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On the right of a court to decide on the amount of royalties to be awarded subsequent to the claims of collective administration associations of copyright and related rights

 

Case no 1/2017

 

THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA

IN THE NAME OF THE REPUBLIC OF LITHUANIA

 

RULING

ON THE COMPLIANCE OF PARAGRAPH 3 OF ARTICLE 86 OF THE REPUBLIC OF LITHUANIA’S LAW ON COPYRIGHT AND RELATED RIGHTS WITH THE CONSTITUTION OF THE REPUBLIC OF LITHUANIA

 

1 December 2017, no KT17-N8/2017

Vilnius

 

The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court: Elvyra Baltutytė, Gintaras Goda, Vytautas Greičius, Danutė Jočienė, Gediminas Mesonis, Vytas Milius, Daiva Petrylaitė, Janina Stripeikienė, and Dainius Žalimas

The court reporter – Daiva Pitrėnaitė

The Constitutional Court of the Republic of Lithuania, pursuant to Articles 102 and 105 of the Constitution of the Republic of Lithuania and Articles 1 and 531 of the Law on the Constitutional Court of the Republic of Lithuania, on 29 November 2017, at the Court’s hearing, considered, under written procedure, constitutional justice case no 1/2017 subsequent to petition no 1B-3/2017 of the Supreme Court of Lithuania, the petitioner, requesting an investigation into whether Paragraph 3 of Article 86 (wording of 12 October 2006) of the Republic of Lithuania’s Law on Copyright and Related Rights was in conflict with Paragraph 1 of Article 29 and Paragraph 1 of Article 109 of the Constitution of the Republic of Lithuania and the constitutional principles of justice and a state under the rule of law.

The Constitutional Court

has established:

I

The arguments of the petitioner

1. The Supreme Court of Lithuania, the petitioner, was considering under cassation procedure a criminal case subsequent to a cassation appeal concerning the awarding of royalties for the use (public performance) of musical works without a licence of the collective administration association. By its ruling, the petitioner suspended the consideration of this civil case and applied to the Constitutional Court.

2. The doubts of the Supreme Court of Lithuania, the petitioner, concerning the compliance of Paragraph 3 of Article 86 (wording of 12 October 2006) of the Law on Copyright and Related Rights (Autorių teisių ir gretutinių teisių įstatymas (ATGTĮ), hereinafter referred to as the ATGTĮ) with Paragraph 1 of Article 29 and Paragraph 1 of Article 109 of the Constitution and the constitutional principles of justice and a state under the rule of law are based on the following arguments.

2.1. In the opinion of the petitioner, under the legal regulation established in Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ, essentially, no right was left for the court considering cases related to the interests of the owners of the collectively administered rights to decide on the amount of royalties to be awarded for the unlawful use of works or subject matter of related rights in those cases where a collective administration association used to apply to court on the recovery of such royalties, while defending the interests of the represented authors or entities of related rights. This norm of the ATGTĮ, according to the petitioner, was formulated in the imperative manner: under this norm, the court was obliged to take the decision to recover from the person who unlawfully used those works or subject matter of the related rights, twice the amount of the royalties that would have been payable under the granted licence to use the work or subject matter of related rights. Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ does not establish any criteria that could be referred to by the court when it decides on the amount of the royalties to be awarded.

Due to such imperativeness of the legal regulation, while deciding on the amount of the royalties to be awarded, the court did not have a possibility to follow the principles of justice, reasonableness, proportionality, and other general principles of law and to take account of other significant circumstances of the case. The impugned legal regulation created preconditions for the appearance of such legal situations where the possibilities of a court to administer justice are reduced (and sometimes it becomes impossible in general); therefore, this legal regulation is to be assessed as being in conflict with Paragraph 1 of Article 109 of the Constitution and the constitutional principle of a state under the rule of law.

2.2. In addition, while interpreting the provisions of Paragraph 1 of Article 77 (wording of 12 October 2006), Item 2 of Paragraph 4 of Article 83 (wording of 12 October 2006), and Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ in a systematic manner, it is obvious that the mechanisms for calculating the amount of the royalties for the unlawful use of works or subject matter of related rights differ depending on who and on what legal grounds applied to court concerning the recovery: when the owners of copyright or related rights applied to court regarding the defence of the violated above-mentioned rights individually, the criteria for calculating the royalties were clear and the court could decide on the amount of the royalties to be awarded (up to twice the amount of the royalties that would have been paid, if intent or gross negligence of the infringer had been established); when a collective administration association applied to court concerning the royalties for the unlawful use of works or subject matter of related rights, the court was, in any case, obliged to award twice the amount of the royalties that would have been paid under the licence.

Under such a legal regulation, the legal situation of collective administration associations is better than that of the owners of copyright and related rights, who defended their rights independently, as in those cases, when the owners of copyright and related rights themselves would apply to a court, the possibility of being awarded twice the amount of the royalties that would have been paid if the infringer had lawfully used the works or subject matter of related rights (i.e. would have received the licence) had been linked, among other things, to the form of guilt of the user (infringer), and twice the amount of the royalties was not a constant but only the maximum limit of the royalties to be awarded. Thus, it is doubtful whether such a legal regulation complied with Paragraph 1 of Article 29 of the Constitution.

II

The arguments of the representative of the party concerned

3. In the course of the preparation of the case for the Constitutional Court’s hearing, written explanations were received from Vytautas Kernagis, the member of the Seimas, acting as the representative of the Seimas, the party concerned, in which it was maintained that the impugned legal regulation was not in conflict with the Constitution. The position of the representative of the Seimas, the party concerned, is substantiated by the following arguments.

3.1. The essential function of entities of collective administration is collective implementation and defence of the copyright and related rights that must, under the law, be administered collectively or that may not be implemented individually due to their essence. The main activities of the entities of collective administration are granting of licences, administration of the rights to royalties and their defence. While implementing their functions, the entities of collective administration not only ensure the rights of individual owners of copyright and related rights but also guarantee the proper functioning of the system for the protection of copyright.

