Copyright levy applies to hotel room 'communications' but not those in private dental surgeries, ECJ rules

However, dentists that play music free of charge in their private surgeries are not obliged to do so, the European Court of Justice (ECJ) has ruled.

Whilst the hotel operators are deemed to be communicating copyrighted works to the public under the terms of EU copyright law, the dentists are not.

Under EU copyright laws whether copyrighted works are 'communicated to the public' is critical in determining whether compensation needs to be paid to rights holders.

Under the EU's Directive on copyright relating to rental rights and lending rights (Lending Directive) performers generally have the exclusive right to authorise or prohibit others "broadcasting by wireless means and the communication to the public" their performances. Those performers are entitled to a "single equitable remuneration" when their commercial 'phonogram' works are broadcast or communicated by other 'users'.

The Information Society (Copyright) Directive also provides rights holders with the exclusive right to determine whether others can communicate their works to the public "including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them".

In the hotel operator case the ECJ was ruling on whether Irish law could legitimately exempt those operators from having to pay that "equitable remuneration" to performers under a 'private use' exception. The ECJ said it could not.

In the second case an Italian Court of Appeal had referred questions to the ECJ relating to whether a dentist in the country had to pay a producers' collecting society a licence in order to play background music at his surgery. The ECJ said such a levy did not have to be paid.

Whether the 'user' of the works has to pay "equitable remuneration" depends on how certain criteria established by previous case law apply to individual cases, the ECJ said.

This involves assessing whether users are making "an act of communication" in the first place and whether that communication is made to a 'public'. Whether the communication of the works is profit-making in nature is relevant in assessing whether users are required to compensate performers.

In order to be said to be making an act of communication, a user must have intervened to give customers access to copyright protected works "in full knowledge of the consequences of its action".

Communications are said to have been made to a 'public' where an "indeterminate number of potential listeners and a fairly large number of people" are exposed to the works.

The profit-making criterion is assessed on the basis that the public subjected to the communicated work is "targeted" and "receptive" to that work and "not merely 'caught' by chance".

The ECJ said that both hotel operators and private dentists deliberately intervene in the act of communication. It said hotel customers only get to listen to sound recordings in their rooms because of the operators' actions.

However, whilst it said that that the 'communication' is made to a 'public' in the case of the hotel customers, it ruled that patients in private dental surgeries did not constitute a 'public' under the terms of the Lending Directive.

The hotel customers "constitute an indeterminate number of potential listeners" because they have chosen to access the hotel's services and are limited in that choice "only by the capacity of the establishment". Hotel customers also constitute a "fairly large number of persons," the ECJ said.

In contrast, it said that dentist patients were a "determinate circle" that generally appeared in "insignificant" number to a practice at the same time and could not therefore be considered as a 'public'.

The ECJ said that hotel guests are specifically "targeted" and "receptive" to the communication of works and that this impacts on the profits hotels make, the ECJ said.

"The action of the hotel by which it gives access to the broadcast work to its customers constitutes an additional service which has an influence on the hotel’s standing and, therefore, on the price of rooms. Moreover, it is likely to attract additional guests who are interested in that additional service. It follows that, in the present case, the broadcasting of phonograms by a hotel operator is of a profit-making nature," the court ruled.

However, the ECJ determined that the broadcasting of music was not "liable" to impact on a dentist's income because those dentists "cannot reasonably either expect a rise in the number of patients because of that broadcast alone or increase the price of the treatment he provides".

"The patients of a dentist visit a dental practice with the sole objective of receiving treatment, as the broadcasting of phonograms is in no way a part of dental treatment. They have access to certain phonograms by chance and without any active choice on their part, according to the time of their arrival at the practice and the length of time they wait and the nature of the treatment they undergo.

Accordingly, it cannot be presumed that the usual customers of a dentist are receptive as regards the broadcast in question. Consequently such a broadcast is not of a profit-making nature," the ECJ said.

Because of this, private dentists who play background music free of charge in their surgeries, like the Italian in this case, do not have to pay "equitable remuneration" in order to do so, the ECJ said.

The ECJ ruled that the hotel operators do have to pay "equitable remuneration" to rights holders, even if broadcasters have already compensated them for the communication to the public of their works. This is because the communication reaches a "new public" that rights holders had not authorised when they originally licensed the broadcasters to communicate their works to the public.

"When a hotel operator communicates a broadcast phonogram in its guest bedrooms, it is using that phonogram in an autonomous way and transmitting it to a public which is distinct from and additional to the one targeted by the original act of communication," the ECJ ruling said.

"Moreover ... the hotel operator derives economic benefits from that transmission which are independent of those obtained by the broadcaster or the producer of the phonograms," it said.

The ECJ said the ruling also affected hotel operators that use other equipment aside from TVs and radios to communicate works to the public.

Ireland argued that provisions in the Lending Directive allowed the country to exempt hotel operators from paying the compensation for private usage of the works. However, the ECJ said that such usage referred to the hotel operator's own private use rights and did not cover those of customers.