IP case law Court of Justice

Judgment of 29 Jun 1999, C-60/98 (Butterfly Music)



JUDGMENT OF THE COURT

29 June 1999 (1)

(Copyright and related rights — Directive 93/98/EEC — Harmonisation of theterm of protection)

In Case C-60/98,

REFERENCE to the Court under Article 234 EC (ex Article 177) by the TribunaleCivile e Penale, Milan, Italy, for a preliminary ruling in the proceedings pendingbefore that court between

Butterfly Music Srl

and

Carosello Edizioni Musicali e Discografiche Srl (CEMED),

Intervener:

Federazione Industria Musicale Italiana (FIMI),

on the interpretation of Article 10 of Council Directive 93/98/EEC of29 October 1993 harmonising the term of protection of copyright and certainrelated rights (OJ 1993 L 290, p. 9),

THE COURT,

composed of: G.C. Rodríguez Iglesias, President, P.J.G. Kapteyn, J.-P. Puissochet(Rapporteur), G. Hirsch and P. Jann (Presidents of Chambers), G.F. Mancini,J.C. Moitinho de Almeida, C. Gulmann, J.L. Murray, D.A.O. Edward and L. Sevón,Judges,

Advocate General: G. Cosmas,


Registrar: L. Hewlett, Administrator,

after considering the written observations submitted on behalf of:

—    Butterfly Music Srl, by Umberto Buttafava and Pierluigi Maini, of the MilanBar, and Alfio Rapisardi, of the Piacenza Bar,

—    Carosello Edizioni Musicali e Discografiche Srl (CEMED), by GianpietroQuiriconi and Luigi Carlo Ubertazzi, of the Milan Bar,

—    the Federazione Industria Musicale Italiana (FIMI), by Giorgio Mondini, ofthe Milan Bar,

—    the Italian Government, by Professor Umberto Leanza, Head of the LegalDepartment of the Ministry of Foreign Affairs, acting as Agent, and OscarFiumara, Avvocato dello Stato, and

—    the Commission of the European Communities, by Karen Banks and LauraPignataro, of its Legal Service, acting as Agents,

having regard to the Report for the Hearing,

after hearing the oral observations of Carosello Edizioni Musicali e DiscograficheSrl (CEMED), the Federazione Industria Musicale Italiana (FIMI), the ItalianGovernment and the Commission at the hearing on 9 February 1999,

after hearing the Opinion of the Advocate General at the sitting on 23 March 1999,

gives the following

Judgment

1.     By order of 12 February 1998, received at the Court on 2 March 1998, theTribunale Civile e Penale (Civil and Criminal District Court), Milan, referred to theCourt for a preliminary ruling under Article 234 EC (ex Article 177) a question onthe interpretation of Article 10 of Council Directive 93/98/EEC of 29 October 1993

harmonising the term of protection of copyright and certain related rights (OJ 1993L 290, p. 9; 'the Directive‘).

2.     That question has been raised in proceedings between Butterfly Music Srl('Butterfly‘) and Carosello Edizioni Musicali e Discografiche Srl ('CEMED‘),supported by the Federazione Industria Musicale Italiana ('FIMI‘), concerning theright to reproduce and exploit recordings which, after entering the public domainunder the legislation previously in force, have again become protected as a resultof the provisions transposing the Directive into national law.

3.     The Directive is designed to put an end to the differences between national lawsgoverning the terms of protection of copyright and related rights and to harmonisethose laws by laying down identical terms of protection throughout the Community. Thus, under Article 3, the term of protection for rights of performers and ofproducers of phonograms was set at 50 years.

4.     In accordance with Article 10(2) of the Directive, that term is to apply to all worksand subject-matter protected in at least one Member State on the date laid downfor implementation of the Directive, namely 1 July 1995 at the latest. However,Article 10(3) states that the 'Directive shall be without prejudice to any acts ofexploitation performed‘ before that date and that the 'Member States shall adoptthe necessary provisions to protect in particular acquired rights of third parties‘.

5.     In Italy, the term of protection for phonograph records and analogous media andfor performers was set at 30 years by Law No 633 of 22 April 1941 on Copyright(GURI No 166 of 16 July 1941). That Law was amended by a series of Decree-Laws promulgated in 1994 and 1995, which were not converted into Laws, and byLaw No 52 of 6 February 1996 (GURI No 34 of 10 February 1996, ordinarysupplement No 24; 'Law No 52/96‘), itself amended by Law No 650 of23 December 1996 (GURI No 300 of 23 December 1996), which preserved theeffects of the abovementioned Decree-Laws.