If the objects of copyright or related rights are used unlawfully, the entities of collective administration incur certain expenses related to the detection of violations, investigation, and the implementation of continuous supervision that are difficult to calculate. In order not to transfer these expenses on the owners of copyright and related rights and legitimate users of the objects of copyright and related rights, the duty to compensate these expenses must be established for the infringers of the right so that they would take on all the risks linked to the committed violation of law. The rule of the recovery of twice the amount of the royalties is intended not for punishing the infringers but for ensuring that they would compensate not only for the damage caused but also the expenses incurred by collective administration associations related to the detection of violations, investigation, and the implementation of continuous supervision. In addition, there is no doubt that the possibility to award twice the amount of the royalties is obviously of preventive character; its purpose is to deter from committing violations.

3.2. The legal regulation impugned by the petitioner and the legal regulation that was assessed by the Constitutional Court in its ruling of 6 January 2011 should not be compared as their functions and content differ. In the constitutional justice case at issue, the purpose of the impugned provision is to ensure the effective defence of the violated rights implemented by collective administration associations and compensation of the expenses incurred while defending these rights; whereas, in its previously considered case, the Constitutional Court assessed the provision on the amount of compensation upon violation of copyright and related rights. The impugned legal regulation is considered to be proportionate, as, under this regulation, the risk concerning the violations of law is taken by the infringer, who must compensate fully and fairly the expenses incurred by collective administration associations related to the detection of violations, investigation, and the implementation of continuous supervision; the impugned legal regulation also ensures the prevention of violations.

3.3. Collective administration associations and individual owners of copyright and related rights, who defend their rights individually, are different entities in essence; thus, also the legal regulation applicable to them differs. While resolving an individual dispute, the court has all possibilities to assess the nature of a violation, the extent of the damage caused, and the loss of income by the owner of copyright and related rights, the incurred costs, and other important circumstances. The benefit received by the infringer may, subsequent to the claim of the specified persons, also be recognised as losses. Having assessed the specified circumstances, the court is able to establish the exact amount of damage (losses) that was actually caused by the violation of the rights protected by the ATGTĮ and to award the royalties.

In addition, the owners of copyright and related rights, who defend their rights individually, have the possibility to choose the most favourable way to defend their rights; meanwhile, collective administration associations may not choose the way of defence of the rights they administer. This is determined by the nature of a collective administration organisation itself and the main purpose of the activity of this organisation – to collect the royalties for the use of a work or subject matter of related rights and to distribute the income received, as well as to pay them to the owners of collectively administered rights. The fact that courts award the amount of royalties to collective administration organisations that is higher than would actually belong to them (which cover the expenses of administration of copyright and relation rights incurred to the organisation) is a widespread practice throughout the world. It is often impossible to establish precisely the expenses incurred to a collective administration organisation related to market monitoring, assessment of the factual circumstances of a violation, intermediation (mediation), pretrial litigation, and other expenses that are linked to a specific violation of collectively administered rights; therefore, the law establishes such legal regulation under which twice the amount of the royalties that would have been payable under the granted licence to use a work or subject matter of related items is recovered from the infringer, so partially compensating the expenses incurred by the collective administration organisation.

III

The material received in the case

4. In the course of the preparation of the case for the hearing of the Constitutional Court, written opinions were received from Nijolė Janina Matulevičienė, Head of the Copyright Division of the Department of Arts and Creative Industries of the Ministry of Culture of the Republic of Lithuania, and Prof. dr. (HP) Vytautas Mizaras, Head of the Science Centre of European Private Law and Intellectual Property Law of Vilnius University Faculty of Law.

4.1. In the written opinion of Nijolė Janina Matulevičienė, Head of the Copyright Division of the Department of Arts and Creative Industries of the Ministry of Culture, it is noted that the right of collective administration organisations to file claims independently ensures the possibility to defend the interests of all represented owners of copyright and related rights and to recover the fixed amount of royalties for the unlawful use of works or subject matter of related rights.

The purpose of the collective administration of law is to ensure not only the private interest of the owners of rights but also the public interest: the collective administration of rights not only ensures the control over the use of works or subject matter of related rights and fair royalties to owners of these rights, create possibilities for the users to get, in a simple and effective way, the licence to use the works or subject matter of related rights lawfully, ensures clear conditions for concluding the agreements on the use of works or subject matter of related rights and settlement, but also creates more favourable conditions for the dissemination of the results of creative activities and development of cultural diversity.

4.2. In the written opinion of Prof. dr. (HP) Vytautas Mizaras, Head of the Science Centre of European Private Law and Intellectual Property Law of Vilnius University Faculty of Law, it is stated that the ATGTĮ provides for special ways and measures for defending the rights of the owners of copyright and related rights that are usually not applied while defending other civil subjective rights. This is determined by the specific character of copyright and related rights as intellectual property: the particularities of the subject matter to which these rights apply and of the said rights themselves, great vulnerability of these rights without significant efforts, various ways and extent of the use of the works or subject matter of related rights, big territory of their use whose control or the administration of whose rights requires considerable costs.

Prevention is important for the defence of copyright and related rights. The requirement for larger amount of royalties (twice the amount of royalties), as a way to defend copyright and related rights, helps to achieve this objective. While applying this way of defence of the said rights, the objective is not only to cover the cost that had to be paid for lawful use of the subject matter of intellectual activities but also the costs that incur when establishing violations and investigating them. In addition, where in the case of unlawful use of a work or subject matter of related right, the infringer would have to pay only the amount of royalties which would have to be paid in the case of lawful use, it is obvious that the risk of unlawful use of works or subject matter of related rights would be justified; thus, such a sanction would not ensure necessary individual prevention and deterrence from other violations. And, on the contrary, when the infringer knows that he/she may experience more losses than he/she would in the case of lawful use of works or subject matter of related rights, prevention is more effective.

