Car rental is not considered a communication to the public of protected works

On April 2, 2020 the Court of Justice of the European Union (hereinafter the “Court”) issued a judgement in case C-753/18, and another judgement can be added to the series of judgements where the question of what constitutes a communication to the public of protected works has gradually been clarified. In the current ruling, the Court found that the hiring out of cars which are standard equipped with radio receivers does not constitute a communication to the public. The judgement raises interesting question of what may constitute a communication to the public and what is merely to provide the physical facilities for such a communication to the public of protected works.

The case has its background in a number of questions posed by the Swedish Supreme Court, due to two separate Swedish cases between the car rental companies Fleetmanager and Nordisk Biluthyrning respectively, on the one hand, and the collective rights management organizations STIM and SAMI, respectively on the other hand. The dispute, which began in 2015, concerns the main question whether a car rental company shall pay compensation to the collective rights management organizations for the communication of musical works to the public by providing cars which are equipped with radio receivers for short term rental to the public. The outcome of the two cases differed in the lower courts, and the cases were appealed to the Swedish Supreme Court. The Swedish Supreme Court granted a leave to appeal for the two cases and then requested a preliminary ruling from the Court regarding the question whether the hiring out of cars which are standard equipped with radio receivers constitutes a ‘communication to the public’ within the meaning of Article 3.1 of Directive 2001/29 and Article 8.2 of Directive 2006/115.

It follows from the case law of the Court that the assessment of whether it is a communication to the public is based on two cumulative criteria, namely an act of communication of protected subject matter and a public to whom that communication is addressed. Furthermore, that a communication to the public can exists in a number of situations going beyond a simple direct transmission of a work. For example, a hotel that provides its customers with access to protected subject matter by placing television sets in its rooms and by distributing via those sets the television signal received by the central antenna, has been considered to constitute a communication to the public (case C-306/05 SGAE). The same is true if the hotel provides equipment so that the guests can listen to CDs, and provides the CDs themselves (case C-162/10 Phonographic Performance). However, if only the physical facilities for a communication is provided this does not mean that this constitute a communication to the public (see recital 27 of Directive 2001/19), it requires a conscious intervention from the user to give access to a protected subject matter in order for this to be considered a communication to the public.

The question that the Court therefore came to focus on was whether the car rental companies acted intentionally with the purpose of (see paragraph 32 in case C-753/18 with reference to case C-610/15) communicating the protected subject matter to the public and thus whether the act constituted something more than providing the physical facilities for a communication. The Court found that the supply of a radio receiver forming an integral part of a hired motor vehicle, which makes it possible to receive, <em><i>without any additional intervention by the leasing company</i></em>, the terrestrial radio broadcasts available in the area in which the vehicle is located differs from acts of communication by which service providers intentionally broadcast protected works to their clientele, by distributing a signal by means of receivers that they have installed in their establishment (my italics) (see paragraph 35 in case C-753/18).

Accordingly, the question asked by the Swedish Supreme Court was answered in the negative. Article 3.1 of Directive 2001/29/EC and Article 8.2 of Directive 2006/115/EC must be interpreted as meaning that the hiring out of motor vehicles equipped with radio receivers does <u>not</u> constitute a communication to the public.

The ruling can seem strange in the light of the Court’s previous case law. To equip hotel rooms or training facilities with TVs and CD players has been considered to constitute a communication to the public, and one can ask in which way these acts differs from equipping a car with a radio receiver. The difference that can be deduced from Court's relatively short judgement is that the service providers in the previous cases, in addition to having installed the technical equipment, also enabled the public direct access to the works for example by transmitting TV broadcasts. The fact that a radio receiver generally is standard equipment in a car and, as the Court states, an "integral part" indicates that the Court already for that reason considered that an intentional action to perform a communication of a protected work did not exist. It was undisputed that the vehicle rental companies did not transmit any signals to the car.

The Court’s judgement obviously refers to a specific and limited situation and does not in itself mean that the previous case law of the Court has in any way changed. It is however conceivable that the technical development and the consumers’ demand for constant connection as well as access to copyrighted material will result in an increase of equipment that can receive content. It is not unlikely that integral screens, microphones and speakers will be found in premises (private homes, hotels, restaurants and gyms), cars, electric bicycles, trains and flights for free use. In addition, these are connected to each other and to the user. It is possible that there will be such high demand in the future that the equipment is already installed during production and that it is not possible for the service provider to remove or deactivate it. In such situation it could, in the light of the Court’s judgement, be possible that the act only constitute a provision of the physical facilities for a communication, unless the service provider take additional measures such as providing access to Wi-Fi (which in itself is an issue that has been the subject of the Court’s examination in C-484/14) or actually retransmit a TV or radio broadcast to the equipment in question. However, we are not there yet and the legal situation, in any case for car rental companies that provide integral radio receivers in their rental cars, is clear.

In accordance with case law of the Court, the expression ‘communication to the public’ as used in directive 2001/29 as well as in directive 2006/115 must be interpreted as having the same meaning.

If you have any questions regarding how you can use protected work in your business, you are welcome to contact us.