Tuesday 23 September 2014

Copyright: anything left of Member States’ external competence?

Lorna Woods and Steve Peers

The extent of broadcasters’ rights is near the top of a long list of controversial issues arising from the law of copyright. Equally controversial is the extent of the EU’s exclusive external competence, which (where it exists) prevents Member States from signing treaties and (usually) means that they do not have a veto in the Council over the treaty concerned. These two issues came together in the recent CJEU judgment in Case C-114/12 Commission v Council, which concerned the EU’s competence to negotiate the Council of Europe’s draft treaty on the rights of broadcasting organisations.


The regime covering mass electronic distribution of audiovisual works is complex, reflecting the traditionally national nature of broadcasting markets and the layered nature of intellectual property rights in audiovisual works.  In addition to the content-based rights, which are often assigned or licensed to the broadcaster, the broadcaster has rights in the signal itself (broadcasters’ neighbouring rights). These rights are found in a number of international treaties, including TRIPS. Similar rights relating to control over the fixation of the signal, as well as the making available of the signal to the public were contained in a number of directives variously implemented in the Member States, in particular Directive 2006/115/EC on Rental and Lending Rights (codifying  Directive 92/100) and Directive 93/83/EEC Satellite and Cable Directive, now codified  as Directive 2006/116). These rules have tended to be technologically specific and while Directive 2001/29 (the InfoSoc Directive) confirmed broadcasters’ rights whether wireless or cable technology was used, questions remained, notably the issue of identifying where the activity of ‘making available’ or ‘communicating to the public’ is taking place, especially in an Internet age.

There has been considerable litigation on these directives and how they operate in a new technical environment. Clearly something needed to be done and broadcasters have for some time been lobbying for change. Against this background, the Council of Europe agreed to start work on a Convention that protected broadcasters’ neighbouring rights.  According to a 2010 report, the aim of the Convention was to agree on a set of exclusive rights of broadcasting organisations, such as the right of fixation the right of reproduction, the right of retransmission, the right of making available to the public, the right of communication to the public and the right of distribution, in technologically neutral terms. Other issues were also to be discussed: the protection of pre-broadcast programme-carrying signals, the term of protection, the need for a non-exhaustive list of limitations and exceptions, the enforcement of rights and obligations concerning technological measures and rights-management information.

As for the EU’s role in these talks, the Council and Member States’ representatives adopted a single joint Decision authorising the joint participation of the EU and its Member States in the negotiations for a Convention. While the EU position would be represented by the Commission, the Member States’ collective position (if they could reach one) would be represented by the Council Presidency. If Member States could not reach a collective position on matters falling within their competence, they would negotiate individually.

The Commission disagreed with the Council’s decision on both substantive and procedural grounds, and so brought an annulment action before the Court of Justice.


First of all, the Court quickly dismissed any doubt that the action was admissible. Even though the act in question had been adopted by the Member States alongside the Council, the Council was ‘involved’ in the entire Decision because it was both conferring and receiving power pursuant to it.

As to the substance, the Court agreed with the Commission that the envisaged treaty fell within the scope of the EU’s exclusive external competence. This was the first case in which the Court interpreted Article 3(2) TFEU (added by the Treaty of Lisbon), which provides that the EU has exclusive competence to conclude an international agreement where ‘its conclusion is provided for in a legislative act of the Union or is necessary to enable the Union to exercise its internal competence, or in so far as its conclusion may affect common rules or alter their scope’
The last of the three categories mentioned in Article 3(2) is similar to the classic exposition of the EU’s exclusive external competence in the ERTA judgment, although some academic opinion has suggested that the Treaty drafters have not adequately synthesized the judgment. On the other hand, some Member States intervening in support of the Council in this case suggested that the TFEU provision narrows the EU’s exclusive external competence, in particular in light of the Protocol to the Treaties on shared competences, which was also added by the Treaty of Lisbon.

However, the Court stated simply that the Treaty provision meant the same thing as the ERTA judgment, as elaborated in the subsequent case law of the CJEU. The Protocol on shared competences was irrelevant, since it only referred to Article 2(2) TFEU, which defines the EU’s shared internal competences.

The Court then summarised the key aspects of the ERTA case law: it is not necessary for the international treaty and the EU legislation concerned to overlap fully; it may be sufficient that the area concerned is ‘largely covered’ by EU rules; and it is irrelevant that there is no contradiction between the treaty concerned and the internal EU rules. To show whether external competence was exclusive on this basis, there had to be a ’specific analysis of the relationship between’ the relevant international treaty and EU legislation. The Court added that the party alleging that competence was exclusive had the burden of proving it.