The impugned Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ, according to which a court takes a decision to recover from the user twice the amount of the royalties that would have been payable under the granted licence to use a work or subject matter of related rights when a claim is filed by a collective administration association must be interpreted as meaning that this is the right of the court but not its duty. Having assessed the overall circumstances, the court does not necessarily have to award the recovery of twice the amount of royalties – it may reduce this amount with regard to, for instance, the guilt of the infringer, the nature, reasons, and other significant circumstances of the violation. Such a position is based on the fact that the main reason for recovery of the royalties that would be of the amount larger than it would be necessary to pay under the license is to cover the expenses incurred as a result of unlawful use of works or subject matter of related rights. Consequently, as also in the case of compensation of any other damage, general rules must also apply, under which a court, while establishing the extent of the damage, may and must assess all significant circumstances, inter alia, the extent of the actual damage suffered, the guilt of the infringer, the actions of the victim himself/herself, the financial situation of the infringer, the costs incurred by the victim, etc.

Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ, as well as all the ATGTĮ, regulates civil relations. It is worth noting that, in the laws regulating civil relations, the legislature formulates an imperative rule of conduct as a prohibition and not a permission or order to behave in a certain way. Thus, the legal norm impugned by the petitioner could be considered imperative only in the case where it would consolidate clear prohibition for the court to assess significant circumstances. Under the method of regulation of civil relations, wording of the provisions of civil law, even if they express an order, does not mean prohibition to act differently than it is expressed under the wording chosen by the legislature. Thus, the provision impugned by the petitioner should not be assessed as being in conflict with Article 109 of the Constitution and the constitutional principles of justice and a state under the rule of law.

5. In the course of the preparation of the case for the hearing of the Constitutional Court, the letters concerning the provision of information from association LATGA and Lithuanian Related Rights Association AGATA were also received: in these letters, it is noted that in those cases when, while deciding cases on a violation of copyright or related rights, the courts applied Paragraph 3 of Article 86 of the ATGTĮ, for the unlawful use of a work or subject matter of related rights, in all cases, the courts took the decision to recover from the user twice the amount of the royalties that would have been payable if the work or subject matter of related rights had been used lawfully.

The Constitutional Court

holds that:

I

The impugned and related legal regulation

6. In the constitutional justice case at issue, the petitioner impugns the compliance of Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ with the Constitution.

While assessing the compliance of Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ on the claims of collective administration associations, filed in the interest of owners of copyright and related rights they represent, with the Constitution, it is important to reveal the context of this legal regulation and to clarify the content of this legal regulation and of the legal regulation linked to it.

7. On 18 May 1999, the Seimas adopted the Law on Copyright and Related Rights, by which it regulated, among other things, the implementation of copyright and related rights and the collective administration and defence of these rights (Item 4 of Article 1).

The Republic of Lithuania’s Law Amending the Law on Copyright and Related Rights, which was adopted by the Seimas on 5 March 2003, set out the ATGTĮ in a new wording. Later, it has been amended and (or) supplemented on more than one occasion, inter alia, by the Republic of Lithuania’s Law Amending and Supplementing Articles 2, 4, 11, 12, 14, 15, 16, 17, 22, 38, 40, 42, 43, 44, 45, 46, 47, 51, 53, 54, 56, 57, 61, 65, and 72, Chapter VI, and the Annex of the Law on Copyright and Related Rights, which was adopted on 12 October 2006 and which established the legal regulation impugned by the petitioner, as well as by the Republic of Lithuania’s Law Amending Articles 2, 11, 15, 16, 17, 20, 201, 40, 53, 55, 58, 592, 75, 77, 86, 95, and 96, Chapter V and Annex 3 of the Law on Copyright and Related Rights No VIII-1185, which was adopted by the Seimas on 3 November 2016 and which, among other things, amended the legal regulation impugned by the petitioner.

8. Article 86 “Claims of Collective Administration Associations Filed in the Interest of Owners of Copyright and Related Rights They Represent” (wording of 12 October 2006) of the ATGTĮ, whose Paragraph 3 is impugned in the constitutional justice case at issue, established the following:

1. Collective administration associations shall, in the interest of the owners of copyright or related rights they represent, and without their separate authorisation, be entitled to file claims for the recovery of royalties and fees from the users of works or subject matter of related rights, who exploit the mentioned works or subject matter of related rights without a licence of a collective administration association or without paying royalties and fees to owners of the rights.

2. An amount of compensation subject to recovery or the sum of a claim shall be set on the basis of the rates fixed by collective administration associations for the use of works and subject matter of related rights. When works and objects of relate rights are used by communicating them to the public, including background music, after a fact of unlawful use of works or subject matter of related rights has been established, it shall be considered that they have been used at least a month, unless otherwise proved.

3. The court, where it establishes that the works or subject matter of related rights have been used without a licence of a collective administration association, shall take a decision to exact from the user the remuneration 2 times larger than the one due under the granted licence to use a work or subject matter of related rights.

4. All recovered royalties and fees shall, in accordance with the procedure established by its regulations and remuneration payment rules, be distributed and paid by a collective administration association to the authors or owners of related rights.”

8.1. Thus, the provisions of Article 86 (12 October 2006) of the ATGTĮ consolidated the right of collective administration associations to file claims on awarding royalties for unlawful (without a license of a collective administration association or without paying the royalties for the owners of rights) use of a work or subject matter of related rights, as well as established the conditions and procedure for the implementation of this right.

8.2. Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ, which is impugned by the petitioner, consolidated the amount of royalties for the unlawful use of works or subject matter of related rights: it was established that, when considering a case subsequent to the claims of collective administration associations, the court adopts a decision to recover twice the amount of the royalties that would be payable if a work or subject matter of related rights were used lawfully (under the granted licence).

8.3. In the explanatory note to the draft law establishing the impugned legal regulation consolidated in Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ, it is specified that the possibility to recover larger royalties for the unlawful use of works or subject matter of related rights than it would be payable if they were used lawfully in those cases when collective administration associations apply to court concerning such recovery is provided as a preventive measure; it is also specified that the costs incurred by collective administration associations when establishing a violation should be covered from the recovered royalties.

8.4. Thus, under Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ, a court, when considering the case subsequent to the claims filed by collective administration associations on the recovery of royalties for the unlawful use of works or subject matter of related rights, was obliged to take the decision to recover from the user twice the amount of the royalties that would be payable if they were used lawfully by, among other things, creating preconditions to ensure the prevention of the violation of copyright and related rights, as well as to cover the costs incurred by collective administration associations when establishing violations.

9. Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ, which is impugned by the petitioner and which establishes the amount of royalties for the unlawful use of works or subject matter of related rights that a court may decide to recover subsequent to the claims filed by collective administration associations, should be interpreted in the context of other provisions of this law.

9.1. The concept of collective administration associations consolidated, inter alia, in the provisions of Paragraph 1 of Article 65, Paragraph 1 of Article 66, and Article 67 of the ATGTĮ, is relevant for the interpretation of the provision impugned by the petitioner.

Article 65 (with the amendments of 12 October 2006) of the ATGTĮ, inter alia, prescribes:

1. Authors, performers, producers of phonograms, broadcasting organisations and other owners of copyright and related rights shall have the right to give the authorisation for the enforcement of their economic rights to associations of collective administration of copyright and related rights <…> established for this purpose.”

Article 66 of the ATGTĮ, inter alia, prescribes:

1.A collective administration association shall be established on the basis of a voluntary membership as an association of authors, performers, producers of phonograms, broadcasting organisations and other owners of copyright and related rights or their unions. A collective administration association shall be a non-profit organisation.

<…>“

Article 67 of the ATGTĮ, inter alia, prescribes:

A collective administration association, on behalf of authors and owners of related rights whom or which it represents, and on the basis of the signed agreements concerning collective administration of rights, shall fulfil the following functions:

<...>

4) defending the rights of owners of copyright and related rights it collectively administers, without any special authorisation in court and other institutions.

9.1.1. While summarising the legal regulation set out in Paragraph 1 of Article 65 (with the amendments of 12 October 2006), Paragraph 1 of Article 66, and Article 67 of the ATGTĮ in the aspect relevant for this constitutional justice case, it should be noted that collective administration associations are established voluntarily as associations of authors, performers, producers of phonograms, broadcasting organisations and other owners of copyright and related rights or their unions, which may be given authorisation by the authors, performers, and other owners of copyright and related rights for collective administration of their economic rights and which, among other things, on behalf of authors and owners of related rights whom or which it represents, and on the basis of the signed agreements concerning collective administration of rights, may defend the rights of owners of copyright and related rights it collectively administers, without any special authorisation in court and other institutions.

9.1.2. Thus, when interpreting the legal regulation consolidated in Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ together with the provisions of Paragraph 1 of Article 65 (with the amendments of 12 October 2006), Paragraph 1 of Article 66, and Article 67 of the ATGTĮ, which consolidate the concept of collective administration associations, it should be noted that Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ establishes that for the unlawful use of a work or subject matter of related rights a court takes a decision to recover twice the amount of royalties than it would be payable if they were used lawfully subsequent to the claims of collective administration associations – special entities established by authors, performers, other owners of copyright and related rights or their unions for the administration of transferred economic rights, copyright and related rights and able, inter alia, to defend these rights without a special authorisation.

9.2. The impugned Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ is related to Item 2 of Paragraph 4 of Article 83 (wording of 12 October 2006) of the ATGTĮ, which establishes the following:

Instead of requesting compensation of damage (losses) caused by the infringement of the rights protected under this Law, the persons specified in Paragraph 1 of Article 77 of this Law may claim: <…> (2) royalties or fees which would have been due if the infringer had requested authorisation to use the works or other objects of the rights protected under this Law, and where the infringer acted intentionally or with negligence – up to twice the amount of such royalties and fees.”

9.2.1. Thus, under Paragraph 4 of Article 83 (wording of 12 October 2006) of the ATGTĮ, the persons specified in Paragraph 1 of Article 77 of this Law may choose the recovery of royalties for the unlawful use of a work or subject matter of related rights as an alternative way of defence of the infringed copyright or related rights instead of requesting compensation of damage.

In this context it should be mentioned that Paragraph 1 of Article 77 (wording of 12 October 2006) of the ATGTĮ, inter alia, prescribed: “Owners of copyright, related rights and sui generis rights, with the aim of defending their rights, licensees of exclusive rights, with the aim of defending the rights assigned to them, as well as associations of collective administration of the rights, with the aim of defending the administered rights, shall be entitled to apply, in the manner prescribed by law, to court.”

Consequently, under Item 2 of Paragraph 4 of Article 83 (wording of 12 October 2006) of the ATGTĮ, owners of copyright, related rights and sui generis rights, licensees of exclusive rights, as well as associations of collective administration of the rights have the right to claim for the royalties for the unlawful use of a work or subject matter of related rights when they used to choose such a way of defence of the infringed copyright and related rights instead of the compensation for damage (losses) actually incurred.

9.2.2. In the aspect relevant in the constitutional justice case at issue, it should be noted that Item 2 of Paragraph 4 of Article 83 (wording of 12 October 2006) of Article 83 of the ATGTĮ consolidates the amount of royalties for the unlawful use of a work or subject matter of related rights: instead of compensation of damage (losses) actually incurred for the above-mentioned persons, including collective administration associations by requiring for royalties that had to be paid if the works of subject matter of related rights were used lawfully, a court may decide to recover from the user twice the amount of these royalties, however, only under the condition provided in this provision – if an intention or negligence of the infringer has been established.

9.2.3. While interpreting the impugned Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ in the context of Item 2 of Paragraph 4 of Article 83 (wording of 12 October 2006) of the ATGTĮ, the following should be noted:

both provisions regulate the same way of defence of copyright or related rights – the requirement to recover the royalties for the unlawful use of a work or subject matter of related rights;

under Item 2 of Paragraph 4 of Article 83 (wording of 12 October 2006) of the ATGTĮ, this way of defence of copyright and related rights could be used by all persons specified in the law, while under Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ, only collective administration associations, which, as mentioned before, are special entities established voluntarily by authors, performers, other owners of copyright and related rights or their unions for the administration of transferred economic rights, copyright and related rights and able, inter alia, to defend these rights without a special authorisation;

these provisions regulate the amount of the royalties for the unlawful use of a work or subject matter of related rights in a different manner: under Item 2 of Paragraph 4 of Article 83 (wording of 12 October 2006) of the ATGTĮ, the court could decide to recover twice the amount of the royalties for the unlawful use of a work or subject matter of related rights than it would be payable if they were used lawfully; however, only where the infringer acted intentionally or with negligence; and under Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ – twice the amount of the royalties irrespective of the form of guilt.

