OPINION OF ADVOCATE GENERAL

TESAURO

delivered on 22 January 1998 (1)

Case C-200/96

Metronome Musik GmbH

v

Music Point Hokamp GmbH

(Reference for a preliminary ruling from the Landgericht Köln)

(Rights related to copyright — Exclusive right of producer of phonograms toauthorise or prohibit the renting and lending of his works — Principle of freeenterprise — Validity of Directive 92/100/EEC)

1.

    By order of 18 April 1996 the Landgericht Köln (Regional Court, Cologne)sought a preliminary ruling from the Court on the validity of certain provisions ofCouncil Directive 92/100/EEC of 19 November 1992 on rental right and lendingright and on certain rights related to copyright in the field of intellectual property(hereinafter 'the Directive‘).

More specifically, the national court asks whether the grant of an exclusive right toauthorise or prohibit the rental of protected works, as provided for in Articles 1and 2 of the Directive, is compatible with the fundamental rights guaranteed byCommunity law, in particular the right of free enterprise.

Legislative background

2.

    The Directive, and likewise the other relevant directives (2) concerned withthe approximation of laws, was adopted by the Council following publication of theCommission Communication ('Green Paper‘) entitled 'Copyright and thechallenge of technology — Copyright issues requiring immediate actions‘. (3) Thepurpose of the Directive is to contribute to harmonisation of national lawsconcerning copyright and related rights, at the same time ensuring protection ofrights which is appropriate to the new technological context. The legal basis of theDirective is Articles 57, 66 and 100a of the EC Treaty.

3.

    For the purposes of these proceedings, the important provisions arecontained in Chapter I of the Directive, which governs the rental right and thelending right. (4) The rule of a general nature contained in Article 1(1) pursues

harmonisation. It provides that the Member States are to recognise 'the right toauthorise or prohibit the rental and lending of originals and copies of copyrightworks, and other subject-matter as set out in Article 2(1).‘ The latter provisionidentifies the persons to whom the exclusive rental right is to be granted: theauthor in respect of the original and copies of his work; the performer in respectof fixations of his performance; the phonogram producer in respect of hisphonograms; and the producer of the first fixation of a film in respect of theoriginal and copies of his film. Article 2(4) goes on to make it clear that the rightsin question may be transferred, assigned or subject to the granting of contractuallicences.

Article 1(2) and (3) define the rights conferred by Chapter I of the Directive. According to those paragraphs: '”rental” means making available for use, for alimited period of time and for direct or indirect economic or commercialadvantage‘ whilst '”lending” means making available for use, for a limited periodof time and not for direct or indirect economic or commercial advantage, when itis made through establishments which are accessible to the public.‘ Theproceedings before the national court are concerned only with the rules governingrental. Article 1(4) expressly states that exercise of the right of sale or distribution,in any form, of the protected works is not to entail exhaustion of the rights ofrental and lending. (5) The Directive thus makes the rental right entirelyautonomous, as a form of exploitation distinct from distribution of the original orcopies of the protected work.

4.

    Chapter II of the Directive is concerned with harmonisation of nationalprovisions relating to certain rights related to copyright, in particular the fixationright (Article 6), the reproduction right (Article 7), the right of broadcasting andcommunication to the public (Article 8) and the distribution right (Article 9). Theproducers of phonograms enjoy an exclusive right to authorise or prohibit thereproduction and distribution of their works and the right to fair remuneration inthe event of broadcasting or any communication to the public of the phonogramor a copy thereof.

Article 13, in Chapter IV, entitled 'Common provisions‘, is concerned with theeffect in time of the protective provisions of the Directive as a whole. For thepurposes of this case, Article 13(3) is of importance: it contains a transitionalprovision intended to facilitate application of the legislation to regimes in thoseStates in which the exclusive rental right had not yet been granted to authors andthe holders of related rights. (6) Finally, it should be noted at this point that, underArticle 15, Member States were required to adopt measures to implement theDirective by 1 July 1994.

5.

    The Directive was transposed into German law by a Law of 23 June 1995,which amended the general law on copyright and related rights (theUrheberrechtsgesetz (Copyright Law) of 9 September 1965, hereinafter 'theUrhG‘).

