C-60/98

BUTTERFLY MUSIC V CEMED

OPINION OF ADVOCATE GENERAL COSMAS delivered on 23 March 1999 *

I — Introduction originally been recorded in the period from 1958 to 1962. Before doing so, it obtained permission to exploit the sound recordings from Carosello which at that time held the 1. In the present case, the Court is asked to related rights over the works in question. give a preliminary ruling on a question Under the national legislation then in force, referred by the Tribunale Ordinario (Dis- rights of producers and performers of trict Court), Milan, relating to the inter- musical works were protected for 30 years. pretation of Article 10 of Council Directive Subsequently the Community legislature, 93/98/EEC of 29 October 1993. 1The cen- by Directive 93/98, extended the term of tral issue is the protection of acquired rights of third parties in cases where the protection of those rights to 50 years. After transposition of that directive into national the time-limit for transposition of that law has resulted in the revival of a right directive, namely 30 June 1995, had related to copyright in respect of a musical passed, the competent Italian authorities work which previously fell within the drafted a series of laws and regulations public'domain. which provide that the rights of producers of phonograms expire 50 years after the fixation is made and that the rights of performers correspondingly end 50 years after the date of the performance.

I I— Facts

4. Butterfly brought proceedings against III — Question referred for a preliminary Carosello before the Tribunale Ordinario, ruling Milan, for a declaration, first, that its letter of formal notice was unlawful and, second, that Butterfly permanently retained the right to exploitation of the sound record- ings in question and to phonographic 6. In view of the foregoing, the national reproduction of the CD 'Briciole di Baci'. court referred the following question to the Carosello contended that the application Court for a preliminary ruling: should be dismissed and counterclaimed for an order prohibiting Butterfly from exploit- ing in the future the aforementioned musi- cal works, whose protection had to be considered to have revived after the change in the legislative regime governing copy- 'Is the interpretation of Article 10 of right and related rights. Carosello's posi- Directive 93/98/EEC of 29 October 1993, tion was also adopted by the intervener, particularly where it provides for the adop- Federazione Industria Musicale Italiana tion of "the necessary provisions to protect (hereinafter 'FIMI'). in particular acquired rights of third par- ties", compatible with Article 17(4) of Law No 52 of 6 February 1996, as amended by Law No 650 of 23 December 1996?'

5. The national court considers that it is IV — Relevant Community legislation clear from Article 10(3) of the directive that rights which had expired at the end of the 30-year period originally laid down by Italian Law revived following the extension 7. Directive 93/98 has the objective of of the term of protection under the direc- harmonising national legislation relating tive. However, it expresses doubts as to to the term of protection of copyright and whether the applicable national legislation certain related rights.

According to the 26th recital in its pre- amble:

'1. Where a term of protection, which is longer than the corresponding term provi- '... Member States should remain free to ded for by this directive, is already running adopt provisions on the interpretation, in a Member State on the date referred to in adaptation and further execution of con- Article 13(1), this directive shall not have tracts on the exploitation of protected the effect of shortening that term of protec- works and other subject-matter which were tion in that Member State.

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OPINION OF MR COSMAS — CASE C-60/98

2. The terms of protection provided for in recently been amended, principally by the this directive shall apply to all works and 'Community Law', that is to say Law subject-matter which are protected in at No 52 of 6 February 1996 (hereinafter least one Member State, on the date 'Law No 52/96'). 4 Law No 52/96 has in referred to in Article 13(1), pursuant to turn been amended by Law No 650 of national provisions on copyright or related 23 December 1996. 5 rights or which meet the criteria for protec- tion under Directive 92/100/EEC.

