Background – How radio is licensed

When radio was introduced, at the turn of the 20th century, the phonograph record industry was concerned that they would see no gain from the popularity of radio and the ‘free’ music it provided. As a result, copyright law - which until then only recognized the existence of copyright in musical compositions - was made to adapt to the new technological environment and the concept of owning rights in a sound recording started to emerge. In the UK, phonogram producers or, to use a more recognisable term, record labels, have been afforded performing rights since the Copyright Act 1911. The right was later recognized by the international community and extended to performers, when the Rome Convention¹ was adopted in 1961². To address radio providers’ concern that the international recognition of these two new set of rights should not alter the way in which they accessed music, the drafters of the Rome Convention invented the concept of ‘equitable remuneration’, which required that a pre-determined sum be paid by broadcasters (or anyone communicating phonograms to the public) to “performers, or to the producers of the phonograms, or to both”³ in exchange for their use of sound recordings. This was later translated in the Copyright, Designs and Patents Act 1988 (“UK Copyright Act”) which accorded performers the right to receive equitable remuneration when a sound recording is communicated to the public by broadcasting or otherwise. The right is personal and performers may not assign their right, except to a collecting society. The collecting society to which performers traditionally assign their right to receive equitable remuneration is the Phonographic Performance Ltd (PPL), whose members are comprised of performers and record labels. PPL is also empowered by record labels (on the basis of the rights they hold) to deliver licences to radio stations based in the UK and the resulting royalties are divided 50/50 between the performers and labels. 

The system is and has always been a territorial system, as radio waves (and copyright rules) were limited in territorial scope. It is similar to the system in other European countries where radio stations are also licensed territorially by collecting societies representing performers and record labels, or in certain instances, by the law. Yet, when radio transitioned online and started offering feeds via streaming over the world wide web, most radio stations continued to be licensed under their national schemes, despite a growing international audience.

Key issue

This tension, between national licensing schemes and a global outreach provides the backdrop for this case. Interestingly, the same tension also provided the backdrop for another controversial text, finally adopted and published during the spring of 2019: ‘directive (EU) 2019/789 of 17 April 2019 laying down rules on the exercise of copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes, and amending Council Directive 93/83/EEC’, also known as the ‘New Sat/Cab Directive’.

Both the decision and the new directive are examined below.

Findings of the case

Sample Stations

The Claimants relied on their full catalogue of repertoire in the proceedings, but the parties agreed that the trial would be conducted by reference to a sample of music stations (‘Sample Stations’). Importantly, four categories of Sample Station were agreed upon, in the context of the case:

• Category 1: radio stations licensed in the UK;
• Category 2: radio stations not licensed in the UK or elsewhere;
• Category 3: radio stations licensed for a territory other than the UK; and
• Category 4: internet radio stations operated by TuneIn, seemingly without a licence, but disconnected in 2017.

Communication to the public

The case revolves around the central question of whether the act restricted by copyright of communication to the public is deemed to have taken place; and whether the act in question has been permitted by the relevant rightsholders (or by the law, where applicable).

‘Communication to the public’ is one of the most sophisticated and complex concept of modern European copyright law. The concept is enshrined in Article 3 of Directive 2001/29 for works of authorship and in Article 8 of Directive 2006/115 for performances and – having been elevated to the status of an “autonomous concept of Union law” in 2006⁴ - its interpretation rests with the Court of Justice of the European Union (“CJEU”). An analysis of the case law of the CJEU on the right of communication to the public shows that, currently, the CJEU proposes no less than 18 criteria which are considered as constituent elements of the right. One consequence of this criteria inflation through the application of case law is that it is extremely difficult for operators in the field of media and entertainment to faultlessly assess their situation and the copyright precautions or licences they need to implement to protect their businesses. This is all the more problematic in a world where media is increasingly consumed online, an environment where the right of communication to the public is always engaged. In the case at hand, the Court chose not to refer the question to the CJEU. Rather, it mustered the courage to analyse and dissect the case law of the CJEU, and having offered its interpretation of the same, drew the following conclusions: 

Radio stations licensed by PPL, in the UK (Category 1). The Court decided that there was no ‘new’ communication to the public. The consent provided by the rights holder, via PPL, envisioned that the user will be located in the UK. There was therefore no ‘new public’ (one of the criteria applied by the CJEU) and no infringement in the UK by either the radio stations or TuneIn. This was an important win for the defendant, as it retained the right to provide UK users with access to radio stations licensed in the UK by PPL.