Prior to the entry into force of the implementing law, the rental of copyright workswas authorised in German law provided that the physical medium containing theprotected works was put into circulation with the consent of the holders of thebroadcasting rights (Paragraph 17(2) of the UrhG, old version); those included, byvirtue of Paragraph 85 of the UrhG, the producer as regards his own phonograms. Paragraph 27 of the Law required the renters to pay fair remuneration to theholders of distribution rights, and therefore, inter alia, to the producer.

6.

    Following the entry into force of the Law of 23 June 1995 Paragraph 17(2)of the UrhG was amended. In the new version, that provision expressly states thatrental is not to be regarded as a fresh, authorised dissemination of the original ora copy of a protected work legitimately put into circulation in the territory of oneof the Member States of the Community. The rental of protected works thusrequires the consent of the rightholders, that is to say the authors, performers andproducers of the phonograms. Under Article 4 of the Directive, where the rentalright vested in authors has been assigned to the producers of phonograms, the newversion of Paragraph 27 grants the former an unwaivable right to equitableremuneration. The person required to pay that remuneration is the personoperating the rental business.

The facts and the preliminary question

7.

    The German company Metronome Musik (hereinafter 'Metronome‘), theproducer of the compact disc 'Plant Punk‘ and therefore the holder of the rights

related to copyright recognised by German law, sought an interim injunction fromthe Landgericht Köln against Music Point Hokamp GmbH (hereinafter 'MusicPoint‘). Metronome complained that Music Point was, by way of trade, offeringfor rental copies of the abovementioned compact disc in breach of the exclusiverental right enjoyed by it under Paragraph 17(2) of the German Copyright Law. By order of 4 December 1995, the court granted the injunction and prohibitedMusic Point from renting out the product in question thereafter. Music Pointappealed against that order. It challenged the constitutional and Community basisof the legislation granting the producer of phonographic recordings the exclusiveright to authorise or prohibit the rental of protected works.

8.

    The national court rejected Music Point's arguments as unfounded. Entertaining doubts as to the compatibility of the Directive with the generalprinciple of Community law upholding free enterprise, it referred the followingquestion to the Court for a preliminary ruling:

'Is the introduction of an exclusive rental right, contrary to the principle of theexhaustion of distribution rights, by Article 1(1) of Council Directive 92/100/EECof 19 November 1992 on rental rights and lending rights and on certain rightsrelated to copyright in the field of intellectual property compatible with Communitylaw, in particular Community fundamental rights?‘

Preliminary remarks

9.

    In view of the general terms of the question, I think it is appropriate firstto define its scope so as to identify the aspects of the validity of the Directive withwhich these proceedings are concerned.

10.

    In the first place, it should be noted that the national court does not call inquestion the lending right, which is also conferred on the producers of phonogramsby Articles 1 and 2 of the Directive; nor, moreover, does it appear that there couldbe any question in this case of conflict with the principle of free enterprise, sincethe lending right is by definition exercised by establishments accessible to the public(for example, libraries) for purposes other than economic gain.

11.

    In the second place, even though the wording of the preliminary questionappears to refer in general to all categories of holders of the rental right includedin the list in Article 2 of the Directive, the court expressly refers in the grounds ofits order only to the exclusive right vested in the producers of phonograms. It isclear that the exercise of the exclusive right accorded to authors may also result inprohibition of hirers' activities. However, in the proceedings before the nationalcourt, the question of a conflict with the principle of free enterprise is raised onlyin relation to the right accorded to producers. Consequently, the considerationswhich follow will focus solely on the validity of the rental right granted to theproducers of phonograms.

12.

    It is also appropriate to emphasise that the question of validity will beexamined in relation only to the principle of free enterprise and not to othergeneral principles which might theoretically be of relevance in examining thedecision to grant producers the exclusive right to authorise or prohibit rental oftheir phonograms. (7) This approach is in fact supported, notwithstanding the generalterms of the question, by the text of the order for reference, which discloses withsufficient clarity the reasons for which the national court came to doubt the validityof the Directive.

13.