11. Under Article 17(1) of Law No 52/96, 3. This directive shall be without prejudice the term of protection for the rights of to any acts of exploitation performed phonograph producers and of performers before the date referred to in Article 13(1). was extended from 30 to 50 years. Member States shall adopt the necessary provisions to protect in particular acquired rights of third parties. 2

'Instruments effected and contracts entered into before 29 June 1995 and, in deroga- tion from Article 119(3) of Law No 633 of 22 April 1941, contracts entered into after 30 June 1990, together with rights lawfully acquired and exercised by third parties which arise under those instruments and contracts, shall be fully safeguarded and VI — Formulation of the question sub- unaffected. mitted

In particular, the following are not affected:

14. It should be noted at the outset that, as the Commission correctly points out in its observations, the question referred for a (a) the distribution and reproduction of preliminary ruling in this case needs to be works which have entered the public reformulated. The Court's jurisdiction domain under the previous legislation, under Article 177 of the Treaty does not within the limits of the graphic com- extend to its answering the question put by position and editorial presentation in the national court. More specifically, the which publication has taken place, by latter raises directly whether the national the persons who have undertaken the provision is consistent with the correspond- distribution and reproduction of the ing Community legislation, an issue which works before the date of entry into cannot constitute the subject-matter of a force of this Law. Future updates reference for a preliminary ruling. I there- required by the nature of the works fore consider that the proper approach is to may also be distributed and reproduced reformulate the question submitted and without payment; proceed to examine whether Direc- tive 93/98 and also Community law gen- erally in relation to the protection of acquired rights of third parties and of legitimate expectations preclude a national rule which, for the protection of acquired (b) the distribution, for three months fol- rights of third parties against the revival of lowing the date of entry into force of rights related to copyright which are over this Law, of phonograph records and musical works, merely grants third parties analogous media in respect of which the opportunity to dispose of their stocks rights of use have expired under the for a period not exceeding three months

from the entry into force of the relevant 16. I take the view that the above argument national provision. as to the question's inadmissibility cannot be accepted. It should be noted first of all that the scope for refusing to examine a question referred for a preliminary ruling on the ground of inadmissibility is particu- larly narrow. The Court has consistently held that '. . . it is solely for the national court before which the dispute has been VII— Admissibility of the question sub- brought, and which must assume responsi- mitted bility for the subsequent judicial decision, to determine in the light of the particular circumstances of the case both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the

from the Società Italiana Autori e Editori Case C-415/93 Union Royale Belge des Sociétés de Football (Italian Society of Authors and Publishers; Association and Others ν Bosman and Others [1995] ECR I-4921, paragraph 59). 'SIAE'), a licence which is essential for 8 — For example, see Case 244/80 Foglia ν Novello [1981] ECR reissuing the CD, the subject-matter of the 3045, paragraph 2 1 , Case C-343/90 Lourenço Dias ν Director da Alfândega do Porto [1992] ECR I-4673, Joined main proceedings is without practical rele- Cases C-320/90, C-321/90 and C-322/90 Telemariscab- ruzzo and Others ν Circostel and Others [1993] ECR I-393 vance. and Celestini, cited in footnote 6 above, paragraph 22.

9 — Celestini, cited in footnote 6 above, paragraph 22. See also the analytical approach to the issue in the Opinion of Advocate General Fennelly in that case (paragraph 19 et seq.). 10 — As to the need to make a finding of manifest inadmissi- bility, see also the recent judgments in Case C-472/93 Spano and Others v Fiat Ciotech and Fiat Hitachi [1995] 19. Certain points in Butterfly's reasoning ECR I-4321, in Case C-2/96 Sunino and Data [1996] ECR I-1543 and in Case C-191/96 Modesti [1996] ECR I-3937. and the conclusion which it reaches are

