The Court also ruled that a Czech law that exempted health establishments from paying royalties for music played to their guests was incompatible with the EU Copyright Directive.
The Court’s ruling, handed down today, relates to a row between Czech collecting society OSA and a thermal spa called Mariánské Lázně.
The dispute began when OSA tried to force the spa to pay royalties to it for providing guests with facilities to watch TV and listen to music in its rooms. Mariánské Lázně refused on the basis that Czech law allows medical establishments to make such broadcasts without paying royalties.
A court in Pilsen, the Krajský soud v Plzni, asked Europe’s top court whether the exemption granted to medical establishments by Czech law is compatible with EU law and whether the monopoly that OSA has within the Czech Republic for collecting royalties is compatible with the freedom to provide services and EU competition law.
It also asked the Court to consider a fundamental question about the way collecting societies operate across Europe: whether the monopoly that OSA has within the Czech Republic for collecting royalties is compatible with the freedom to provide services and EU competition law.
Today the Court decided that the monopoly that OSA has to collect royalties in the Czech Republic does amount to restriction on the freedom to provides services, since the spa was unable to choose to pay copyright fees to another collecting society. However, it said that the restriction is justified because there is no better way, at the moment, of protecting copyright in the EU.
Although the Court said that the monopoly granted by the Czech legislation to OSA is compatible with the freedom to provide services, the ruling may not be all good news for OSA. The Court said that if a collecting society charges fees that are appreciably higher than those levied in other member states, it could indicate that the collecting society is abusing its dominant position. Whether there is such abuse in this case will be for the referring Czech court to decide.
The ruling comes in the same month that EU member states adopted a directive on the way that collecting societies work. The directive on collective management of copyright and multiterritorial licensing of online music was adopted by the European Council unanimously last week (although some member states made statements about how they interpreted the new rules).
The directive will allow multi-territorial licensing of online music services and should increase the transparency of collecting societies by setting out minimum standards for the way they are governed and the timeliness with which they pay royalties to rights holders.