    A last clarification is called for concerning the actual nature of the rentalright and its relationship with the principle of exhaustion of copyright. It will benoted that in the text of its question the national court describes the grant of arental right to the categories mentioned by the Directive as being 'contrary‘ to theprinciple of the exhaustion of distribution rights. In other words, according to theLandgericht, the grant to authors and holders of related rights of the right toauthorise or prohibit the rental of protected works constitutes an exception to theprinciple of the exhaustion of distribution rights.

However, I feel unable to share that view which, moreover, does not appear to findany support in the case-law of the Court of Justice. In Warner Brothers, the Courtmade it clear that the express consent of the holder of a copyright or right relatedto the commercialisation of a physical medium containing the protected work,although rendering lawful subsequent sales of the same medium even without theexpress consent of the rightholder, does not authorise any different form ofeconomic exploitation of the work such as rental of the physical medium purchased.

The Court then made it clear that, in view of the emergence of a specific rentalmarket separate from the sales market, 'by authorising the collection of royaltiesonly on sales to private individuals and to persons hiring out video-cassettes, it isimpossible to guarantee to makers of films a remuneration which reflects thenumber of occasions on which the video-cassettes are actually hired out and whichsecures for them a satisfactory share of the rental market.‘ (8)

14.

    It is thus clear that the problem is badly defined. The release into circulationof the sound-recording medium cannot by definition de-restrict other forms ofexploitation of the protected work which are of a different nature from sale or anyother lawful form of distribution. Like the right of public performance, (9) includingbroadcasting, (10) the rental right remains a prerogative of the author and theproducer notwithstanding sale of the corpus mechanicum containing the work.

There is thus no question here of any exception, still less of anything 'contrary‘,to the principle of the exhaustion of copyright. The sale of the sound-recordingmedium entails solely exhaustion of the right of distribution, which allows theauthor to decide whether, how and when to commercialise the original or copiesof the protected work. Exercise of the distribution right cannot in itself thereforehave any effect on other prerogatives granted to the author and to the holder ofrelated rights, which make it possible to control any economic exploitation of theprotected work. That applies with greater force to those infinitely repeatableactivities that are capable of increasing the scale of exploitation of the work amongthe public: public performance, broadcasting and therefore also rental and lendingof copies of the work. (11)

Substance

15.

    The terms of the problem having been thus defined, the first substantivepoint concerns the actual scope of the right conferred by Articles 1 and 2 of theDirective. The provisions in question, far from prohibiting rental of protectedworks, grant specified categories of holders the exclusive right to authorise orprohibit the rental of such works.

16.

    It is therefore clear that the legislative choice represented by the grant ofan exclusive right is capable of impairing pursuit of the economic activity of rentingphonographic products such as compact discs. By contrast with the position

obtaining in a number of Member States before the introduction of Communityrules for the harmonisation of legislation, that activity can be carried on only if therightholders grant the requisite licences. It appears from the documents before theCourt that the producers of phonograms, vested with the rental right in respect oftheir works, prefer for the time being, on the basis of economic assessments, notto allow third parties to hire out their products.

17.

    It is apparent from the case-law of the Court that the freedom to pursue atrade or profession, far from being an absolute prerogative, must be viewed withinthe Community legal order in relation to its social function. It follows thatCommunity law may impose restrictions on the exercise of that right, provided thatthey in fact correspond to objectives of general interest pursued by the Communityand do not constitute in relation to the aim pursued a disproportionate andintolerable interference, impairing the very substance of the rights guaranteed. (12)

18.

    That said, it is now necessary to consider whether the reasons whichprompted the Community legislature to grant the producer of phonograms anexclusive right to authorise or prohibit the rental of their phonographic productsare such as to conform to the parameters just outlined.

    —    The reasons for harmonising national provisions concerning the rental right

19.

    In the preamble to the Directive the Council indicates the objectives itpursued in granting the rental right to the categories of persons indicated in Article2. In the first place, mention is made of the way in which harmonisation of thelegislation of the Member States regarding copyright and related rights contributedto the establishment and proper functioning of the internal market. In the firstrecital it is stated that 'differences exist in the legal protection provided by the lawsand practices of the Member States for copyright works and subject matter ofrelated rights protection as regards rental and lending [and] such differences aresources of barriers to trade and distortions of competition which impede theachievement and proper functioning of the internal market‘. The third recital addsthat 'such differences should therefore be eliminated in accordance with theobjective of introducing an area without internal frontiers as set out in Article 8aof the Treaty so as to institute, pursuant to Article 3(f) of the Treaty, a systemensuring that competition in the common market is not distorted‘.

