CJEC, 6th chamber, January 24, 1989, No 341-87

THE COURT,

1. By order dated 2 October 1987, which was received at the Court on 3 November 1987, the Landgericht Hamburg referred to the Court for a preliminary ruling under Article 177 of the EEC treaty a question on the interpretation of Articles 30 and 36 of the treaty in order to be able to assess the compatibility with those provisions of the application of national legislation governing copyright in musical works.

2. That question arose in proceedings between EMI Electrola GmbH, a German undertaking, to which a British company, EMI Records Limited, assigned reproduction and distribution rights in musical works performed by a well-known British singer, and two other German undertakings, Patricia Im - und Export and Luene-ton, which sold, in the Federal Republic of Germany, sound recordings originating in Denmark and incorporating some of the abovementioned musical works.

3. EMI Electrola, alleging an infringement of its exclusive distribution rights for sound recordings on German territory, brought an action before the Landgericht Hamburg for an injunction restraining Patricia Im - und Export and Luene-ton from continuing to sell sound recordings imported from Denmark and for damages. However, the two defendant companies contended that the sound recordings in question had been lawfully marketed in Denmark because the period during which exclusive rights are protected under Danish copyright law had already expired.

4. It is apparent from the documents before the Court that the sound recordings in question were manufactured on German territory by Patricia Im - und Export at the Commission of a Danish undertaking and that they were subsequently delivered to that undertaking in Denmark before being re-exported to the Federal Republic of Germany. That Danish undertaking was not the one to which EMI Records Limited had assigned reproduction and distribution rights in the musical works in question for the territory of Denmark.

5. The national court took the view that EMI Electrola's application was justified under German law but that the question might arise whether Articles 30 and 36 of the EEC treaty prevented the application of the national legislation. In order to resolve that problem it stayed the proceedings and referred the following question to the Court for a preliminary ruling.

"Is it compatible with the provisions on the free movement of goods (Article 30 et seq. of the EEC treaty) for a manufacturer of sound recordings in Member State A to exercise his exclusive rights in that State over the reproduction and sale of certain musical works in such a manner as to prohibit the sale in the territory of Member State A of sound recordings of the same musical work manufactured and sold in Member State B, where the manufacturers of sound recordings previously enjoyed copyright protection for the musical work in Member State B but the copyright period has already expired?"

6. Reference is made to the report for the hearing for a fuller account of the facts of the case, the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court.

7. According to Article 36 of the treaty, the provisions of Article 30 prohibiting between Member States all measures having an effect equivalent to quantitative restrictions on imports are not to preclude prohibitions or restrictions on imports justified on grounds of the protection of industrial and commercial property. That protection covers literary and artistic property including copyright, to the extent in particular that it is commercially exploited. Consequently, it includes the protection of exclusive reproduction and distribution rights in sound recordings, which, under the applicable national legislation, is assimilated to copyright protection.

8. The purpose of Articles 30 and 36 is therefore to reconcile the requirements of the free movement of goods with due respect for the legitimate exercise of exclusive rights in literary and artistic property. This implies, in particular, that any abusive exercise of those rights that is of such a nature as to maintain or create artificial barriers within the Common Market should not be given protection.

9. In previous decisions the Court has accordingly concluded that a copyright owner may not rely on the exclusive exploitation right conferred by copyright to prevent or restrict the importation of sound recordings which have been lawfully marketed in another Member State by the owner himself or with his consent (judgment of 20 January 1981 in joined Cases 55 and 57-80 Musik-Vertrieb Membran GmbH and Another V GEMA ((1981)) ECR 147).

10. However, such a situation is different from the one described by the national court. As its preliminary question indicates, the fact that the sound recordings were lawfully marketed in another Member State is due, not to an act or the consent of the copyright owner or his licensee, but to the expiry of the protection period provided for by the legislation of that Member State. The problem arising thus stems from the differences between national legislation regarding the period of protection afforded by copyright and by related rights, those differences concerning either the duration of the protection itself or the details thereof, such as the time when the protection period begins to run.

11. In that regard, it should be noted that in the present state of Community law, which is characterized by a lack of harmonization or approximation of legislation governing the protection of literary and artistic property, it is for the national legislatures to determine the conditions and detailed rules for such protection.

12 In so far as the disparity between national laws may give rise to restrictions on intra-Community trade in sound recordings, such restrictions are justified under Article 36 of the treaty if they are the result of differences between the rules governing the period of protection and this is inseparably linked to the very existence of the exclusive rights.

13. No such justification would exist if the restrictions on trade imposed or accepted by the national legislation relied on by the owner of the exclusive rights or his licensee were of such a nature as to constitute a means of arbitrary discrimination or a disguised measure to restrict trade. However, there is nothing in the documents before the Court to suggest that such a situation might exist in a case such as the present one.

14. Consequently, the reply to the question referred to the Court must be that Articles 30 and 36 of the treaty must be interpreted as not precluding the application of a Member State' s legislation which allows a producer of sound recordings in that Member State to rely on the exclusive rights to reproduce and distribute certain musical works of which he is the owner in order to prohibit the sale, in the territory of that Member State, of sound recordings of the same musical works when those recordings are imported from another Member State in which they were lawfully marketed without the consent of the aforesaid owner or his licensee and in which the producer of those recordings had enjoyed protection which has in the mean time expired.

Costs

15. The costs incurred by the Government of the Federal Republic of Germany, the Government of the French Republic, the United Kingdom, the Government of the Kingdom of Spain and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that Court.

On those grounds,

THE COURT (Sixth Chamber),

In answer to the questions submitted to it by the Landgericht Hamburg, by order of 2 October 1987, hereby rules:

Articles 30 and 36 of the EEC treaty must be interpreted as not precluding the application of a Member State' s legislation which allows a producer of sound recordings in that Member State to rely on the exclusive rights to reproduce and distribute certain musical works of which he is the owner in order to prohibit the sale, in the territory of that Member State, of sound recordings of the same musical works when those recordings are imported from another Member State in which they were lawfully marketed without the consent of the aforesaid owner or his licensee and in which the producer of those recordings had enjoyed protection which has in the mean time expired.