), under II.1 (p. 8).[13] Order for reference under II.1 (p. 8).[14] Findings of Advocate-General M. Szpunar 7 September 2017, C-265/16 (VCAST/R.T.I.).[15] Findings A-G, paragraph 52.[16] Findings A-G, paragraph 53.[17] Findings A-G, paragraph 54.[18] Naturally, there will usually be more people present in a household than those who have taken out a subscription.[19] The 2015 judgement of the German Bundesgerichtshof (Germany’s Federal Supreme Court) that transmitting to 343 households was not a communication to the public as there was no question of an indeterminate number of potential recipients would also appear to be at odds with European law.