9.2.4. Thus, Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ is lex specialis with regard to Item 2 of Paragraph 4 of Article 83 (wording of 12 October 2006) of the ATGTĮ: it prescribes a different amount of royalties for the unlawful use of a work or subject matter of related rights subsequent to the claims of a special entity – collective administration associations; as mentioned before, such a legal regulation had been established, among other things, in order to create the preconditions for ensuring the prevention of violations of copyright and related rights, as well as to cover the expenses incurred by collective administration associations in relation to the detection of violations.

10. In the constitutional justice case at issue, while interpreting the provisions of Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ in relation to the decision adopted by a court linked to the unlawful use of a work or subject matter of related rights subsequent to the claims of collective administration associations, certain provisions of the Civil Code of the Republic of Lithuania (Civilinis kodeksas (CK)) are relevant.

Paragraph 1 of Article 1.2 of the CK, inter alia, prescribes: “Civil relationships shall be regulated in accordance with the principles of equality of <…> rights, <…> legal certainty, proportionality, and legitimate expectations, prohibition to abuse a right, as well as the principles of comprehensive judicial protection of civil rights.”

Paragraph 4 of Article 1.5 of the CK prescribes: “In interpreting and applying laws, the court shall be guided by the principles of justice, reasonableness and good faith.”

Thus, with reference to, inter alia, these provisions of the CK, it should be noted that while interpreting and applying Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ, the court had to follow, inter alia, the principles of justice, reasonableness, good faith, and proportionality.

11. As mentioned before, Article 86 (wording of 12 October 2006) of the ATGTĮ, which prescribed the legal regulation impugned by the petitioner, was set out in a new wording by the Law Amending Articles 2, 11, 15, 16, 17, 20, 201, 40, 53, 55, 58, 592, 75, 77, 86, 95, and 96, Chapter V and Annex 3 of the Law on Copyright and Related Rights No VIII-1185, which was adopted by the Seimas on 3 November 2016.

It should be noted that upon the adoption of this law, the impugned legal regulation prescribed in Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ and the related legal regulation have not changed in the aspect relevant in the constitutional justice case at issue.

II

The provisions of the Constitution and the official constitutional doctrine

12. In the constitutional justice case at issue, the Court investigated into the compliance of the legal regulation consolidated in the ATGTĮ on the decisions adopted by a court subsequent to the claims filed by collective administration associations while defending violated copyright or related rights with Paragraph 1 of Article 29 and Paragraph 1 of Article 109 of the Constitution and the constitutional principles of justice and a state under the rule of law.

13. In the context of the constitutional justice case at issue, it needs to be noted that the constitutional grounds for the protection and defence of the interests of authors are enshrined in Paragraph 3 of Article 42 of the Constitution, under which the law protects and defends the spiritual and material interests of an author that are related to scientific, technical, cultural, and artistic work.

13.1. The Constitutional Court has held that the defence of the rights and interests of authors against violations is a public interest (the Constitutional Court’s ruling of 5 July 2000). The Constitution gives rise to the duty of the legislature to establish such a legal regulation that would ensure the effective protection of copyright and related rights; laws must provide for responsibility for the violation of these rights (wording of 6 January 2011).

13.2. The Constitutional Court has noted that owners of the copyright and related rights may sustain various losses, which incurred as a result of unlawful actions of other persons; a duty arises for the legislature to establish such legal regulation that would permit to reimburse (compensate) for the losses of both material and moral nature sustained by the proprietor (owner of the copyright or related rights); such legal regulation must, by taking account of the specificity of intellectual property, create preconditions for calculation of the losses sustained by owners of the copyright and related rights as a result of unlawful actions of other persons (the Constitutional Court’s ruling of 6 January 2011).

13.3. In the context of the constitutional justice case at issue, it should be noted that, in implementing the duty stemming from Paragraph 3 of Article 42 of the Constitution to ensure the effective protection of the rights and interests of an author, the legislature may provide for in a law various methods of protecting copyright and related rights, whose application would, inter alia, compensate the owners of copyright and related rights for losses incurred by them as a result of unlawful acts committed by other persons, as well as would create the preconditions for preventing violations of these rights.

In order to secure the public interest – the protection of the rights and interests of an author, and taking into account the specificity of the protection of intellectual property, copyright, and related rights, inter alia, taking into consideration the fact that it might be difficult to identify some violations of copyright and related rights or the losses of the owners of copyright and related rights as a result of the said violations, the legislature may also establish, under Paragraph 3 of Article 42 of the Constitution, such a legal regulation whereby it would be possible to entrust the protection of copyright and related rights to special associated entities established for this purpose by the owners of copyright and related rights and to create the preconditions for carrying out effectively the functions entrusted to the said entities.

14. As the Constitutional Court has held, the most reliable way to defend human rights is judicial defence (the Constitutional Court’s ruling of 14 February 1994); in a state under the rule of law, everyone is given an opportunity to defend their rights in a court against unlawful actions of other persons and those of state institutions and officials (the Constitutional Court’s ruling of 1 October 1997). The guarantee of the judicial protection of the rights and freedoms of persons is an essential element of the constitutional institute of the rights and freedoms of persons, a necessary condition for the administration of justice (inter alia, the Constitutional Court’s rulings of 30 June 2000 and 5 July 2013).

15. Paragraph 1 of Article 109 of the Constitution prescribes that, in the Republic of Lithuania, justice is administered only by courts. The administration of justice is a function of courts and it determines both the place of the judiciary in the system of institutions of state power and the status of judges; neither any other state institution nor any other state official may exercise this function (the Constitutional Court’s rulings of 21 December 1999, May 2004, and 16 January 2006). The administration of justice is the purpose and constitutional competence of the judiciary (inter alia, the Constitutional Court’s rulings of 28 March 2006 and 13 May 2010 and its decision of 16 May 2016).

