C-402/85

OPINION OF MR LENZ—CASE 402/85

O P I N I O N OF MR ADVOCATE GENERAL LENZ delivered o n 24 F e b r u a r y 1987 *

Mr President, of the law it is also expressly provided that Members of the Court, in the event of the transfer of the copyright the extent and purpose of the use to which the work may be put must be defined. Accordingly, when the right of reproduction A — Facts is assigned (generally to manufacturers of recordings, in return for a reproduction fee) it is expressly provided that recordings may only be marketed for private use. If a 1. These proceedings, brought before us on recording of a work is played in public, a reference by the cour d'appel, Versailles, therefore, not only a performance royalty concern the interpretation of Articles 30 and but also the abovementioned supplementary 36 of the EEC Treaty on the one hand and reproduction fee become payable. of Article 86 on the other, in relation to the fact that SACEM, the French copyright- management society, charges discotheques a 'supplementary mechanical reproduction 4. Elsewhere in the Community that legal fee' on the use of records from other position prevails only in Belgium, by virtue Member States. of case-law; under the law of the other Member States the right of reproduction is exhausted when it is transferred to a manu- facturer of recordings, and when recordings 2. T h e following points are relevant in that are played in public only a performance regard. royalty is payable.

6. SACEM enters into contracts with users I — Question 1 of musical works, inter alia discotheques, providing for the payment of fees calculated according to the importance of the music in I. 10. In the course of the proceedings, as the user's activities. In the case of disco- the Court will recall, the view was expressed theques it requires 8.25% of their receipts, that Article 30 of the EEC Treaty was not composed of a performance fee of 6.6% relevant, since the French legislation in and a supplementary mechanical repro- question, concerning the charging of a fee duction fee of 1.65% (that breakdown, for the public playing of recorded music, however, is not expressly made in the relates only to the provision of services. contracts). Doubts as to the applicability of Article 30 in such circumstances were also raised with regard to the fact that that legislation does not concern trade and the importation of goods, it has nothing to do with the free movement of goods and above all the 7. Since 1974 the plaintiff in the main crossing of frontiers is entirely irrelevant. It proceedings has operated a discotheque in was also argued that the fact that the fee in Fréjus, in which he plays records the rights question applies without distinction to to which are held by SACEM. These two domestic products and imported recordings parties entered into legal proceedings, which implies that Article 30' is not applicable. were referred by the cour de cassation to the cour d'appel, Versailles. The latter court has referred to us the question whether Articles 30 and 36 or Article 86 of the EEC I I . I have begun by summarizing those Treaty prevent SACEM from charging the arguments because it is my impression that abovementioned 'supplementary mechanical the problem raised in the main proceedings reproduction fee'. cannot really be dealt with, in that manner; these arguments are clearly based on an excessively narrow view of Article 30.

recordings, that is to say goods for the 2. 14. If, on the other hand, it is recalled purpose of the Treaty, play a significant role that in its order the national court expressly (as, for instance, in the playing of music in stated that the amount of the combined fee discotheques). (8.25% of income) was not to be regarded as unreasonable, and that it was also stated that the plaintiff had acknowledged that the charging of a flat rate was legitimate (in particular since Article 35 of the French law expressly provides for flat-rate calculations), there is some foundation for the view that Article 30 does not in fact apply in circum- stances such as those of the main

The matter of copyright and its exhaustion in the elimination of the supplementary mechanical event of lawful reproduction in a foreign reproduction fee would not, therefore, in country — the effect could be that because the end work to the benefit of imported of their price advantage such sound sound recordings; looked at in those terms, recordings could become more attractive to it cannot be assumed that they would users and imports could thus increase. become more attractive from the point of Conversely, it would also mean that the view of price and that patterns of trade charging of the fee might affect imports and would be influenced accordingly. that there might be grounds for applying Article 30 even though the fee is charged in respect of both imports and domestic goods without distinction.

BASSET v SACEM

March 1957. Consequently, it would be recordings would play any role. Even if it difficult to conclude that any elimination of were assumed, therefore, that a change in the supplementary mechanical reproduction the calculation method could have some fee (for imported sound recordings, on the influence on the purchasing decisions of basis of considerations of copyright) would discotheque owners, it can hardly be have the effect of encouraging individual concluded that any such influence would be users to purchase such records and thus of sufficient importance in relation to influence patterns of trade. If, that is to say, decisions clearly based primarily on taste as the fee were eliminated in respect of such to affect patterns of trade. recordings, with the result, because of the proportion of imported recordings in a discotheque's stock, that the supplementary mechanical reproduction fee was collected only to a reduced extent (that is to say, only for domestic sound recordings), that could 19. (d) Let me add for the sake of not be determined on an individual basis. It completeness that if there is therefore a would instead be necessary either to work strong foundation for the view that the on the basis of general sales statistics and charging of the supplementary mechanical assume that the use of imported sound reproduction fee should not be regarded as recordings in discotheques followed the a measure having equivalent effect to a same pattern or establish average figures on quantitative restriction on imports within