The requirements of uniformity in the rules governing the rights provided for in theDirective are then set out in the eighth and ninth recitals. In the eighth it is statedthat creative, artistic and entrepreneurial activities, and in particular those of

producers of phonograms and films, are, to a large extent, activities ofself-employed persons and that the pursuit of such activities must be made easierby providing harmonised legal protection within the Community. In the ninthrecital, it is added that 'to the extent that these activities principally constituteservices, their provision must equally be facilitated by the establishment in theCommunity of a harmonised legal framework‘.

20.

    The reasons just outlined have my support. The Warner Brothers judgmentcited above had already disclosed distortions in the functioning of the internalmarket deriving from discrepancies in national legislation on the rental of protectedworks. (13) The Court took the view that the national measures in questionconstituted measures having an effect equivalent to a quantitative restriction ontrade but one which was, nevertheless, justified under Article 36 of the Treaty inthat it was designed to protect intellectual property. The only way of eliminatingbarriers to the free movement of goods was the adoption of legislation toapproximate national provisions. (14)

21.

    It is not superfluous to point out that, before harmonisation, a lending rightwas granted by operation of law, albeit under differing procedures, in France,Spain, Portugal and the United Kingdom. In Italy, the dominant trend in the case-law made the right at issue part of the right 'to put into circulation‘ provided forin the old version of Article 72 of the special law on copyright. In Belgium, Greeceand Luxembourg, the legislative position was not particularly clear and the patternof the case-law was not clearly identifiable, but the lending right was in generalassociated with the 'right of destination‘ recognised by domestic law. In otherStates the rental right was close to achieving legislative recognition, on the Germanmodel of adequate remuneration considered earlier (that is the position in theNetherlands), or was granted only to authors (as in the case of Denmark). Onlyin Ireland was no lending right recognised in respect of protected works. (15)

In those circumstances, it must necessarily be recognised that harmonisation of thelegislative provisions in the Member States concerning the lending right, and inparticular the grant to producers of a lending right in respect of their phonograms,as a right separate from that of authors and performers, is certainly justified by theaim of promoting the proper functioning of the internal market, in particular thefree movement of goods and services, and of avoiding distortions of competition. Moreover, as is made clear in the second recital in the preamble to the Directive,differences in legal protection could well become greater 'as Member States adoptnew and different legislation or as national case-law interpretation of suchlegislation develops differently‘.

22.

    In addition to the objective of ensuring the proper functioning of theinternal market, it must also be borne in mind that 'the adequate protection ofcopyright works and subject matter of related rights protection by rental andlending rights‘ can be regarded as being 'of fundamental importance for theCommunity's economic and cultural development‘ (fifth recital). The link betweenthe grant of the lending right to producers and the Community's economic andcultural development will be more clearly defined below, when the Council'sdecision to grant an exclusive right to producers to authorise or prohibit the rentalof their works is discussed. It is nevertheless appropriate to have regard, in thatconnection, to Article 128 of the EC Treaty, inserted by Article G(37) of the Treatyon European Union, under which the Community is given the task of contributingto the development of cultural diversity. Among the areas of cultural importance,Article 128(2) includes artistic and literary creation. In particular, Article 128(4)provides that the Community is to take cultural aspects into account in its actionunder other provisions of that Treaty.

The provision in question, it will be remembered, entered into force after theadoption of the Directive. However, I do not think that fact is decisive since theprovision is without doubt an expression of a general principle.

—    The grant of an exclusive rental right to the producer of phonograms

23.

    The comments made thus far fully support the Council's decision to proceedwith harmonisation of national legislation on the lending right. It remains, however,to consider the compatibility with the right of free enterprise of the Council'schoice in granting the producers of phonograms the exclusive right to authorise orprohibit rental of their works.