15.1. When interpreting Paragraph 1 of Article 109 of the Constitution, the Constitutional Court has held that, when administering justice, courts must ensure the implementation of the law that is expressed in the Constitution, laws, and other legal acts, they must guarantee the supremacy of law and protect human rights and freedoms; Paragraph 1 of Article 109 of the Constitution gives rise to the duty of courts to consider cases in a fair and objective manner and to adopt reasoned and well-founded decisions (inter alia, the Constitutional Court’s rulings of 24 October 2007, 21 September 2008, and 31 January 2011).

15.2. The principle of justice consolidated in the Constitution, as well as the provision that justice is administered by courts, means that not the adoption of a decision as such in a court, but rather the adoption of a just court decision constitutes a constitutional value; the constitutional concept of justice implies not perfunctory and nominal justice administered by a court, not the outward appearance of justice administered by a court, but such court decisions (other final court acts) that are not unjust according to their content; justice administered by the court only in a perfunctory manner is not justice that is consolidated in and protected and defended by the Constitution (inter alia, the Constitutional Court’s rulings of 24 October 2007, 20 February 2008, and 25 September 2012). When adopting a decision in a case, the court must always follow the laws and law, inter alia, the principles of justice, reasonableness, proportionality, and good faith which stem from the Constitution (the Constitutional Court’s ruling of 15 March 2008).

15.3. The Constitutional Court has also noted that Paragraph 1 of Article 109 of the Constitution gives rise to the fact that the legislature may not establish such legal regulation that would deny the powers of a court to administer justice (the Constitutional Court’s ruling of 5 July 2013); it is impermissible to establish any such legal regulation that would preclude a court from adopting a just decision in a case and, thus, from administering justice, where the court takes account of all the important circumstances of the case, follows law, and does not transgress the imperatives of justice and reasonableness stemming from the Constitution (inter alia, the Constitutional Court’s rulings of 21 September 2006 and 6 December 2012 and its decision of 18 September 2015); otherwise, the powers of a court to administer justice, which stem, inter alia, from Article 109 of the Constitution, would be limited or even denied, and the constitutional concept of courts as the institution administering justice in the name of the Republic of Lithuania, as well as the constitutional principles of a state under the rule of law and justice, would be deviated from (inter alia, the Constitutional Court’s rulings of 21 September 2006, 31 January 2011, and 6 December 2012).

16. The Constitutional Court has held on more than one occasion that the constitutional principle of the equality of persons before the law, which is consolidated in Article 29 of the Constitution, means the right of an individual to be treated equally; it imposes the obligation to assess homogenous facts in the same manner and prohibits any arbitrary assessment of essentially the same facts in a different manner. The constitutional principle of the equality of the rights of persons would be violated if certain persons or groups of such persons were treated in a different manner even though between the said groups of persons there would be no differences of such a character or extent that could objectively justify their uneven treatment; in assessing whether a certain different legal regulation has been established reasonably, account must be taken of concrete legal circumstances.

The Constitutional Court has also held on more than one occasion in its acts that this principle does not in itself deny the opportunity to establish, by means of a law, a diverse and differentiated legal regulation with respect to certain persons that belong to different categories if there are differences between the said persons of such a character that can objectively justify that differentiated regulation.

A violation of the constitutional principle of the equality of the rights of persons is, at the same time, a violation of the constitutional imperatives of justice and harmonious society; thus, such a violation is also a violation of the constitutional principle of a state under the rule of law (inter alia, the Constitutional Court’s rulings of 6 February 2012, 14 December 2012, and 30 April 2013).

III

The legal regulation of European Union copyright and related rights

17. Annex 3 of the ATGTĮ specifies that this law implements the European Union legislation, inter alia, Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights (hereinafter referred to as the Directive), whereby the States were obliged to provide for the measures, procedures and remedies necessary to ensure the enforcement of the intellectual property rights covered by this Directive; those measures, procedures and remedies must be fair and equitable and not unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays (Article 3).

17.1. In recital 26 of the Directive, it is, inter alia, noted that with a view to compensating for the prejudice suffered as a result of an infringement, the amount of damages awarded to the right holder should take account of all appropriate aspects, such as loss of earnings incurred by the right holder, or unfair profits made by the infringer and, where appropriate, any moral prejudice caused to the right holder; as an alternative, for example where it would be difficult to determine the amount of the actual prejudice suffered, the amount of the damages might be derived from elements such as the royalties or fees which would have been due if the infringer had requested authorisation to use the intellectual property right in question.

17.2. Under Article 4 of the Directive, inter alia, intellectual property collective rights-management bodies which are regularly recognized as having a right to represent holders of intellectual property rights are recognized as persons entitled to seek application of the measures, procedures, and remedies.

17.3. Article 13 of the Directive, which regulates the relationship linked to compensation of damage, inter alia, establishes that, when the judicial authorities set the damages, they shall take into account all appropriate aspects, such as the negative economic consequences, including lost profits, which the injured party has suffered, any unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the right holder by the infringement; as an alternative to (a), they may, in appropriate cases, set the damages as a lump sum on the basis of elements such as at least the amount of royalties or fees which would have been due if the infringer had requested authorisation to use the intellectual property right in question.

18. The Court of Justice of the European Union interpreted these provisions of the Directive in its judgment of 25 January 2017 adopted in Case C-367/15 Stowarzyszenie ‘Oławska Telewizja Kablowa’ subsequent to the request for a preliminary ruling from the Supreme Court of the Republic of Poland. In answering the question referred for a preliminary ruling, the Court of Justice of the European Union held that Article 13 of the Directive does not preclude national legislation, under which the holder of an intellectual property right that has been infringed may choose to demand from the person who has infringed that right either compensation for the damage that he has suffered, taking account of all the appropriate aspects of the particular case, or, without him having to prove the actual loss, payment of a sum corresponding to twice the appropriate fee which would have been due if permission had been given for the work concerned to be used.

In this judgment, the Court of Justice of the European Union emphasised that, where an intellectual property right has been infringed, mere payment of the hypothetical royalty is not capable of guaranteeing compensation in respect of any costs that are linked to researching and identifying possible acts of infringement, compensation for possible moral prejudice or payment of interest on the sums due. However, it is admittedly possible that, in exceptional cases, payment for a loss calculated on the basis of twice the amount of the hypothetical royalty will exceed the loss actually suffered so clearly and substantially that a claim to that effect could constitute an abuse of rights.