Foreign radio stations, unlicensed radios, and unlicensed webradios operated by TuneIn. While TuneIn enjoyed a small victory in Category 1, it had no such success with Categories 2, 3 and 4, for which the Court held that TuneIn was engaging in a new act of communication to the public and thereby infringed the rights of the Claimants when the radio station was targeted at a UK public. The Court found that targeting was evidenced by TuneIn’s active role in, among other things, delivering geographically tailored advertisements. The Court further held that the providers of the radio stations in Categories 2, 3, and 4 were jointly responsible for such infringement on the basis that they ‘authorised’ the activities of TuneIn, as construed under section 16(2) and 16(3) of the UK Copyright Act.⁵

While the conclusion of the Court in relation to the stations in Category 2 (unlicensed) and the stations in Category 4 (unlicensed and fully controlled by TuneIn) is not surprising, the Court’s ruling, in relation to the stations in Category 3 could conceivably stir up the radio community. Following the Court’s reasoning, an online radio station with a valid licence in its home territory, would be found to be infringing copyright in all territories where its signal can be accessed from the very moment it is aggregated and indexed by a third party targeting other countries, regardless of whether a radio station’s had knowledge of the aggregation. This conclusion would probably be sufficient to raise alarm bells and trigger a wave of geo-blocking across the European radio community, save for the recent adoption by the European Parliament of the New Sat/Cab Directive, whose key provisions are precisely meant to offer a new legal framework for online simulcasters within the EU.

The New Sat/Cab Directive

The New Sat/Cab Directive extends the application of the country of origin principle enshrined in the first Sat/Cab directive6 to ‘ancillary online services’ which it defines as: 

‘an online service consisting in the provision to the public, by or under the control and responsibility of a broadcasting organisation, of […] radio programmes simultaneously with or for a defined period of time after their broadcast by the broadcasting organisation, as well as of any material which is ancillary to such broadcast’.⁷

The New Sat/Cab Directive creates a fiction, under which it will be assumed that all the acts of communication to the public of a radio ‘ancillary online service’ will be deemed to have occurred in the country where it is established (the ‘country of origin principle’). This means that a licensed radio station could in principle rely on the licence it obtained from its home territory, when it is accessed in another EU country by simulcast.

However, the New Sat/Cab Directive only extends the country of origin principle to simulcasts. Operators that transmit only webcasts (ie. a stream that is ‘online only’) are absent from the system and will not be able to rely on the Directive to offer their webcasts on a pan-European basis. As a result, absent permission from rightsholders, “pure” webcasters may need to geoblock their feed or seek national licences in each country where it can be accessed.

Geoblocking - the new norm? 

While it may be comforting to know that the New Sat/Cab Directive is likely to fix, at least partially, some of the crucial issues raised by the TuneIn decision, it needs to be noted that the New Sat/Cab Directive has not yet been transposed in the UK. In light of the TuneIn decision, it is important that both webcasters and simulcasters carefully review the implications of the decision and assess how to protect their businesses going forward.

The implications of the decision for radio stations whose webstreams can be accessed in the UK can be summarised as follows:

1. The mere presence on the Internet of a radio stream licensed on a territorial basis does not automatically mean that a copyright infringing act occurs in each country where it can be accessed and for which no licence exists;
2. The act of targeting a territory is likely to trigger an act of communication and subsequently, an infringement;
3. Targeting can be carried out by the radio station itself, but also by any third party accessing the stream and targeting it at another public;
4. Section 20 of the UK Copyright Act is a tort of strict liability, and therefore it also applies to a radio station indexed and targeted at another country by a third party, without the station’s knowledge (for example, by way of web crawling).

These implications are substantial and should not be underestimated. Even if an appeal is lodged by the defendant, webcasters and simulcasters may want to consider reviewing their licensing strategies. As discussed above, simulcasters in the EU may receive some respite within the EU once the New Sat/Cab Directive is implemented in the UK, but would still need to consider their strategy outside of the EU. Webcasters, on the other hand, should consider their global licensing strategy from the outset.

Conclusion

While the judgment is a UK court judgment, it considers principles in both UK and European law and could have far-reaching consequences. If a similar approach were to be taken by the European courts or indeed if the rightsholders were to issue proceedings in the UK courts against UK based stations with regard to infringements in Europe, the UK licensed stations which are not geo-blocked outside the UK could find themselves in difficulty with regard to territories where they do not have a licence to broadcast, but are available via TuneIn or similar services. 

In a context where the EU’s objective is to increase the accessibility of European radio stations across the EU, and where none of the radio licensing schemes have been updated to reflect the increasingly global nature of radio consumption, this decision may be seen as particularly harsh by certain stakeholders. Yet, it is a feature of the current copyright environment that companies leveraging technology to disseminate third party content will be challenged by music rightholders. This decision is perfectly on trend and acts as a further impingement on the safe harbour defence in Europe.

1. Rome Convention - International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations, Rome on October 26, 1961 (available at wipolex-res.wipo.int).
2. The USA remains one of the only country having not ratified the Rome Convention.
3. Article 12 - If a phonogram published for commercial purposes, or a reproduction of such phonogram, is used directly for broadcasting or for any communication to the public, a single equitable remuneration shall be paid by the user to the performers, or to the producers of the phonograms, or to both. Domestic law may, in the absence of agreement between these parties, lay down the conditions as to the sharing of this remuneration.
4. CJEU 7 December 2006, SGAE (Rafael Hoteles), C-306/05
5. "(2) Copyright in a work is infringed by a person who without the licence of the copyright owner does, or authorises another to do, any of the acts restricted by the copyright.
6. Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission
7. Article 1 of the New Sat/Cab Directive

Client Alert 2019-264