Keywords
Summary

Keywords

1 Approximation of laws - Copyright and related rights - Directive 92/100 - Renting out and lending of originals and copies of copyright works - Exclusive rental right introduced by the directive - Breach of the principle of the exhaustion of distribution rights - None

(EC Treaty, Art. 36; Council Directive 92/100)

2 Community law - Principles - Fundamental rights - Right to property - Freedom to pursue a trade or profession - Restrictions - Directive 92/100, introducing an exclusive rental right and including among the holders of that right producers of sound recordings - Restriction justified by the general interest - Breach of the principle of proportionality - None

(EC Treaty, Arts 36 and 128; Council Directive 92/100)

Summary

3 The introduction, by Directive 92/100 on rental right and lending right and on certain rights related to copyright in the field of intellectual property, of an exclusive rental right for copyright works cannot constitute any breach of the principle of the exhaustion of the distribution right, the purpose and scope of which are different.

The principle of exhaustion of distribution rights in the event of the offering for sale, by the rightholder or with his consent, of copyright works derives from settled case-law of the Court of Justice, according to which the exclusive right guaranteed by the legislation of a Member State on industrial and commercial property is exhausted when a product has been lawfully distributed on the market in another Member State by the actual proprietor of the right or with his consent. However, literary and artistic works may be the subject of commercial exploitation by means other than the sale of the recordings made of them.

By authorising the collection of royalties only on sales to private individuals and to persons hiring out those recordings, it is impossible to guarantee authors of works a remuneration which reflects the number of occasions on which the works are actually hired out and which secures for them a satisfactory share of the rental market. The release into circulation of a sound recording cannot therefore, by definition, render lawful other forms of exploitation of the protected work, such as rental, which are of a different nature from sale or any other lawful form of distribution. Just like the right to present a work by means of public performance, the rental right remains one of the prerogatives of the author and producer notwithstanding sale of the physical recording.

4 The freedom to pursue a trade or profession, and likewise the right to property, form part of the general principles of Community law. However, those principles are not absolute but must be viewed in relation to their social function. Consequently, the exercise of the right to property and the freedom to pursue a trade or profession may be restricted, provided that any restrictions in fact correspond to objectives of general interest pursued by the Community and do not constitute in relation to the aim pursued a disproportionate and intolerable interference, impairing the very substance of the rights guaranteed.

The objectives of Directive 92/100 in fact conform with the objectives of general interest pursued by the Community. First, the protection of literary and artistic property, which is a category of industrial and commercial property within the meaning of Article 36 of the Treaty, constitutes a ground of general interest which may justify restrictions on the free movement of goods and, second, the cultural development of the Community forms part of the objectives laid down by Article 128 of the EC Treaty, as amended by the Treaty on European Union, which is intended in particular to encourage artistic and literary creation.

More specifically, the inclusion of producers of sound recordings among the beneficiaries of the exclusive rental right appears justified by the protection of the extremely high and risky investments which are required for the production of recordings and are essential if authors are to go on creating new works. The grant of an exclusive right to producers certainly constitutes the most effective form of protection, having regard in particular to the development of new technologies and the increasing threat of piracy, which is favoured by the extreme ease with which recordings can be copied. In the absence of such a right, it is likely that the remuneration of those who invest in the creation of those products would cease to be properly guaranteed, with inevitable repercussions for the creation of new works.

Furthermore, the obligation to establish, for the producers of sound recordings and all other holders of rights in respect of such recordings, an exclusive right to authorise or prohibit the commercial rental of those products is in conformity with the combined provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (`TRIPs'), annexed to the agreement establishing the World Trade Organisation.

Since it does not appear that the objectives pursued could have been achieved by measures which preserved to a greater extent the entrepreneurial freedom of individuals or undertakings specialising in the commercial rental of sound recordings, the consequences of introducing an exclusive rental right cannot be regarded as disproportionate and intolerable.