19. To sum up the legal regulation of the Directive, it should be noted that the provision of Article 13 of the Directive, which consolidates a court’s right to set a lump sum for the determination of the amount of damage, does not preclude the court from taking into account all circumstances of the case and the general principles of law applicable in deciding a particular case.

IV

The jurisprudence of foreign constitutional courts

20. In the context of the constitutional justice case at issue, it is worth noting that the questions linked to the recovery of several times the amount of the royalties for the unlawful use of a work or subject matter of related rights, as a remedy, have been considered by the Constitutional Tribunal of the Republic of Poland. By its judgment of 23 June 2015, adopted in case SK 32/2014, the Constitutional Tribunal recognised that the Constitutional Tribunal recognised that the provision of the law under which the owner of copyright could request that a person who had infringed his/her property rights intentionally would compensate for incurred damage by paying the sum of money three times the amount of the royalties which would have been due if permission had been given for the work concerned to be used.

20.1. As it was noted in the judgment of the Constitutional Tribunal, in continental law, the function of the compensation for damage is, first of all, compensational and this is related to the recognition of the principle that it is not allowed for the infringer to be enriched at the expense of an injured party. Such viewpoint allows demarcating civil liability, which is linked to the compensation of damage, from the liability which pursues other purposes (including repressive purposes). However, in civil law, namely in the sphere of intellectual property right, there are certain exceptions of the specified compensation principle that are usually grounded on the difficulty to prove the amount of damage. Although under the Constitution, it is in general allowed to provide that, for the violation of property rights, it may be required to compensate by paying a certain amount of money established in advance, which is linked not to the extent of the damage made but to the royalties for lawful use of works (even though, the amount/extent of such a requirement would exceed the extent/amount of damaged incurred), however, also in this case, the balance between the interests of the owners of copyright (authors) and the users of their works who have violated their rights of property must be ensured. The legislature is not free to intervene in the sphere of property rights of the infringers of copyright and to completely arbitrarily establish the principles of compensation for damage incurred by authors. It is impermissible to establish such legal regulation whereby the owner of property rights of authors would be granted such strong protection that the extent of his/her possible requirement would be entirely detached from damage incurred and would exceed it several times.

20.2. While assessing the compliance of the impugned provision with the Constitution, in the judgment of the Constitutional Tribunal, it is stated that by establishing an excessively severe sanction and thus disproportionately interfering with the sphere of the property rights of the infringer, the legislature violated the above-mentioned balance. Although the owner of the rights, de lege lata has the strong institutionalised protection and disposes a number of requirements that he/she can claim when defending the violated property rights of the author, the impugned provision additionally provides him/her with such a protection measure as a possibility to claim for the amount of royalties fixed in advance, entirely detached from the damage incurred. Meanwhile, the infringer who is applied the liability detached from the principle of an adequate causal link, which is consolidated in the Civil Code of the Republic of Poland, does not have any effective measures allowing him/her to defend himself/herself and to reduce the material loss. It is not only that his/her liability is not limited by “the normal consequences of conduct having caused the damage”, but it may exceed these consequences a few times. Thus, with reference to the necessity to protect the owners of property rights of authors, the legislature took no account at all of the situation of the infringer who gave rise to damage and did not establish any of his/her rights as a counterbalance to the requirement provided for in the impugned provision. The Constitutional Tribunal emphasised that the owner of copyright whose property rights are violated may be granted various measures of legal remedies; however, he/she should not have such measures that would mean excessive legislature’s interference with the sphere of the property rights of the infringer. Since the main protection measure is the compensation established with regard to the adequate causal link, even if the possibility to claim for the amount of royalties fixed in advance is provided for, the extent of the damage incurred and the proportionality of this compensation may not be disregarded at all.

V

The assessment of the compliance of Paragraph 3 of Article 86 (wording of 12 October 2006) of the Law on Copyright and Related Rights with the Constitution

21. As mentioned above, the compliance of Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ with, inter alia, Paragraph 1 of Article 109 of the Constitution and the constitutional principles of justice and the state under the rule of law is impugned in the constitutional justice case at issue.

22. The doubts of the petitioner concerning the compliance of the impugned legal regulation with Paragraph 1 of Article 109 of the Constitution and the constitutional principles of justice and a state under the rule of law are essentially based on the fact that without having established, in Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ, any criteria for the court to refer while deciding on the amount of royalties for the unlawful use of a work or subject matter of related rights, the court could not follow, inter alia, the principles of justice, reasonableness, proportionality, and other general principles of law and, having taken account of significant circumstances of the case, to adopt a just decision. Such legal regulation created preconditions for the emergence of legal situations where a court’s opportunities to administer justice decrease and sometimes it is on the whole impossible to administer justice.

23. It has been mentioned that the impugned Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ established that a court, when considering a case subsequent to claims filed by collective administration associations, adopts a decision on the recovery of royalties for unlawful use of a work or subject matter of related rights of twice the amount of the royalties that would have been payable under the granted licence to use the work or subject matter of related rights.

24. As mentioned before, it stems from Paragraph 1 of Article 109 of the Constitution that the legislature is not allowed to establish any such legal regulation that would not permit a court, after it takes account of all important circumstances of a case and follows law, without violating the imperatives of justice and reasonableness, which arise from the Constitution, to adopt a just decision in a case and, thus, to administer justice; otherwise, the powers of a court to administer justice, which arise from, inter alia, Article 109 of the Constitution, would be limited or even denied, and the constitutional concept of a court as the institution that administers justice in the name of the Republic of Lithuania, as well as the constitutional principles of a state under the rule of law and justice, would be deviated from.

25. While deciding whether Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ was in conflict with Paragraph 1 of Article 109 of the Constitution and the constitutional principles of justice and a state under the rule of law, it should be noted that, as the Constitutional Court has held in its rulings, in legal theory, various methods of interpretation of law are known: linguistic, systematic, historical, comparative, etc.; as a rule, in order to disclose the content of legal norms, it is not enough to apply only the linguistic method of interpretation (inter alia, the Constitutional Court’s rulings of 23 June 1999, 9 November 1999, and 7 December 2016); it is possible to reveal the meaning of separate notions used in a law by applying different methods of interpretation of a law, i.e. systematic method, as every legal norm is a constituent part of a single legal act, which is related to other norms of that legal act (the Constitutional Court’s rulings of 23 June 1999 and 7 December 2016); when interpreting legal norms, the intentions of the legislature on the grounds of which a law was adopted is an important factor (the Constitutional Court’s ruling of 26 October 1995).

