No Royalties in EU|for Music to Drill By

(CN) - Europe's high court found that hotels owe royalties for providing guests with in-room music and television, but dentists' offices are in the clear.

Member states of the European Union are required to have legislation mandating payment for the public use or broadcasting of sound recordings to producers of the recordings. U.S. copyright law requires similar measures, and private use is exempt from such remuneration.

In two rulings on Thursday, the Court of Justice settled two disputes that arose over the requirements in Europe.

In the first case, Phonographic Performance (Ireland) Ltd. filed suit against Ireland for legislatively exempting hotels from paying royalties on the recordings and broadcasts provided in individual hotel rooms. PPL claims that the exemption is a breach of EU law.

The Irish high court referred several questions to the EU Court of Justice, making clear that Irish law applies only to hotel rooms, and not common areas or on-demand and interactive content accessed by hotel guests. Specifically, the national court sought definitions for what constitutes a "user" making a "communication to the public" of a broadcast phonogram, according to the EU court.

"Anyone who uses a phonogram for a broadcast or for communication to the public must be considered to be a 'user' for the purposes of that provision," the opinion states. "In those circumstances, it must be assessed whether, in a case such as that at issue in the main proceedings, there has been 'communication to the public.

It defined "public" as a term referring to "an indeterminate number of potential listeners and a fairly large number of persons." But the profit-making nature of the communication to the public is also a relevant concern.

"Indeed, the action of the hotel by which it gives access to the broadcast work to its customers constitutes an additional service which has an influence on the hotel's standing and, therefore, on the price of rooms," the decision states. "Moreover, it is likely to attract additional guests who are interested in that additional service.

"It follows that, in the present case, the broadcasting of phonograms by a hotel operator is of a profit-making nature."

EU law does not allow member states to offer royalty exemptions to hotel operators make sound recordings public, according to the court.

A dentist who provides music for the enjoyment of patients does not meet the public standard, the court also found.

The Società Consortile Fonografici, which collects and distributes royalties for its artists, brought action in the Italian courts against Marco Del Corso, a Turin dentist who plays background music in his private dental practice. The action arose from a breakdown in royalty negotiations between the SCF and the Association of Italian Dentists.

The Italian court of appeal similarly requested clarification from the EU high court as to the definition of "communication to the public," and also where various intellectual property treaties fit into EU law.

"Although the patients of a dentist are in the area covered by the signal conveying the phonograms, they are able to listen to those phonograms only as a result of the deliberate intervention of that dentist," the decision states. "Therefore such a dentist must be considered to be intervening deliberately in the broadcasting of those phonograms."

But the court noted that few people will benefit from the dentist-office music.

"The number of persons to whom the same broadcast phonogram is made audible by the dentist, it must be held that, in the case of the patients of a dentist, the number of persons is not large, indeed it is insignificant, given that the number of persons present in his practice at the same time is, in general, very limited," the decision states. "Moreover, although there are a number of patients in succession, the fact remains that, as those patients attend one at a time, they do not generally hear the same phonograms, or the broadcast phonograms, in particular."

A dentist who broadcasts music as background noise in his office cannot reasonably expect a rise in the number of patients he treats, the decision states. Likewise, he would not be able to charge more because of the music he plays. Thus, he sees no financial gain from the use of the phonograms, according to the court.

"The patients of a dentist visit a dental practice with the sole objective of receiving treatment, as the broadcasting of phonograms is in no way a part of dental treatment," the decision states. "They have access to certain phonograms by chance and without any active choice on their part, according to the time of their arrival at the practice and the length of time they wait and the nature of the treatment they undergo."

Therefore, a dentist playing background music in his office is not making a making a "communication to the public" and does not entitle the phonogram producers to remuneration, according to the court.

Both cases have been sent back to the referring courts for final judgment within the framework provided by the EU high court.

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