6.     Under Article 17(1) of Law No 52/96, the term of protection for the rights of theabovementioned persons was extended from 30 to 50 years. Article 17(2) of LawNo 52/96, as amended, specifies that that term of protection also applies to worksand rights no longer protected under the periods of protection previously in forceprovided that, under the new periods, they are protected afresh as at 29 June 1995. However, under Article 17(4) of Law No 52/96, as amended, those provisions areto apply without prejudice to instruments and contracts predating 29 June 1995 andto rights lawfully acquired and exercised by third parties thereunder. In particular,the following are not affected:

'(a)    the distribution and reproduction of works which have entered the publicdomain under the previous legislation, within the limits of the graphiccomposition and editorial presentation in which publication has taken place,

by the persons who have undertaken the distribution and reproduction ofthe works before the date of entry into force of this Law. Future updatesrequired by the nature of the works may also be distributed and reproducedwithout payment;

(b)    the distribution, for three months following the date of entry into force ofthis Law, of phonograph records and analogous media in respect of whichrights of use have expired under the previous legislation, by the persons whohave reproduced and marketed the said media before the date of entry intoforce of this Law‘.

7.     Butterfly, which is engaged in the production and distribution of music media,produced in November 1992, with the agreement of CEMED, a phonogramproducer which held the rights over the original recordings, and with authorisationfrom the Società Italiana Autori e Editori (Italian Society of Authors andPublishers; 'SIAE‘), a compact disc entitled 'Briciole di Baci‘ ('the CD‘)containing 16 songs interpreted by the singer Mina, which had been recorded in theperiod from 1958 to 1962.

8.     Those recordings entered the public domain at the end of 1992, but subsequently,in accordance with the Directive, the Decree-Laws referred to in paragraph 5above and Law No 52/96 increased the term of protection for rights of producersof phonograms and of performers from 30 to 50 years.

9.     At the end of 1995 and the beginning of 1996, CEMED, relying on the 'revival‘of its rights which resulted from the term of protection laid down by the Directive,sent Butterfly a letter of formal notice calling on it to cease the reproduction anddistribution of the CD. Butterfly then brought an action, on 10 May 1996, beforethe Tribunale Civile e Penale, Milan, for a declaration that it was entitled toreproduce the recordings on the CD.

10.     Before the national court, Butterfly contended in particular that the Directiveimplicitly precluded the renewal of rights which had expired and that, even if the'revival‘ of those rights were recognised, Law No 52/96, as amended, did notcomply with the obligation to protect acquired rights of third parties expressly laiddown in Article 10(3) of the Directive. CEMED, supported by FIMI, a tradeassociation representing Italian record producers, counterclaimed for an orderprohibiting Butterfly from making any further use of the works covered by the newperiod of protection.

11.     The Tribunale Civile e Penale considered that it was clear from Article 10(2) of theDirective that the protection of rights could be revived following the extension ofthe periods which was required in certain Member States by harmonisation of theterms of protection. However, having regard to the obligation to protect acquiredrights of third parties, it questioned the lawfulness of Article 17(4) of LawNo 52/96, as amended, which provides only a limited possibility for sound-recording

media in respect of which rights of exploitation entered the public domain beforethe date on which the Law entered into force to be distributed by third parties who,before that date, had acquired the right to reproduce and market them. Ittherefore decided to refer the following question to the Court for a preliminaryruling:

'Is the interpretation of Article 10 of Directive 93/98/EEC of 29 October 1993,particularly where it provides for the adoption of ”the necessary provisions toprotect in particular acquired rights of third parties”, compatible with Article 17(4)of Law No 52 of 6 February 1996, as amended by Law No 650 of23 December 1996?‘

Admissibility

12.     CEMED takes the view that the question referred for a preliminary ruling isinadmissible because it is irrelevant to the circumstances of the main proceedings. It relies, first, on the contract by which Butterfly agreed not to reproduce therecordings at issue after 31 July 1993, second, on the wording of the grounds of theorder for reference, which refers to the 'distribution of stocks‘, when all the copiesof the CD pressed by Butterfly were sold before the end of 1995, and, finally, onButterfly's lack of locus standi, having failed to obtain a copyright licence from theSIAE and authorisation from the singer Mina.