Applying these principles to the facts of the case, the Court summarised the relevant EU legislation (the five Directives referred to above), stating that the intellectual property rights concerned ‘are the subject, in EU law, of a harmonised legal framework which seeks, in particular, to ensure the proper functioning of the internal market’, which integrated technological, digital and information society developments, and which had ‘established a regime with high and homogeneous protection’ for broadcasters as regards their broadcasts.  It was irrelevant that this harmonisation appeared in different EU measures, which also regulated other intellectual property rights.

So the area of law to be compared as between EU law and the planned treaty was the neighbouring rights of broadcasters. On this point, while there were some differences between the existing EU rules and the planned treaty, any new rules on the planned treaty were liable to have a significant impact upon the EU acquis. In particular, the Court distinguished its prior case law which had held that external competence was shared when the EU set minimum standards, on the grounds that in this area EU legislation simply limited its scope instead. Since the new treaty might extend the scope of the EU rules, its subject-matter fell within the scope of the EU’s external competence. And on several points, the Court did not believe there was enough evidence to support the claims of the Council and some Member States that issues not covered by the EU acquis at all would be inserted into the future treaty.

For example, one particular issue relates to the protection of signals prior to their broadcast to the public – usually this occurs when one broadcaster transmits a signal to another. This issue is not currently covered by the EU rules. If the decision was taken to protect these signals, this protection could be provided in a number of ways.  The Court highlighted one option – the extension of the term ‘broadcasts’ to cover pre-broadcast signals would have horizontal effects through the regulatory system, and therefore impact on the EU acquis.  The other possible mechanisms noted (the introduction of sui generis legal protection of pre-broadcast signals or the application of the provisions dealing with ‘technical measures’ to the pre broadcast signals) would not have such an effect. The Court emphasized that in the absence of any reference to these approaches in the Council of Europe preparatory documents ‘those approaches seem, at this stage, to be hypothetical and cannot therefore be relevant to determining the exclusive or shared nature of the competence of the European Union in the present case’ (para 99).

Having ruled in favour of the Commission on its substantive argument, the Court ruled that it was not necessary to decide on the three alternative procedural arguments which the Commission had made: such a ‘hybrid’ decision of the Council and Member States was not permitted by EU law; the Council had wrongly voted by unanimity, not qualified majority; and the Council had breached the principle of sincere cooperation. The first two of these arguments had been accepted by Advocate General Sharpston in her Opinion (she thought the final argument was superfluous). However, unlike the Court, she had ruled against the Commission on the substantive point, on the basis that the Commission had argued that all of the provisions of the draft Convention were closely linked to EU law, but had failed to prove this on the facts.


First of all, as regards the admissibility of this action, the Court’s ruling is convincing as regards the Council conferring power on Commission, but arguably not as regards Member States conferring power on the Council (since it would be operating outside the EU framework in that context), and certainly not as regards Member States conferring power on Member States. The better argument for the admissibility of this action is that if the Council and Member States adopt a hybrid decision like this one, their action is indissociable. Put another way, if the Council and Member States act together in this way, there’s joint and several admissibility.

Secondly, as for the procedural points not addressed by the judgment, the Advocate-General’s opinion is not convincing. Since mixed agreements, ie agreements ratified by both the EU and its Member States, are a common feature of EU law, then there should no problem with the idea that a decision relating to negotiations on those agreements could in principle be a hybrid decision. Conceptually, that’s no different from the nature of the final mixed agreement.

As for the substantive competence issues, first of all it’s important that the Court clarified the point that ERTA and the case law elaborating upon it are still applicable to Article 3(2) TFEU, in light of the doubt which some had expressed on this point. The judgment is presumably relevant by analogy to the first two grounds for exclusive competence listed in Article 3(2) TFEU (where competence is provided for in a legislative act of the Union or is necessary to enable the Union to exercise its internal competence). At the very least, it must follow that the Protocol on shared competence is also irrelevant to those two other grounds, since as the Court rightly said, that Protocol only refers to Article 2(2) TFEU.

Despite this important clarification, the application of the ERTA judgment itself remains complex and seems highly fact dependent in each case, arguably making the prediction of outcome difficult. Here, it is notable that the Court and the Advocate General came to different conclusions in determining the key question of whether the conclusion of the Convention affects common rules or alters their scope (Article 3(2) TFEU).  The Advocate General and the Court both stated that the burden of proof was on the Commission to show that exclusive competence had been established. As a corollary it seems the default position is shared competence. To quote the Advocate General:

if the analysis of the Convention and EU rules on the basis of the information presently available shows that in at least one respect Member States retain competence, the Commission’s plea must be rejected. [para 143]

While the Court accepted this allocation of the burden of proof, it is when we get to the specifics that differences emerge as can be seen in a couple of examples. Article 8(3) of Directive 2006/115 states:

Member States shall provide for broadcasting organisations the exclusive right to authorise or prohibit the rebroadcasting of their broadcasts by wireless means, as well as the communication to the public of their broadcasts if such communication is made in places accessible to the public against payment of an entrance fee.