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12 — In 1989 the Court had found that '... in the present state of Community law, which is characterised by a lack of harmonisation or approximation of legislation governing the protection of literary and artistic property, it is for the national legislatures to determine the conditions and detailed rules for such protection' (Case 341/87 EMI 21. Directive 93/98 forms part of the Electrola ν Patricia Im- und Export and Others [1989] efforts of the Community legislature to ECR 79, paragraph 11). That gap was subsequently filled by Council Directive 91/250/EEC of 14 May 1991 on the harmonise rules in the field of protection of legal protection of computer programs (OJ 1991 L 122, p. 42); Council Directive 92/100/EEC of 19 November copyright and related rights. 1 1 Those 1992 on rental right and lending right and on certain rights related to copyright in the field of intellectual property efforts emerged at the beginning of the (OJ 1992 L 346, p. 61); Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmis­ sion (OJ 1993 L 248, p. 15; Directive 93/98; and Directive 11 — As far back as the judgment in Case 78/70 Deutsche 96/9/EC of the European Parliament and of the Council of Grammophon ν Metro [1971] ECR 487, the Court had 11 March 1996 on the legal protection of databases stated that the protection of industrial and commercial (OJ 1996 L 77, p. 20). property rights was a matter with which Community law was concerned since it was expressly referred to in 13 — Agreement on Trade-Related Aspects of Intellectual Prop­ Article 36 of the EEC Treaty. erty Rights.

exceptions to the protective regime should the continuation of acts of exploitation of be interpreted restrictively. works which were directly linked to invest- ments made in good faith before the entry into force of the Community provisions, and third, the Member States had to make provision for appropriate financial com- pensation to be paid to holders of copyright and related rights in respect of the above- mentioned acts of exploitation which con- 23. The above conclusion is also borne out tinued after the date of entry into force of by what happened in the procedure leading the Community provisions. to the adoption of the directive. The initial draft merely contained the provision under which application of the directive is not to have the effect of shortening a longer term of protection which may be laid down under the law of certain Member States; in other words, it cannot have the effect of restricting copyright and related rights which have already been secured on the 25. A comparison of the Parliament's pro- basis of the national provisions in force. posals and the directive in its final form The initial draft did not, however, expressly gives rise to the following conclusions: provide that rights which had already expired under national law before the entry into force of the directive could revive. The European Parliament sought its amend- ment, raising the issues of, on the one hand, the revival of rights whose protection had already expired under national law and, on the other, the safeguarding of acquired rights of third parties. First, provision is made for the revival of copyright and related rights which had expired under the national legislation applicable before the entry into force of the Community directive. 1 4 I t is to be noted that the solution involving revival of rights is consistent with the general 24. For the purpose, in particular, of pro- principle according to which rules of law tecting acquired rights of third parties, the are applicable ex nunc. More specifically, European Parliament called on the Com- when a provision lays down that a right mission to add to the text of the directive provisions under which, first, the new 14 — The solution of revival of rights was necessary in order to Community rules on the protection of achieve in the shortest possible time the harmonisation of copyright and related rights were to apply national laws concerning the term of protection of copy- right and related rights. Without such revival, copyright without affecting lawful acts of exploita- and related rights in respect of works predating the directive would, for a period at least, be protected in one tion of works which had taken place before Member State (which provides for a long term of a specified date, second, holders of copy- protection) while having expired in another Member State. That possibility would without doubt have negative right and related rights could not object to consequences for inter-State trade.

expires 50 or 70 years after the event which Second, provision is made to safeguard causes its protection under the law to begin acquired rights of third parties, in accor and this period has still not expired when dance likewise with general principles of the provision in question enters into force, Community law but not precisely in the that right must in principle be considered to way put forward by the Parliament; while be extant. The revival of copyright and an express reservation was added regarding related rights under the directive does not the directive's field of application in respect amount to the retroactive application of the of acts of exploitation performed before latter giving rise, from the point of view of 1 July 1995 — the date on which, as its temporal application, to doubts as to its already mentioned, the national measures compatibility with general principles of necessary for transposition of the directive law. 15 had to be adopted — no particular approach is specified (or imposed) as regards how the rights of third parties are to be protected when acts of exploitation are performed after the above date.

law. In order to distinguish between them, regard must be had to the temporal aspects of the situations governed by the preamble to the directive merely states the rule. Retroactive effect consists in the application of the rule to situations which were permanently fixed before that the Member States may, and not that that rule came into force. Immediate effect, which, in principle, works likewise according to the principle tempus they must, '. . . provide. . . that in certain regit actum, consists in applying the rule to situations circumstances 16 the copyright and related

It is only if the directive had provided that the revival of related rights extended to requiring third parties acting in good faith to pay for CDs which they had pressed, released and sold before 1 July 1995 that the issue of retroactive application contrary to general principles of law would have arisen. That issue does not arise in the present case since it follows from both the letter and the spirit of the directive that the revival of related rights does not also cover products which were sold before the expiry of the time-limit laid down by the Community legislation. 16 — Emphasis added.