13.     As to that, according to settled case-law (see, in particular, Case C-415/93 UnionRoyal Belge des Sociétés de Football Association and Others v Bosman and Others[1995] ECR I-4921, paragraphs 59, 60 and 61), it is solely for the national courthearing the case, which must assume responsibility for the subsequent judicialdecision, to determine, in particular, the need for a preliminary ruling in order toenable it to deliver judgment. The Court of Justice may refuse a request made bysuch a court only where it is quite obvious that the interpretation of Communitylaw sought bears no relation to the actual facts of the main proceedings or theirpurpose, or where it does not have before it the factual or legal material necessaryto give a useful answer to the questions submitted (see, in particular, Bosman,paragraph 61). Since that is not the position in the present case, the questionreferred for a preliminary ruling cannot be declared inadmissible for a reasonrelating to its lack of relevance to the circumstances of the case.

14.     It is accordingly necessary to examine the question submitted.

The question submitted

15.     By its question, the national court asks the Court whether Article 10(3) of theDirective precludes a provision of national law such as the provision which, in Law

No 52/96, as amended, lays down a limited period in which sound-recording mediamay be distributed by persons who, by reason of the expiry of the rights relating tothose media under the previous legislation, had been able to reproduce and marketthem before that Law entered into force.

16.     Butterfly suggests that the Court should rule that Law No 52/96, as amended, isinconsistent with Article 10 of the Directive in that it does not confer suitableprotection for record producers who have undertaken in good faith the exploitationof works whose protection is revived following the extension of the term ofprotection of copyright and related rights. It maintains, in particular, that thethree-month limit, laid down in Article 17(4)(b), as amended, of Law No 52/96, onthe right to distribute records granted to persons who reproduced and marketedthem before Law No 52/96 entered into force, is unreasonable and conflicts withthe absence, under Article 17(4)(a), as amended, of that Law, of a limit for thedistribution of literary works which entered the public domain.

17.     CEMED, FIMI, the Italian Government and the Commission, on the other hand,suggest that the Court should rule that Article 10 of the Directive does notpreclude national legislation such as Law No 52/96, as amended. They contend, inparticular, that rules which restrict copyright and related rights must be interpretedrestrictively. FIMI and the Italian Government maintain, furthermore, that themore favourable treatment accorded by Law No 52/96, as amended, to publishersof literary works which have entered the public domain is justified by the highinvestment costs which they must bear. Finally, while the Commission does notshare that last view, it considers that the period laid down for the distribution ofstocks of phonographic media, which in fact lasted nearly a year taking account ofthe Decree-Laws promulgated in 1994 and 1995, is sufficient to comply with theobligation under the Directive to protect acquired rights of third parties.

18.     As the national court has observed, it is clear from Article 10(2) of the Directivethat application of the terms of protection laid down by the Directive may have theeffect, in the Member States which had a shorter term of protection under theirlegislation, of protecting afresh works or subject-matter which had entered thepublic domain.

19.     This consequence results from the express will of the Community legislature. Whilethe Commission's original proposal for the Directive provided that its provisionswould apply 'to rights which have not expired on or before 31 December 1994‘,the European Parliament amended that proposal by introducing new wording whichwas, in essence, taken up in the final version of the Directive.

20.     That solution was adopted in order to achieve as rapidly as possible the objective,formulated, in particular, in the second recital in the preamble to the Directive, ofharmonising the national laws governing the terms of protection of copyright andrelated rights and to avoid the situation where rights have expired in some MemberStates but are protected in others.

21.     However, Article 10(3) makes it clear that the Directive is without prejudice to anyacts of exploitation performed before the date laid down for its implementation,that is to say 1 July 1995 at the latest, and that the Member States are to lay downthe necessary provisions to protect in particular acquired rights of third parties.

22.     Guidance on that provision is provided by the final two recitals in the preamble tothe Directive. The 26th recital states that 'Member States should remain free toadopt provisions on the interpretation, adaptation and further execution ofcontracts on the exploitation of protected works and other subject-matter whichwere concluded before the extension of the term of protection resulting from thisDirective‘. According to the 27th recital, 'respect of acquired rights and legitimateexpectations is part of the Community legal order ... Member States may providein particular that in certain circumstances the copyright and related rights which arerevived pursuant to this Directive may not give rise to payments by persons whoundertook in good faith the exploitation of the works at the time when such workslay within the public domain‘.

23.     Reading these various provisions together, it is apparent that the Directive didprovide for the possibility that copyright and related rights which had expired underthe applicable legislation before the date of its implementation could be revived,without prejudice to acts of exploitation performed before that date, while leavingit to the Member States to adopt measures to protect acquired rights of thirdparties. In view of the wording of those provisions, such measures must beregarded as measures which the Member States are obliged to adopt, but whosedetail is left to the discretion of the Member States, provided, however, that theydo not have the overall effect of preventing the application of the new terms ofprotection on the date laid down by the Directive.