On close examination, there are genuine grounds for complaint against theprovisions of the Directive. The undertakings which, by way of trade, rented outcompact discs in Germany before the entry into force of the domestic lawimplementing the Directive were in any event required by the domestic legislationto pay producers adequate remuneration for the economic exploitation of their

phonograms. It would therefore have been sufficient, in the view of Music Point,to strike a balance between the opposing interests in such a way as to keep accessto the rental market available to commercial operators, without prejudice to theobligation to recognise the right of the producers of phonograms to fairremuneration.

24.

    In assessing the proportionality of the solution adopted in the Directive, itis therefore necessary to show that the Community objectives of general interest,as outlined above, could not have been attained by measures which would havebeen less onerous for rental businesses. The national court itself notes in its orderfor reference, whilst recognising that the introduction of an exclusive rental rightis justified and necessary to ensure the creation and functioning of the internalmarket, that the question 'must be asked whether, in view of [the] extreme effects[of that solution] on the freedom to pursue the business of renting CDs, theeconomic interests of phonogram producers and the operation of the single marketcould not equally have been assured by an obligatory right to remuneration.‘

Let me say immediately that that question must be answered in the negative.

25.

    In the first place, as made clear by the Council in the sixth and seventhrecitals in the preamble to the Directive, copyright and related rights protectionmust adapt to new economic developments such as new forms of exploitation ofprotected works. That adaptation must take the form of the introduction ofprovisions to protect the holders of intellectual property rights so as to allow themto receive 'an adequate income as a basis for further creative and artistic work‘. The justification for the protection offered by the legislation on copyright andrelated rights to the producers of phonograms has always been based on theprotection of the particularly high-risk and substantial investments which constitutean absolutely essential precondition for authors to go on creating new works. Consequently, 'the possibility for securing that income and recouping thatinvestment can only effectively be guaranteed through adequate legal protection ofthe rightholders concerned‘ (last sentence of the seventh recital). The return onthe investor's investment also constitutes, indirectly, the remuneration for theauthor's intellectual endeavours.

26.

    As far as the rental right is concerned, the grant of an exclusive right toproducers certainly appears to be the most effective form of protection. Thus, inthe case of CDs, if the producer were not allowed to decide whether and when togrant third parties a licence to rent them, the door would be left open to thephenomenon, already witnessed in the past in the absence of clear rules, of sale atthe rental price. In other words, the borrower of the physical medium containingthe recording could, at little cost, obtain a copy of the product and very easilyreproduce its content. Indeed, what commonly happens in the case of CDs, asopposed to video-cassettes, is that they are rented not so much for listening as forthe purpose of obtaining a personal copy of the protected work.

Furthermore, that operation can, potentially, be repeated an infinite number oftimes. The sale of a single copy to a person in the rental business allows it to berented out on a considerable number of occasions, in view of the fact that, unliketheir vinyl counterparts, CDs do not easily wear out. Moreover, the introductionof digital technology for unrecorded tapes as well (DAT) now makes it possible toreproduce the content of the CD with the same high quality as the original, andthis makes rental even more attractive. Those developments would clearly lead toa considerable shrinkage in sales of phonographic products which could not beoffset by rental income. There would then be a risk that it would be impossible toassure adequate remuneration for those who make investments to producephonographic products, and this would of course have repercussions for thecreation of new works. In addition, producers would concentrate exclusively oninvestments in commercial, and thus more profitable, works, to the detriment ofcultural pluralism within the Community.

27.

    The information given in the order for reference and again in theobservations of Music Point, according to which the market in sales of CDs did notregister any decline in Germany when renting was still permitted, (16) does not seemsignificant. First, it relates to the market situation at a time when technologicaldevelopments had not yet made renting a de facto alternative to sales; second — andthis is a more important point — the accuracy of the assessments made by theCommunity institutions as a basis for the content of harmonising legislation cannotbe verified solely in the light of statistics relating to one or more Member States.

28.

    The grant of the exclusive right cannot be isolated from a proper assessmentof the potential effects of technological developments. The rules laid down in theDirective, including the transitional provisions which allow renting of recordingsacquired before a specified date, offer a solution whereby excessive impairment ofinvestments can be prevented. That solution is thus entirely proportionate to theaims pursued by the harmonisation of legislation, since it was necessary in order toensure adequate protection for the rights of phonogram producers.