26. In my view, the above considerations clearly show the will of the Community 27. So far as concerns review of the discre- legislature to protect acquired rights while tion which has been conferred on the none the less conferring a wide discretion Member States to settle how acquired on the competent national authorities; the rights of third parties are safeguarded, it latter moreover are, by their nature and should be noted that that discretion is position, the best suited for achieving the particularly wide, as is apparent from the golden mean between the opposing rights following observations. First, Article 10(2) of the creator, the producer or the inter- of the directive is worded in the most preter, on the one hand, and third parties general manner possible. Second, that gen- acting in good faith, on the other. Nor does eral formulation was preferred notwith- there appear to be any foundation for standing the Parliament's proposal referred Butterfly's assertion that its right, as a third to above which laid down, albeit partially, party acting in good faith, to continue the specific forms of protection for third par- exploitation of Mina's songs even after ties. Third, the mere fact that the national 1 July 1995 may be derived directly from provisions in question are adopted to Article 10 of Directive 93/98. The Member implement Community legislation which States are, in principle, given the power to is in the form of a directive is sufficient to legislate with regard to situations created demonstrate the extent of the freedom by the revival of related rights under the enjoyed by the competent national bodies. directive after 1 July 1995 and to the The latter are bound by Article 189 of the protection which must be guaranteed to Treaty as regards achieving the objective third parties. It is only if the national pursued by the directive, but retain the

28. The above points do not mean, of course, that legislative action by the Mem- ber States under Article 10(3) of the direc- tive is not subject to review. Furthermore, as the Court had already pointed out before the Community legislation at issue was enacted, '... the exclusive rights conferred by literary and artistic property are by their 30. So far as concerns the present dispute, nature such as to affect trade in goods and it should be noted first of all that the period services and also competitive relationships within which stocks had to be disposed of within the Community. For that reason... under the Italian legislation at issue was those rights, although governed by national three months from its entry into force. In legislation, are subject to the requirements other words, the period expired three of the Treaty and therefore fall within its months after 25 February 1996, that is to scope of application'. 1 7National protec- say on 26 May 1996. That observation is tion conferred on copyright and related interesting inasmuch as the revival of copy- rights therefore could not be so absolute right and related rights brought about by that it affected other rights and interests the incorporation of the directive into the which Community law considers worthy of national law of the Member States had protection, such as acquired rights of third already taken place on 29 June 1995. parties in the present case. Implementation of the Italian legislation at issue therefore had the effect, where works had begun to be exploited before 1 July 1995, of guaranteeing holders of acquired rights the opportunity to dispose of their stocks for a period slightly in excess of 11 months from the time when copy- right and related rights revived. 1 8In that 29. However, as the Commission rightly way, traders who exploited works that had points out, national legislation which fallen into the public domain before 1 July merely, and indeed for a restricted period, 1995 gained the opportunity, through the grants third parties the opportunity to disposal of their copies within an appro- dispose of stocks resulting from the exploi- priate period, to earn the profits from that tation of a work which had been in the exploitation without having to pay fees to public domain before 1 July 1995 does not 18 — To be precise, third parties were granted the opportunity to continue to press and sell CDs from 1 July 1995 until 17—Joined Cases C-92/92 and C-326/92 Phil Collins and 25 February 1996 and freely to dispose of the copies Others [1993] ECR I-5145. pressed from 25 February 1996 until 26 May 1996.

