Spa Guests not ‘Patients’ in EU Royalties Snafu

(CN) - A Czech spa that pipes music into guest rooms must pay royalties, though perhaps not the full $27,000 demanded by the collection society, the EU high court ruled Thursday.

Lecebne Iazne installed radios and televisions in the rooms of its health spas without a license with OSA, the only copyright collection society in the Czech Republic. The spa owners relied on a clause in Czech copyright law which exempts healthcare establishments from paying royalties for music played to patients.

OSA sued Lecebne Iazne in a Plzen regional court for $27,000 in royalties over an 18-month period. The society also sought a declaration that the portion of Czech copyright law which exempts healthcare providers from royalties violates EU law.

For its part, Lecebne Iazne claimed that OSA abused its position as the only collecting society in the Czech Republic by charging disproportionately higher fees compared with neighboring countries. The Plzen court asked the Court of Justice of the European Union whether the healthcare exemption complies with EU copyright law and whether OSA abuses its monopoly position - a position also granted by Czech lawmakers.

In its opinion, the Luxembourg-based high court noted that the transmission of copyrighted works to guest rooms is a public broadcast for which royalties must be paid. And EU copyright law makes no exception for commercial enterprises like spas and health clubs, the court added.

But while the court declined to rule on the legality of OSA's monopoly, it questioned whether the royalties the society charges are an abuse of its position.

"Where such a collecting society imposes fees for its services which are appreciably higher than those charged in other member states and where a comparison of the fee levels has been made on a consistent basis, that difference must be regarded as indicative of an abuse of a dominant position within the meaning of EU law," the court wrote. "In such a case it is for the collecting society in question to justify the difference by reference to objective dissimilarities between the situation in the member state concerned and the situation prevailing in all the other member states.

"Likewise, such an abuse might lie in the imposition of a price which is excessive in relation to the economic value of the service provided," the court continued, adding that the Czech court must decide those issues.

The high court's decision mirrors a pair of 2012 opinions, one of which held that Ireland improperly exempted hotels from paying royalties on broadcasts received in individual rooms.

In the second case, the court found that music played by a dentist for his patients did not meet the requirements of a public transmission, given the low numbers of people the music reached and their lack of choice in what they heard.

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