On this point I would also observe that, when the Directive entered into force,some Member States had already introduced in their domestic legislation anexclusive rental right for phonogram producers, a fact which the Council could notignore when adopting Community harmonising legislation. Any other course wouldprobably have helped maintain barriers to the functioning of the internal marketrather than removing them.

29.

    In short, the Council was right to decide to introduce legislation affordingspecial protection for the lending right of authors, performers and producers, which was exposed to encroachment as a result of technological progress. In thecase of producers, the extreme ease with which recordings of works can be

reproduced is liable to cause serious damage to the profitability of theirinvestments. The sacrifice imposed on those who in the past legitimately engagedin the business of renting out recordings appears, in that respect too, to beproportionate to the aim pursued. It must be borne in mind that the right topursue a trade or profession must always be viewed in conjunction with therequirements of protection of intellectual property and with developments in therental market due to new technologies.

30.

    Furthermore, the requirements imposed clearly enjoy an internationalconsensus. Whilst it is true that the Berne Convention for the Protection ofLiterary and Artistic Works, the latest revision of which dates back to 1971, and the1961 Rome Convention on related rights, for reasons which are understandable inview of developments in sound-reproduction technology, contain no provisionsconcerning the lending right, recent convention practice has been directed whollytowards the strengthening of protection. That is particularly true with regard tophonogram producers.

In that regard, particular importance attaches to the Agreement on Trade-relatedAspects of Intellectual Property Rights (TRIPS) annexed to the Agreementestablishing the World Trade Organisation, (17) to which both the Community and theMember States are parties. Article 11 of TRIPS provides that 'In respect of atleast computer programs and cinematographic works, a Member shall provideauthors and their successors in title the right to authorise or to prohibit thecommercial rental to the public of originals or copies of their copyright works‘. Article 14 then provides that the provisions of Article 11 are to 'apply mutatismutandis to producers of phonograms and any other right holders in phonogramsas determined in a Member's law. If on 15 April 1994 a Member has in force asystem of equitable remuneration of right holders in respect of the rental ofphonograms, it may maintain such system provided that the commercial rental ofphonograms is not giving rise to the material impairment of the exclusive rights ofreproduction of right holders‘. Now, at least as far as CDs are concerned, it seemsto me that the comments made earlier show that a system based on fair financialreturn is by definition liable substantially to undermine the exclusive reproductionright of phonogram producers.

31.

    A provision of similar content is also to be found in the Performances andPhonogram Treaty, opened for signature in Geneva on 20 December 1996 onconclusion of the diplomatic conference organised by WIPO (World IntellectualProperty Organisation), which was devoted to the updating of internationalconventions in force concerning copyright and related rights. By contrast with

Article 14 of TRIPS, Article 17 of the Geneva Convention lays down a maximumterm beyond which the members may not maintain a system of adequateremuneration (three years as from entry into force of the Treaty).

32.

    No examination of the validity of the provisions of the Directive concerningthe rental right can disregard those extremely important details. They are evidenceof an extremely wide consensus in favour of strengthening protection forphonogram producers in accordance with the approach taken by the Council whenit adopted the Directive. (18) In that connection, it is significant that in the preambleto the Directive reference was made to the need for the legislation of the MemberStates to be approximated 'in such a way as not to conflict with the internationalconventions‘.

That means that in interpreting the general principle of freedom of economicenterprise and the corresponding fundamental right, the international obligationsentered into by the Community and the Member States cannot be disregarded. Economic enterprise is not entirely unrestricted if its exercise undermines theprotection of intellectual property rights whose recognition enjoys an extremelywide consensus in the international community.

33.

