ECJ to decide on Irish hotel room royalties case

In general, if you want to show someone else’s media in public, you need a licence to do so. That licence can come from the copyright owner or, where the copyright owner has joined a copyright licensing body, that body has the power to grant collective licenses.

This collective licensing system enables shops, hotels, pubs and offices to use copyrighted materials on their premises without obtaining a licence from every songwriter, publisher or company to do so. These commercial venues must pay annual fees to the main Irish copyright licensing bodies (IMRO/MCPSI and PPI) in return for a licence which allows them to play music or use televisions on their premises.

A licence is required if the shop or pub merely tunes into the local radio station or cable news channel and does not create its own playlist. To take an extreme example: if a musician has joined IMRO and also happens to own a pub, that pub requires a licence even if it only plays looped recordings of the owner’s compositions, recorded exclusively in his or her home studio.

The extensive powers of copyright licensing bodies to extract royalties did not arise without controversy and IMRO appears to have found it necessary, in their FAQs, to offer an answer to the question: “Who says such a system is fair?”

If a commercial premises shows cable television, such as from BSkyB, it requires an additional licence in the form of a commercial subscription agreement, denoted by the presence of a pint-glass “bug” on-screen.

Hotel bars, nightclubs and common areas playing media require IMRO and/or PPI licences, but a licence is not required in respect of hotel rooms. This is provided for in section 97 of the Copyright and Related Rights Act 2000 which says that it is not copyright infringement to show media in sleeping accommodation or as part of the amenities provided exclusively or mainly for residents. The exemption does not apply where a specific charge arises for admission into that part of the premises where the broadcast is made. So, if you showed a Premiership football match in a residents’ lounge, but charged residents €1 per person to enter the lounge while the match was on, section 97 will not apply and a licence is required. (I have used the phrase “specific charge”, though section 97 refers to a “discrete charge”. This was actually the source of debate and it appears that it was intended to use the phrase “special charge”, but “discrete” survived enactment.)

Section 97 was included in response to lobbying by the Irish Hotel Federation. The reasoning behind the exemption is that royalties should arise where there is a public performance of a copyrighted work, but a guest in a hotel room is in a similar position to an individual in their private living room and therefore no public performance takes place. However, the European Court of Justice has previously decided that public performance of a recording can take place in a hotel room.

In a recent case involving a hotel in Kerry, section 97 was unsuccessfully pleaded in defending an action taken against a hotel which had shown Premiership football matches in the residents’ lounge without having the appropriate licence from BSkyB. Details of the arguments advanced are not available but it is possible that section 97 was found not to apply because the bar was not provided only for the use of residents (ie. non-residents could enter the bar and watch the matches).

PPI, the copyright licensing body responsible for collecting royalties in respect of copyright in recordings, wants the section 97 exemption to be abolished and taken legal action against the State to that end. Ms. Justice Finlay-Geoghan has referred a number of questions arising from the proceedings to the ECJ. According to the Irish Times:

Among the issues the ECJ will have to decide is whether a hotel operator, as a result of providing TVs and radios in guestrooms, is a “user” of copyrighted music that can be played in a broadcast for the purposes of EU directive 2006/115/EC. If the operator is such a user, the ECJ will then have to decide whether the same directive require the operator to pay a charge additional to royalties already being paid by TV and radio station operators. The ECJ also has to decide whether hotel operators are exempt from such payments on grounds the playing of such music is for “private use” as provided for under the same directive. A further issue is whether the directive permits the exemption of hotel operators from paying if the music is played by means other than TV or radio.

The IHF devoted a section of its 2009 annual report to copyright issues, stating:

The battle to protect our members against attacks by copyright and neighbouring rights holders continues … It is our advice that the state has a good case to defend. But the process may not end there as there is a view that this is an attempt by the major international record companies to have the case referred to The European Court of Justice with the hope of getting a favourable decision which would have Europewide effect … Should [PPI] be successful in their pursuit it would result in an annual cost to hoteliers and guesthouse owners of over €3m per year. The Council of the Federation recognises the risks in this case and have obtained legal advice on how to deal with this matter as it progresses.

Update (19 April 2010)

The questions addressed by Ms. Justice Finlay Geoghegan to the ECJ are as follows:

(i) Is a hotel operator which provides in guest bedrooms televisions and/or radios to which it distributes a broadcast signal a “user” making a “communication to the public” of a phonogram which may be played in a broadcast for the purposes of Article 8(2) of Codified Directive 2006/115/EC of the European Parliament and the Council of 12th December, 2006?

(ii) If the answer to paragraph (i) is in the affirmative, does Article 8(2) of Directive 2006/115/EC oblige Member States to provide a right to payment of equitable remuneration from the hotel operator in addition to equitable remuneration from the broadcaster for the playing of the phonogram?

(iii) If the answer to paragraph (i) is in the affirmative, does Article 10 of Directive 2006/115/EC permit Member States to exempt hotel operators from the obligation to pay “a single equitable remuneration” on the grounds of “private use” within the meaning of Article 10(1)(a)?

(iv) Is a hotel operator which provides in a guest bedroom apparatus (other than a television or radio) and phonograms in physical or digital form which may be played on or heard from such apparatus a “user” making a “communication to the public” of the phonograms within the meaning of Article 8(2) of Directive 2006/115/EC?

(v) If the answer to paragraph (iv) is in the affirmative, does Article 10 of Directive 2006/115/EC permit Member States to exempt hotel operators from the obligation to pay “a single equitable remuneration” on the grounds of “private use” within the meaning of Article 10(1)(a) of Directive 2006/115/EC?

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