Swedish Supreme Court asks CJEU to Clarify Scope of ‘Communication to the Public’

Autohors: Nedim Malovic and Christopher Tehrani

The Swedish Collective Management Organisation (STIM) and the Swedish Artists’ and Musicians’ Interest Organisation (SAMI) instigated two separate proceedings against two car renting companies. Both cases followed missed payment (since 2014) of yearly licensing fees to STIM and SAMI, and they are currently pending before the Swedish Supreme Court. This has now decided to stay the proceedings, and ask the Court of Justice of the European Union (CJEU) to clarify the scope of communication to the public in Article 3(1) of Directive 2001/29 (InfoSoc Directive) and Article 8(2) of the Directive 2006/115 (the Rental Rights Directive).

STIM brought the first case against Fleetmanager, a company that leases vehicles, primarily to companies. The cars are equipped with built-in radio systems and are usually rented out to customers for a period of 29 days or less (short-term hire).

SAMI brought the second case against Nordisk Biluthyrning, which leases vehicles to private individuals, governmental authorities, and various companies.

Stim v Fleetmanager

STIM submitted that Fleetmanager should be considered responsible for obtaining a licence to make radio equipment systems available in its own vehicles to listen to protected content.

The District Court held that the leasing of cars equipped with radios meant that protected subject matter would be made available to the public within the scope of Section 2 of the Swedish Copyright Act (SCA). However, Fleetmanager could not be regarded as participating in the unlicensed activity and Stim’s claim was therefore dismissed. The Court of Appeal subsequently held that the scope of Section 2 of the SCA should be assessed in light of Article 3(1) of the InfoSoc Directive. Howevcr, the Court of Appeal also held that Fleetmanager could not be regarded as participating in the unlicensed activity.

Following Fleetmanager’s appeal to the Swedish Supreme Court, this argued that leasing cars equipped with integrated radio receivers - which are an integral part of the cars' control and information systems – is akin to providing the physical facilities required to enable or implement such transmission. This could therefore not be considered as “communication to the public”. In addition, neither do the people who rent cars constitute a new public because they have the ability to access the same musical works which are being broadcasted through the car's radio, through their smartphones that can be connected to the car's control and information system.

SAMI v Nordisk Biluthyrning AB

Nordisk Biluthyrning also submitted to the Patent and Market Court that it does not publicly transmit or transfer sound recordings to the public. In particular, the company stated that it was not a communicating the works to the public, because the vehicles’ built-in radio system forms an integral part of the car's equipment. The company could not therefore be considered as carrying out any deliberate action but as merely providing the physical conditions for a communication to the public to take place. The Patent and Market Court reasoned that the relevant provision, namely Article 8(2) of the Rental Rights Directive substantially corresponds to the provision relating to "communication to the public" in Article 3(1) of the InfoSoc Directive. Thus, by providing radio receivers in rental cars, the company made audio recordings available to its customers, which constituted a communication to the public.

The case was subsequently appealed to the Patent and Market Court of Appeal that reversed the first instance decision and held that the company could not be held liable.

The Swedish Supreme Court

Further to appeals to the Supreme Court, this stated that, according to CJEU case law, it is apparent that a communication to the public may take place – in the manner envisaged by Article 3(1) of the InfoSoc Directive – when transmissions are made by means of technical equipment to a nearby audience (e.g. in a café, rehabilitation centre, or a spa). Furthermore, the CJEU has held that hotel operators carry out a “communication to the public” in light of Article 8(2) of the Rental Rights Directive, when hotel rooms are equipped with phonograms available in digital or physical form and which can be played or intercepted (Phonographic Performance Ireland, C-162/10). Nonetheless, the CJEU also came to the contrary conclusion regarding transmission of phonograms in a dental office (Società Consortile Fonografici, C-135/10).

Another question is how the term “indeterminate number of potential recipients” (Reha Training, C-117/15, para 41) should be interpreted against the background in the case at hand. The Supreme Court has therefore asked the CJEU to answer the following questions (please note that these are our own translations from Swedish):

1. Does the leasing of cars, equipped with a radio receiver, mean that the leasing company, is a user who provides a communication to the public within the meaning of Article 3(1) of Directive 2001/29 or a communication to the public within the meaning of Article 8(2) of Directive 2006/115, respectively?

1. What significance, if any, does the scope of the car leasing business have, and the leasing period?