Court of Justice of the European Union

Legal status of Independent Management Entities

ECJ 21.03.2024, C-10/22 – Liberi editori e autori (LEA)/Jamendo; referring court: Tribunale ordinario di Roma/Italien 05.01.2022, Advocate General: Maciej Szpunar

Main findings (non-official):

1. Although the recitals of a directive may clarify the content of the provisions of that legal act and be used for their interpretation, they are not legally binding and cannot contain any provisions that deviate from the text of the directive or contradict its wording.

2. Independent management entities engage in commercial activities and are distinct from collecting societies in the strict sense, in that they are not owned or controlled by the rightholders. In terms of content, they carry out the same activities as collective management organizations.

3. National legislation that grants a collecting society a monopoly on the management of a certain category of works serves the purpose of effective rights management and the monitoring thereof and is therefore in the public interest.

4. Neither the E-Commerce Directive nor the Services Directive are applicable to the management of copyright. This is not affected by the principle of narrow interpretation of exceptions, since in any case the practical effectiveness of the exception in question must be maintained and its objective observed.

5. Collective management organisations in the strict sense have to grant freedom of choice to their rightholders, whereby the latter may freely choose the entity to be entrusted with the management of their rights, without regard to the nationality, domicile or place of establishment of the organisation or the rightholder.

6. Although independent management entities have to fulfill certain information requirements, they are not obliged to grant the freedom of choice that is provided for in relation to collecting societies in the strict sense. This also holds true to a number of other rules that apply to collecting societies. The CMO Directive does not contain any provisions governing the commencement of business by such entities and are therefore not harmonised in this respect.

7. In the absence of harmonisation of the conditions for the taking up of the business of an independent management entity (established in another Member State), legislation of a Member State which excludes the taking up of its business in that Member State in general and categorically does not contradict Union law per se.

8. However, the exclusion of independent management entities (based abroad) may violate the freedom to provide services under EU primary law (Art 56 TFEU) if such a restriction does not correspond to compelling reasons of public interest, is suitable for achieving this objective and does not go beyond what is necessary to achieve it. The protection of intellectual property may, provided it is proportionate, be in the public interest.

9. However, if the law of a Member State does not provide for a monopoly and allows rightholders to choose between several (domestic or foreign) collecting societies, which may also operate domestically, but does not apply this to independent (foreign-based) management entities, this does not in principle constitute impermissible unequal treatment either, because independent management entities have to meet only lower requirements in a number of respects.

10. However, a categorical exclusion of the management activity (of an organisation based abroad) goes beyond what is necessary to protect copyright, because independent management entities can also be subject to stricter regulation than that provided for in the CMO Directive.

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