CJEU says that failure to pay fair compensation for private copying is a tort

Where can one (read: a collective management organisation) sue to obtain missing payments of the fair remuneration due for private copying?

This is the question that the Court of Justice of the European Union (CJEU) addressed yesterday in Austro-Mechana v Amazon, C-572/14 [thanks to EU law enthusiast and scholar Steve Peers for the heads up].

The Austrian Supreme Court had in fact asked the CJEU to say whether a claim for missed payment of ‘fair compensation’ under Article 5(2)(b) of the InfoSoc Directive can be considered akin to 'tort, delict or quasi-delict' within what is currently Article 7(2) of Brussels I Recast [formerly Article 5(3) of Brussels I] for the sake of determining the court(s) competent to hear such action. Besides the general rule (Article 4) that allows one to sue in the Member State where the defendant is domiciled/established, as a special rule Article 7(2) of Brussels I Recast also allows actions relating to tort, delict or quasi-delict, to be brought in the courts "for the place where the harmful event occurred or may occur".

Readers may remember that a few weeks ago this very blog reported [here] on the Opinion of Advocate General (AG) Henrik Saugmandsgaard Øe in this case. In his analysis the AG held the view that, for the sake of establishing jurisdiction within the Brussels I Regulation Recast, failure to pay the fair compensation should be regarded as tort, delict or quasi-delict.

Yesterday the CJEU confirmed the AG’s analysis. For once, this is good news coming from Luxembourg for collecting management organisations.

Someone who has no collecting issues

Background

This reference arose in the context of litigation between Austrian collective management organisation Austro-Mechana and Amazon concerning the international jurisdiction of the Austrian courts to entertain legal proceedings by which the former sought to obtain payment from the latter of the remuneration due by reason of the first placing of recording media on the domestic market, in accordance with Austrian legislation.

Amazon has objected the jurisdiction of Austrian courts, on grounds that the obligation to pay the remuneration for private copying is not one arising from 'tort, delict, or quasi-delict', but rather a consequence of acts (the making of private copies) which are permitted by the law.

Both the Vienna Commercial Court and the Vienna Higher Regional Court sided with Amazon and dismissed Austro-Mechana's action.

The Austrian Supreme Court was not so sure that the correct interpretation of Article 7(2) of the Brussels I Regulation Recast is that obvious, so it decided to stay the proceedings and seek guidance from the CJEU.

Intentions alone or also harm?

The CJEU response

Besides the specific subject of the reference (jurisdiction), the decision is a fairly interesting one in relation to Article 5(2)(b) of the InfoSoc Directive.

Is fair compensation mandatory?

First, the Court adopted a much more tranchant language in relation to the fair compensation requirement than the one employed in earlier decisions [in particular: Copydan (here) and Reprobel (here)].

Despite the wording of Recital 35 in the preamble to the InfoSoc Directive, at para 17 of the decision [see also para 48] the CJEU stated that:

"where Member States decide to introduce the exception, provided for in Article 5(2)(b) of Directive 2001/29, to the right of reproduction for copying for private use (‘the private copying exception’) into their national law, they are required, in particular, to provide, pursuant to that provision, for the payment of fair compensation [is thus the provision of a fair compensation mandatory?] to holders of the exclusive right of reproduction". 

This is a rather different tone [though this Kat suspects that the CJEU did not really mean to mark a departure from earlier case law: see para 19] from the one employed at para 35 of the Reprobel decision:

"It is apparent from recitals 35 and 38 in the preamble to [the InfoSoc Directive] that the notion and level of fair compensation are linked to the harm resulting for the author from the reproduction of his protected work without his authorisation. From that perspective, fair compensation must be regarded as recompense for the harm suffered by that author". [this consideration served the Court to exclude that publishers should be regarded as entitled to any fair compensation at all, contrary to what Belgian law provided]

This said, and following an overview of the system currently in place in Austria, the CJEU turned to the issue of jurisdiction.

Who wants to pay
fair compensation?

The obligation to pay fair compensation is not a voluntary one ...

The Court noted at the outset that Austrian courts would have jurisdiction to entertain Austro-Mechana’s claim for payment of the remuneration for private copying only by way of derogation - to be interpreted strictly - from the general rule (Article 4 of the Brussels I Regulation Recast) that attributes jurisdiction to the courts of the defendant’s domicile.

The rationale of the rule in Article 7(2) is that of a particularly close connecting factor existing between the dispute and the courts of the place where the harmful event occurred or may occur, which justifies the attribution of jurisdiction to those courts for reasons relating to the sound administration of justice [including ease of taking evidence] and the efficacious conduct of proceedings. 

The CJEU then recalled that the concept of ‘matters relating to tort, delict or quasi-delict’ covers all actions aimed at establishing the liability of a defendant and do not concern ‘matters relating to a contract’. 

The Court excluded that Austro-Mechana’s claim for payment of the fair remuneration would be a matter relating to a contract within the meaning of 7(1)(a) of the Brussels I Regulation Recast. This is because the obligation to pay the fair compensation is not an obligation freely assumed by one party [Amazon in this case] towards another [Austro-Mechana], but rather an obligation arisen by reason of the making available, for commercial purposes and for consideration, of recording media suitable for reproduction of protected works [paras 35-38].

... So Article 7(2) of the Brussels I Regulation applies

The Court then turned to the consideration of whether failure to pay fair compensation could considered a 'harmful event' within Article 7(2) of the Brussels I Regulation Recast.

The CJEU answered in the affirmative, noting [para 43] "that the ‘fair compensation’ referred to in Article 5(2)(b) of Directive 2001/29 ... intends to compensate authors for the private copy made without their authorisation of their protected works, so that it must be regarded as compensation for the harm suffered by the authors resulting from such unauthorised copy by the latter."

The CJEU also added [para 45] that "[t]he fact that, under the Austrian system relating to the financing of that ‘fair compensation’, the latter must be paid not to the holders of an exclusive reproduction right that it aims to compensate, but to a copyright-collecting society is irrelevant in that respect."

In conclusion

It is now clear that the subjects in charge of collecting the fair compensation for private copying (eg collective management organisations) can bring proceedings before the courts of the Member State where the harm arising from missed payments is felt.

In the case of Austro-Mechana, proceedings against Amazon can be brought in Austria, thus sparing the hassle of having to sue where the latter is established.

[Originally published on The IPKat on 22 April 2016]