3. 23. In my view — here I anticipate my 20. That case concerned direct interference conclusion — there are in fact no significant with imports (by the charging, by the reasons for recommending such a step. Even German copyright-management society, of a if it were necessary to assume that Article 30 supplementary licence fee on sound is in principle applicable in this case, I think recordings from other Member States) and there are important considerations which thus a direct influence on sales of goods weigh against the conclusion that the (not merely, as in this case, a conceivable charging of a supplementary mechanical indirect effect by way of the purchasing reproduction fee on the use of imported decisions of domestic customers, which are records is contrary to the Treaty. normally made after goods have been imported). The key point, moreover, was that the German copyright-management society relied on the right assigned to it (the right of reproduction), although the relevant 24. (a) First of all, SACEM correctly relied case-law in related areas led to the in this regard on Article 36 (which is conclusion that that right could be regarded expressly referred to in the first question), as exhausted once the product had been put under which the restriction of trade may be into circulation in another country with the justified inter alia on grounds of the authorization of the author or composer. protection of industrial and commercial property.

Case 187/80 7 ) and whether it results in comes into play each time the work is restrictions on trade. performed. When, therefore, the composer or his agent demands a performance fee on the public use of sound recordings in a Member State other than that of manu- facture, that clearly forms part of the 26. In the legal systems of the Member exercise of the substance of copyright and States copyright is typically a right of must therefore be tolerated under Article 36 exploitation in the form of the right of even if it has effects restrictive of trade. reproduction on the one hand and the right of public performance on the other (applying equally to situations where it takes place by way of a sound recording).

27. It might therefore be said that that states that the right of reproduction and aspect of French law (the assignment of the that of public performance are protected right of reproduction for the purposes of a rights) incorporate the principle that in each specific use) forms part of the specific contracting State works by nationals of subject-matter of copyright and that its other contracting States are to be protected exercise, involving the charging of a special in accordance with the provisions of fee for the public use of sound recordings, is national law (that is to say, foreign works covered by Article 36. In any event, must be protected in the same manner as however, it is important that in circum- works by nationals of the State in question), stances such as those of the main in France the French system, in all its details proceedings it may be said with regard to (including those which on a strict view of sound recordings imported from other copyright might not seem entirely Member States that the right of repro- convincing) must be applied to works from duction has been exhausted but not the right other Member States. Since under French

OPINION OF MR LENZ —CASE 402/85

from other Member States where such a fee currently investigating the relations between is not charged, and any interference with SACEM and foreign copyright-management trade which may result cannot be regarded societies and, with regard to the amount of as unlawful under Community law. the fees charged by SACEM, Article 86 of the EEC Treaty. It must be pointed out, however, that these proceedings do not concern the amount of the fees charged by 4. 29. It does not appear necessary to deal SACEM (with regard to which counsel for specifically with the other factors referred to Mr Basset made detailed submissions, in the first question, such as the fact that including comparisons with the fees payable SACEM enjoys a defacto monopoly for the in other countries). The national court has protection of its repertoire and is connected expressly held on this point that it may not by reciprocal representation contracts with be objected that the amount of the fee is foreign copyright-management societies; the unreasonable. The question for us, instead, answer to the first question must therefore is whether there is anything in Article 86 be that Article 30 of the EEC Treaty (in to suggest that the charging of the conjunction, if necessary, with Article 36 supplementary mechanical reproduction fee of the Treaty and with international is unlawful in itself. conventions) does not prevent the French copyright-management society from charging users a royalty referred to as a supplementary mechanical reproduction fee 32. With regard to the remarks made in the on the public performance of works from course of the proceedings I must admit that the repertoires of foreign companies by I find it difficult to follow the logic of the means of sound recordings in free circu- argument relating to Article 86. Nor did the lation on the territory of other Member remarks made by counsel for Mr Basset States even where such a fee is not provided shed much light on the matter. for in the Member States in which those sound recordings originate.

(c) the application of dissimilar conditions 37. Nor are the criticisms made in the to equivalent transactions with other report of the commission de la concurrence, trading parties (the national court dealt referred to above, regarding the charging with this point itself, in so far as methods of SDRM óf any assistance since comparison with the fees demanded of only the manner in which the fee is charged other users is concerned); is criticized, not the fee itself. (d) the imposition on other parties of supplementary obligations which have 38. The only conclusion can therefore be no connection with the subject of the that the charging in France of the contract. supplementary mechanical reproduction fee, that is to say, the exercise of a right 35. The only possible alternative, therefore, provided for by statute, cannot be regarded is the type of abuse referred to in as an abuse for the purposes of Article 86, subparagraph (a) — the imposition of unfair even where the fee is charged on the use of prices or trading conditions. The argument imported sound recordings. was put forward in that regard that in charging the supplementary mechanical 39. If it is borne in mind, moreover, that in reproduction fee SACEM had gone beyond the light of what has already been stated the power delegated to it by foreign there is no real question of any effects on copyright-management societies. trade and that the exercise of the right in 36. It is immediately clear, however, that question has nothing to do with SACEM's that is not in fact the situation in this case. dominant position (any author or composer As SACEM emphasized, those contracts is entitled by statute to exercise that right, expressly provide for the treatment of but does not for that reason alone occupy a foreign nationals in the same manner as dominant position — see judgment in Case French nationals. Indeed, as we have 78/70), it is clear that in circumstances such already seen that is also required by the as those of the main proceedings Article 86 relevant international conventions. of the EEC Treaty is not relevant.