    It should be noted, finally, that the Directive does not a priori preventproducers from granting the requisite licences for rental in response to offers whichthey see as profitable. A problem not easily solved would arise, however, if it wereshown that the sole purpose of the prohibition of granting rental licences was toeliminate those engaged in the rental business from the market — so that,subsequently, the same market could be occupied by undertakings controlled byproducers. No problem of that kind is involved here: we are concerned here onlywith the validity of the provisions of the Directive which grant an exclusive right toauthorise or prohibit the rental of phonographic products. However, in the eventof the procedures for exercising the exclusive right in question being called inquestion, I do not think it could be affirmed with certainty, in the light of recentcase-law of the Court of Justice, that the requirements of general interest whichmotivated the grant of the right are such that it may even be exercised in clearbreach of Article 86 of the Treaty. (19)

Conclusion

34.    In the light of the foregoing considerations, I propose that the Court givethe following answer to the question submitted by the Landgericht Köln:

    Consideration of the question referred to the Court has not disclosed any factor ofsuch a kind as to affect the validity of Article 1(1) of Council Directive 92/100/EECof 19 November 1992 on rental right and lending right and on certain rights relatedto copyright in the field of intellectual property.

1: Original language: Italian.

2: —    Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computerprograms (OJ 1991 L 122, p. 42); Council Directive 93/83/EEC of 27 September 1993 onthe coordination of certain rules concerning copyright and rights related to copyrightapplicable to satellite broadcasting and cable retransmission (OJ 1993 L 248, p. 15);Council Directive 93/98/EEC of 29 October 1993 harmonising the term of protection ofcopyright and certain related rights (OJ 1993 L 290, p. 9); and Directive 96/9/EC of theEuropean Parliament and of the Council of 11 March 1996 on the legal protection ofdatabases (OJ 1996 L 77, p. 20).

3: —    COM(88) 172 final of 10 November 1988.

4: —    Rules conferring the exclusive right to authorise or prohibit rental are also found in otherdirectives concerning the protection of copyright. Article 4(c) of the abovementionedDirective 91/250/EEC conferred on the authors of computer programs an exclusive rightin respect of 'any form of distribution to the public, including the rental, of the originalcomputer program or of copies thereof‘. That right is now covered by the general rule inArticle 1 of Directive 92/100/EC. Also of importance is Article 7(2)(b) of theabovementioned Directive 96/9/EC, which also confers the exclusive right to authorise orprohibit rental on authors ('makers‘ in the terminology used in the Directive) of databaseswho, not fulfilling the requirement of originality, are not afforded protection by copyright. That right concerns operations of re-use of the database (or a substantial part thereof)

which the maker may prohibit.

5: —    The right of distribution as a right related to copyright is defined by Article 9(1) of theDirective as ' — for performers, in respect of fixations of their performances, — forphonogram producers, in respect of their phonograms, — for producers of the first fixationsof films, in respect of the original and copies of their films, — for broadcastingorganisations, in respect of fixations of their broadcast as set out in Article 6 (2), theexclusive right to make available these objects, including copies thereof, to the public bysale or otherwise‘.

        Article 9(2) provides: 'The distribution right shall not be exhausted within the Communityin respect of an object as referred to in paragraph 1, except where the first sale in theCommunity of that object is made by the rightholder or with his consent.‘ Finally, Article9(3) provides that the distribution right is to be without prejudice to the specific provisionsconcerning the rental right.

6: —    Under Article 13(3) the Member States retain the right to lay down in domestic legislationthat rightholders are deemed to have given their authorisation for the rental or lending ofan object acquired before 1 July 1994. However, Member States may also determine thatrightholders are entitled at least to obtain adequate remuneration for the rental or lendingof that object, particularly if it is a digital recording.

7: —    I refer to the right of every person to enjoy access to culture, recognised in internationalinstruments concerning human rights to which the Member States contributed or becameparties. I have in mind for example the Covenant on Economic, Social and CulturalRights drawn up by the United Nations and opened for signature in New York on 10December 1996, Article 15 of which provides: 'the States parties to the present Covenantrecognise the right of everyone (a) to take part in cultural life; (b) to enjoy the benefitsof scientific progress and its applications; (c) to benefit from the protection of the moraland material interests resulting from any scientific, literary or artistic production of whichhe is the author‘. I also have in mind Article 27 of the Universal Declaration of HumanRights, approved by the General Assembly of the United Nations on 10 December 1948,which confers on every individual 'the right freely to participate in the cultural life of thecommunity, to enjoy the arts and to share in scientific advancement and its benefits‘. Thesecond paragraph of that article also expressly recognises copyright as a human right:'Everyone has the right to the protection of the moral and material interests resultingfrom any scientific, literary or artistic production of which he is the author‘.