24.     As the Advocate General has stated in point 25 of his Opinion, that solution is,moreover, consistent with the principle that amending legislation applies, unlessotherwise provided, to the future consequences of situations which arose under theprevious legislation (see, in particular, Case 68/69 Bundesknappschaft v Brock [1970]ECR 171, paragraph 6, and Case 270/84 Licata v Economic and Social Committee[1986] ECR 2305, paragraph 31). Since the revival of copyright and related rightshas no effect on acts of exploitation definitively performed by a third party beforethe date on which revival occurred, it cannot be considered to have retroactiveeffect. Its application to the future consequences of situations which are notdefinitively settled means, on the other hand, that it has an effect on a third party'srights to continue the exploitation of a sound recording where the copies alreadymanufactured have not yet been marketed and sold on that date.

25.     Furthermore, while the principle of the protection of legitimate expectations is oneof the fundamental principles of the Community, it is settled case-law that thisprinciple cannot be extended to the point of generally preventing new rules fromapplying to the future consequences of situations which arose under the earlier

rules (see, in particular, Case 278/84 Germany v Commission [1987] ECR 1,paragraph 36, Case 203/86 Spain v Council [1988] ECR 4563, paragraph 19, andCase C-221/88 European Coal and Steel Community v Busseni [1990] ECR I-495,paragraph 35).

26.     In view of those considerations, national legislation, such as Law No 52/96, asamended, which permits persons, who were reproducing and marketing sound-recording media in respect of which the rights of use had expired under theprevious legislation, to distribute those media for a limited period from its entryinto force, meets the requirements of the Directive.

27.     First, such legislation satisfies the obligation imposed on the Member States toadopt measures to protect acquired rights of third parties. It is true that LawNo 52/96, as amended, allowed only a limited period of three months for thedistribution of sound-recording media. However, such a period may be consideredto be reasonable having regard to the objective pursued and, in particular, since,as the Commission has pointed out, under the circumstances in which the Directivewas transposed, by means of the Decree-Laws referred to in paragraph 5 aboveand Law No 52/96, the period actually ended nearly a year after the date ofimplementation of the Law.

28.     Second, such legislation, by limiting in that way the protection of acquired rights ofthird parties with regard to the distribution of sound-recording media, meets theneed to circumscribe a provision of that kind, which must necessarily be transitionalin order not to prevent the application of the new terms of protection of copyrightand related rights on the date laid down by the Directive, that being the Directive'sprincipal objective.

29.     That interpretation is not affected by the fact that another provision of LawNo 52/96, as amended, which does not apply in the main proceedings, lays downdifferent protective rules for acquired rights of third parties with regard to thedistribution of literary works. This second provision is for the benefit of a distinctclass of persons, who are not in the same situation as the persons concerned by thefirst provision. Irrespective of whether the protective rules covering that class meetthe requirements of the Directive, they cannot have any bearing on the assessmentof a measure which governs an objectively different situation.

30.     The answer to be given to the question referred for a preliminary ruling musttherefore be that Article 10(3) of the Directive does not preclude a provision ofnational law such as the provision which, in Law No 52/96, as amended, lays downa limited period in which sound-recording media may be distributed by personswho, by reason of the expiry of the rights relating to those media under theprevious legislation, had been able to reproduce and market them before that Lawentered into force.

Costs

31.     The costs incurred by the Italian Government and the Commission, which havesubmitted observations to the Court, are not recoverable. Since these proceedingsare, for the parties to the main proceedings, a step in the action pending before thenational court, the decision on costs is a matter for that court.

On those grounds,

THE COURT,

in answer to the question referred to it by the Tribunale Civile e Penale, Milan, byorder of 12 February 1998, hereby rules:

Article 10(3) of Council Directive 93/98/EEC of 29 October 1993 harmonising theterm of protection of copyright and certain related rights does not preclude aprovision of national law such as the provision which, in Italian Law No 52 of6 February 1996, as amended by Italian Law No 650 of 23 December 1996, laysdown a limited period in which sound-recording media may be distributed bypersons who, by reason of the expiry of the rights relating to those media underthe previous legislation, had been able to reproduce and market them before thatLaw entered into force.

Rodríguez Iglesias            KapteynPuissochet

        Hirsch            Jann                Mancini

Moitinho de Almeida            GulmannMurray

                Edward                Sevón

Delivered in open court in Luxembourg on 29 June 1999.

R. Grass G.C. Rodríguez Iglesias

RegistrarPresident

1: Language of the case: Italian.


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