31. The three-month period laid down by the Italian Law, which amounted in prac- tice to a period of 11 months from the date on which copyright and related rights revived under the directive, appears in 32. Furthermore, the fact that, as may be principle to be sufficient to safeguard the gathered from the comparative analysis economic interests of third parties acting in relied on by Butterfly, the Italian legislature good faith, as the Italian Government appears to have treated third party produ- explains in its observations. 19 In any event, cers more harshly than they were treated by it is not manifestly inadequate and dispro- the competent bodies of the other Member portionately restrictive vis-à-vis those par- States, of course does not mean that it acted ties, who moreover must be considered to beyond the powers conferred on it by have known from 29 January 1993, the Article 10(3) of the directive. date on which the directive was published in the Official Journal, that the revival of related rights had been set for 1 July 1995 at the latest. Nor is it for the Court to take the place of the national legislature and seek a more satisfactory system for balan- cing the opposing interests which would also take other parameters into account, such as the size of the investment made by the third party acting in good faith, special 33. In that regard, Butterfly's argument that the Italian legislature treated holders 19 — The Italian Government states in its observations that, of acquired rights in respect of phonograms before the adoption of the legislation at issue, account was taken of the normal costs to which producers of phono- unfavourably compared with persons grams are subject, the amount of their investment and the potential profit. In particular, it was found that production exploiting literary works is not of assis- costs are especially low in the case of works in the public tance in resolving the problem of interpre- domain; they amount in practice to the expenditure on actual reproduction (manufacture of the CD). In order to tation before the Court. The national absorb that expenditure, it is therefore sufficient to grant the opportunity for stocks to be disposed of for a limited legislation at issue is, indeed, manifestly period after the revival of the related rights coupled with a favourable for third parties who had begun dispensation from the obligation to pay a fee to the holder of those rights. to exploit literary works which lay in the

34. A subsidiary point which may usefully be made is that it is not self-evident, as Butterfly mistakenly appears to think, that 35. In the final analysis — and this is the the provisions of the Italian legislation most important argument supporting the relating to the fate of acquired rights of positions of Carosello, FIMI, the Italian third parties in respect of literary works Government and the Commission — the where copyright revives are consistent with power which is conferred on the Member the spirit of the directive. That issue is not States by the relevant provision of the raised directly by the national court and directive relates to the adoption of transi- has not been the subject of detailed analysis tional provisions which, by their nature, by the parties which submitted observa- must be as narrow as possible, since they tions. For that reason, I consider it prefer- are equivalent to exceptions inserted into the general system for the protection of related rights which is created by the rules 20 — In addition, it may be argued that the third parties who in of the directive. In other words, when the good faith exploited a musical work which had been in the public domain are not in the same situation as those national authorities are called on to give exploiting a literary work in respect of which copyright protection expired. It is therefore not possible to require, effect to the requirement in Article 10(3) of on the basis of general principles for the interpretation of the directive to protect acquired rights of the law, that different situations be treated in the same way. third parties, they must have in mind that

37. Consequently, I do not consider that there can be a legal basis in Community law enabling traders who are in the same 36. Nor can the outcome of the preceding position as Butterfly — that is to say analysis as to the interpretation of Directive traders who have begun to exploit a work 93/98 be called into question by relying on in respect of which the related rights had general principles of Community law, in expired and wish to continue that exploita- particular those concerning the protection tion after the revival of those rights by of acquired rights of third parties and of virtue of the transposition of Directive legitimate expectations. So far as concerns 93/98 into national law — to claim protec- the concept of acquired rights, while the tion that is in any way fuller than that Court has recognised that they are pro- provided for by the Italian legislation at tected by Community law, 2 1 it has never issue. 2 4In the light of that finding, it is been held — nor, moreover, could it be — unnecessary to examine whether Arti- that the safeguarding of those rights by the cle 10(3) of the directive displays the legal insertion of transitional provisions in Com- characteristics necessary for it to produce munity legislation can result in the reversal direct effects in national law. of the general system set up by that legislation and nullify the rights and legit- imate interests which it seeks, first and foremost, to protect. Similarly, the Court has consistently held that the principle of the protection of legitimate expectations '... cannot... be extended to the point of generally preventing new rules from apply- ing to the future effects of situations which arose under the earlier rules'. 2 2 The Court

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