The European Court of Justice in favour of strengthening copyrights in Poland

Judyta Papp talks to professor Elzbieta Traple from the Faculty of Civil Law at Jagiellonian University. Conversation was published on Lex.pl website.

Judyta Papp: The decision of the European Court of Justice has just been announced regarding case C 367/15 of 25 January 2017 on executing the intellectual property rights and compliance of the domestic legal provision interpreted in Article 13 of Directive 2004/48/EC by the European Parliament and Council.

El?bieta Traple: Yes, the decision was issued as a result of the compliant filed to the Court by a Polish economic entity and pertains one of the claims provided in Article 79 of the Copyright Act, the so-called lump sum claim, i.e. for the payment of adequate remuneration which would be payable to the creator, if the creator granted a permission for the use the property.

It seems that the creators’ environment should be very satisfied with the decision as the ground-breaking views of the Court strengthens the protection of copyright in Poland. Can you describe the essence of the problem resolved by the decision??

The Polish legislator provided that the entitled entity may claim from the violating party a double sum of money of the potential remuneration. The claimant believed that such a claim is in violation with Article 13 of the directive you mentioned, therefore, the domestic law allows establishing a lump-sump remuneration only at the level of a one-time license fee. The Court did not find such a violation and the decision suggests that Article 79 is not in conflict with the Directive in its current meaning.

Let’s talk about this difference as the entitled party may seek damages on the basis of general principles.

The difference is very material as in many situations the creator cannot prove the amount of the damage he/she incurred as, e.g. by this point, he/she has not been using the work for commercial purposes or would not have intended to grant a permission to the given entity. The creator’s damage might not be easy to translate into the the amount of potential remuneration also due to the fact that the illegal use (for example publication on the Internet) may cause the lack of interest in other forms of use, like printable form.

Yes, undoubtedly.

Therefore, the decision on the potential single remuneration won't reflect the amount of the actual damage and it won’t serve as a preventive measure, not to mention the fact that such a damage would encourage the violation as, in case of finding a breach, the perpetrator would have to consider payment, if it concluded a contract. It is a truly minor risk. The preventive aspect is substantial as it is a significant element in shaping a friendly environment for perpetrators.

What significant elements can you see in the justification of the Court which would be meaningful for Polish courts?

The Court emphasizes that the payment of the potential license fee - in case of the breach of the intellectual property right - is not adequate to the damage incurred and it may not be treated as a full compensation.

The justification strongly emphasizes the essence of the lump sum nature of such a compensation. In a specific situation, the actual damage is higher because a normal license fee does not ensure either return of expenditure related to the investigation and identification of the acts of violation or consider the damage in terms of the creator’s interests. The Court is right in stating that the fact that a respective double remuneration is not exactly proportional to the actual damage incurred is irrelevant as the feature is inseparably related to the each lump sum remuneration.

Under the EU law, the effective measures for executing the intellectual property law and substantive law in the scope of intellectual property rights, prevention and security have a fundamental meaning for the stabilization of economic conditions of cultural growth.

It is obvious and I guess nobody can deny it. Member States that care about the high level of protection should shape their protective measure systems in a manner that would make violating copyright unprofitable. Thanks to the possibility to claim a double amount of the relevant remuneration without the need to conduct the difficult evidential process - in regard to the amount of the actual damage (which would be necessary, if we assumed the necessity to investigate the proportion between the remuneration and the damage in the factual state), undoubtedly shortens the road to obtaining a decision, which also isn’t without significance.

But in the justification of its decision, dated 25 January 2017 in case C367/15, the EU Court of Justice goes one step further. You may see a clear change in the direction towards the justification of the Constitutional Tribunal (case No. SK 32/14) of 23 June 2015.

Right, as for treating multiple remuneration as unacceptable punitive damages in its principle. Let’s leave aside whether it should be twice or three times the amount as it is irrelevant here. In the position of the Court of Justice on the decision in question, it should be indicated that there is no way to establish a lump sum remuneration without accepting its immanent feature, i.e. detaching - like in case of a contractual fine - from the actual amount of damage and indicating that the payment of a single remuneration does not, in principle, fully compensate for the loss incurred by the creator.

As a matter of fact, there are very few cases of involuntary violation, usually it is marginal. Thus, with regard to the position of the Court of Justice on the matter of preliminary ruling, what reflections should we expect in Poland?

Well, the decision is meaningful not only for Polish creators. A lump sum remuneration in the form of a double amount of appropriate remuneration was also provided in some other European countries. In Poland, a lump sum remuneration in the form of multiple remuneration, payable if a contract had been concluded, was introduced in the Polish Act before the adoption of the Directive and the solution has a long tradition. It would be interesting to investigate how often it is applied in the practice of copyright disputes and how it has contributed to reducing piracy. Remember that although the dispute that was the cause of filing a preliminary ruling pertained collective management organization (CMO) and the economic entity, the measures provided in the Act serve all entitled parties equally and we should not look at the regulation from the perspective of the CMO interests.

Yes, it is important but it serves not only creators and entitles entities as a success on the market depends, to a large extent, on the effective execution of intellectual property rights.

Drawing on the header by Stefan Papp