    On this point, see Cassin, 'L'intégration, parmi les droits fondamentaux de l'homme, desdroits des créateurs des oeuvres de l'esprit‘, in Études sur la Propriété Industrielle, Littéraire,Artistique. Mélanges Robert Plaisant, Paris, 1960, p. 225 et seq. The classification ofcopyright as a human right in international instruments will not be taken into account heresince the intellectual property right at issue is a related right which does not come withinthe scope of the legislation cited above.

8: —    Case 158/86 Warner Brothers and Another v Christiansen [1988] ECR 2605, paragraph 15.

9: —    Case 395/87 Ministère Public v Tournier [1989] ECR 2521.

10: —    Case 62/79 Coditel v Cine Vog Films [1980] ECR 881.

11: —    See Sarti, Diritti esclusivi e circolazione dei beni, Milan, 1996, p. 312 et seq.; Bergé, LaProtection internationale et communautaire du droit d'auteur, Paris, 1996, p. 128 et seq.

12: —    See inter alia Case 4/73 Nold [1974] ECR 491, paragraph 14; Case 265/87 Schräder [1989]ECR 2237, paragraph 15; Case C-280/93 Germany v Council [1994] ECR I-4973, paragraph78; Case C-44/94 Fishermen's Organisations and Others [1995] ECR I-3115, paragraph 55.

13: —    Judgment cited in footnote 7, paragraph 10: 'the commercial distribution of video-cassettestakes the form not only of sales but also, and increasingly, that of hiring out to individualswho possess video-tape recorders. The right to prohibit such hiring out in a Member Stateis therefore liable to influence trade in video-cassettes in that State and hence, indirectly,to affect intra-Community trade in those products. Legislation of the kind which gave riseto the main proceedings must, therefore, in the light of established case-law, be regardedas a measure having an effect equivalent to a quantitative restriction on imports, which isprohibited by Article 30 of the Treaty‘.

14: —    The Court recognised, in Joined Cases C-92/92 and C-326/92 Phil Collins and Others [1993]ECR I-5145, paragraph 26, that 'It is ... precisely in order to avoid the risk of hindrancesto trade and the distortion of competition that the Council has, since the disputes in themain proceedings arose, adopted Directive 92/100/EEC of 19 November 1992 on the rentalright and lending right and on certain rights related to copyright in the field of intellectualproperty, on the basis of Article 57(2) and Articles 66 and 100a of the Treaty‘.

15: —    This information comes from the report accompanying the proposal for a CommissionDirective, Doc. COM(90) 586 of 24 January 1991, paragraph 11 et seq.

16: —    The data are, however, contested by Metronome.

17: —    The WTO Agreement and its schedules, signed in Marrakesh on 15 April 1994, wereapproved on behalf of the Community by Council Decision 94/800/EC of 22 December1994 concerning the conclusion on behalf of the European Community, as regards matterswithin its competence, of the agreements reached in the Uruguay Round multilateralnegotiations (1986-1994) (OJ 1994 L 336, p. 213).

18: —    It should also be noted that the WIPO proceedings regarding protection of the rental rightwere taken into consideration by the Commission in drawing up the proposal for adirective — see paragraph 40 and note 12 of the introductory report cited in footnote 14.

19: —    The judgment in Joined Cases C-241/91 P and C-242/91 P RTE and ITP v Commission[1995] ECR I-743 offers more than one reason for controlling the way in which theexclusive right granted to the producers of phonograms is exercised. I would add, however,that the conclusion reached by the Court in that judgment deserves some clarification: itwould be unacceptable to interpret it as a general justification for control, by means of thecompetition provisions, of decisions by authors regarding the exercise of their essentialprerogatives such as the right of reproduction and performance. The status of fundamentalright attributed to copyright by the international instruments referred to earlier stands in

the way of such a conclusion. The same cannot be said of rights related to copyright, towhich the international provisions do not accord equivalent protection.