The Advocate General analyses the matter as follows: ‘Thus, EU law does not yet regulate ‘at least’ the right of retransmission by wire or cable, whereas the Convention might do so and the Member States are currently authorised to provide for it in their own jurisdiction’ [para AG 150].  The Court accepts the same point but draws a very different conclusion from it – that the proposed Convention, by regulating areas currently outside EU competence, in itself might have an impact on EU law. The Court does not explain how, merely adopting the Commission’s position [92]. The fact that broadcasters are already partially covered by EU law does not seem to address the point.  So, the Opinion seems more logical on this point.

In a number of the aspects of the Convention under consideration, the question of whether there was impact would be affected by the approach finally taken by the negotiators. For example, the scope of the Convention would depend on its definition. While EU law does not have a definition of the term ‘broadcasting organisations’ there would be some confluence with the rights-holders under the various directives. The impact on EU law is therefore uncertain.  The Advocate General concluded cautiously:

If the definition in the Convention creates an absolute category that is wider than broadcasting organisations that are rightholders under the said directives, the creation of that category might possibly limit the European Union’s freedom to decide on its own definition. That may not be the case if the definition in the Convention were non-exhaustive and did not offer protection to entities other than existing rightholders under EU law. [AG 156]

While in this case it was necessary to finally determine the point as to whether there is impact on EU law or not, this then begs the question of what to do in such a circumstance – do we assume that if there is a possible interpretation that could affect EU law then the text is satisfied, or is a higher standard of proof required?

The difference on this point can be seen in the respective approaches of the Advocate General and the Court to pre-broadcast signals. It is clear that currently EU law does not require the protection of such signals and that the Convention proposed to afford protection to such signals. Given the early stages of negotiations, it is unclear what sort of mechanism was likely. Some possibilities might utilise techniques found in the existing legal framework (for example extending the definitions, or applying the technical measures rules to pre-broadcast signals). Since such an approach would have an impact on EU law, then that would bring the issue within the exclusive competence of the EU – appoint on which the Advocate General and the Court agreed.

Another mechanism exists – the development of a sui generis right – which would not have this effect. Here the Advocate General suggested that in such a situation there would be no exclusive competence. In stark contrast, the Court dismissed other approaches (including the sui generis right) as hypothetical, and therefore focussed only on the approach that would trigger exclusive EU competence [para 99].  No reason was given as to why the other approaches were more hypothetical than the approach the Court selected.  So while the Court and the Advocate General agree on the principles, they differ in the application of those principles, and it seems that the Court has tended to favour assessments that point towards exclusive competence.

Finally, what are the broader implications of the judgment? The Court of Justice has already ruled (in the Daiichi Sankyo judgment) that the WTO's TRIPs agreement falls within the scope of the EU exclusive external competence over the common commercial (external trade) policy (CCP), which was extended to cover trade-related intellectual property fully by the Treaty of Lisbon. It has also ruled that a Council of Europe treaty relating to enforcement of audiovisual service providers’ rights falls within the scope of the same competence, in light of the full extension of the CCP to services by the same Treaty. Usually, the Member States have no veto as regards CCP matters.

Now it seems that treaties relating to many other aspects of intellectual property can fall within the scope of the EU’s exclusive external competence, due to the exercise of the EU’s powers to adopt internal market legislation. Again, this means that Member States usually lose their veto. This effect is not absolute, given that the recent Marrakesh treaty on copyright exceptions for the blind and the Beijing treaty on audiovisual performances are both mixed agreements (see the list of signatories for the former and latter treaties respectively). However, the power of the EU (and the Commission in particular) in this field is demonstrated by the Commission’s veto of a planned Council of Europe treaty on cross-border broadcasting, at a late stage of negotiations.

More broadly, the Court’s pro-EU application of the test for exclusive competence suggests that it would be easier to find such exclusivity in other areas which the EU has only partly regulated, such as consumer law or immigration law. The broadcasting rights judgment may, in time, prove to be nearly as important as the ERTA judgment which it reconfirms and elaborates upon.

Barnard & Peers: chapter 14, chapter 24 

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