Thus, also the impugned provision of Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ, according to which, a court, where it established that the works or subject matter of related rights had been used without a licence of the collective administration association, had to take a decision to recover from the user twice the amount of the royalties that would have been payable if the said works or subject matter of related rights had been used lawfully, may not be interpreted only literally, by applying a linguistic method of interpretation.

25.1. It has been mentioned that under Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ, which is interpreted in conjunction with other provisions of the ATGTĮ, for the unlawful use of the works or subject matter of related rights, subsequent to the claims filed by collective administration associations – special entities established voluntarily by the owners of copyright and related rights or their unions for the administration of transferred copyright and related rights, a court was obliged to take the decision to recover from the user twice the amount of the royalties that would be payable if they were used lawfully; it has also been mentioned that such a legal regulation had been established, among other things, in order to create the preconditions for ensuring the prevention of violations of copyright and related rights, as well as to cover the expenses incurred by collective administration associations in relation to the detection of violations.

25.2. It has also been mentioned that, with reference to the provisions of the CK, while interpreting and applying Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ, the court had to follow, inter alia, the principles of justice, reasonableness, good faith, and proportionality.

This means that under Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ, while adopting the decision on the amount of the royalties subsequent to the claims of collective administration associations, the court had to follow, inter alia, the principles of justice, reasonableness, good faith, and proportionality.

25.3. It has also been mentioned that the provisions of the ATGTĮ implement the European Union legislation, inter alia, the Directive.

It is worth noting that the provisions of Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ, which are impugned by the petitioner, are related to Article 13 of the Directive, which, as mentioned before, having consolidated the right of a court to set the damages as a lump sum as an alternative to establishing the amount of damage, the court is not prevented from taking account of all the circumstances of the case and applicable general principles, when it decides a specific case.

25.4. Thus, while applying the logical and systematic methods of interpretation of law and in view of the intentions of the legislature and the relevant legal regulation consolidated in the legal acts of the European Union, Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ should be interpreted as meaning that a court, when deciding subsequent to the claims filed by collective administration associations on the recovery of royalties for the unlawful use of a work or subject matter of related rights, as a rule, had been obliged to take the decision to recover from the user twice the amount of the royalties that would have been payable under the granted licence to use the work or subject matter of related items. However, having assessed the circumstances relevant to the case and based on, among other things, the principles of justice, reasonableness, good faith, and proportionality, the court had also been able to make the decision to recover a different amount of royalties for the unlawful use of the work or subject matter of related rights.

Only if the legal regulation established in Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ is interpreted in a way indicated above, it is to be assessed as not having violated the requirement (arising from Paragraph 1 of Article 109 of the Constitution and the constitutional principles of justice and a state under the rule of law) that prohibits the establishment of a legal regulation precluding a court from adopting a just decision in a case and, thus, from administering justice, after the court takes account of all the important circumstances of the case, follows law, and adheres to the imperatives of justice and reasonableness stemming from the Constitution.

26. Taking account of the arguments set out, the conclusion is to be made that Paragraph 3 of Article 86 (wording of 12 October 2006) was not in conflict with Paragraph 1 of Article 109 of the Constitution and the constitutional principles of justice and a state under the rule of law.

27. As mentioned above, the compliance of Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ with Paragraph 1 of Article 29 of the Constitution is also impugned in the constitutional justice case at issue.

28. The petitioner also doubts the compliance of the impugned legal regulation with Paragraph 1 of Article 29 of the Constitution as, in its opinion, under this legal regulation, the legal situation of collective administration associations is more favourable with regard to infringers compared to the owners of copyright and related rights who defend their rights in a court independently: when the owners of copyright and related rights themselves apply to a court, the possibility of being awarded twice the amount of the royalties that would have been paid if the infringer had lawfully used the works or subject matter of related rights (upon having received the licence) is linked, among other things, to the form of guilt, which must be proven by the injured person; meanwhile, when a collective administration association files a claim for the recovery of royalties for the unlawful use of works, the court is under the obligation, in any case, to take a decision to recover from the user twice the amount of the royalties that would have been paid under the granted licence.

29. As mentioned before, under Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ, the court could decide to recover twice the amount of the royalties for the unlawful use of a work or subject matter of related rights than it would be payable if a work or subject matter of related rights were used lawfully, without taking account of the form of guilt – differently than under Item 2 of Paragraph 4 of Article 83 (wording of 12 October 2006) of the ATGTĮ, under which the court could decide to recover up to twice the amount of such royalties only where the infringer acted intentionally or with negligence.

It has also been mentioned that Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ is lex specialis with regard to Item 2 of Paragraph 4 of Article 83 (wording of 12 October 2006) of the ATGTĮ: it prescribes a different amount of royalties for the unlawful use of a work or subject matter of related rights subsequent to the claims of a special entity – collective administration associations; such a legal regulation had been established, among other things, in order to create the preconditions for ensuring the prevention of violations of copyright and related rights, as well as to cover the expenses incurred by collective administration associations in relation to the detection of violations.

30. It has been mentioned that the constitutional principle of the equality of persons before the law, which is consolidated in Paragraph 1 of Article 29 of the Constitution, imposes the obligation to assess homogenous facts in the same manner and prohibits any arbitrary assessment of essentially the same facts in a different manner. this constitutional principle of the equality of the rights of persons does not in itself deny the opportunity to establish, by means of a law, a diverse and differentiated legal regulation with respect to certain persons that belong to different categories if there are such differences between the said persons of such a character that can objectively justify that differentiated regulation; any differentiated legal regulation must be based only on objective differences of the situation of the subjects of certain social relations regulated by relevant legal acts.

It has also been mentioned that in order to secure the public interest – the protection of the rights and interests of an author, and taking into account the specificity of the protection of intellectual property, copyright, and related rights, inter alia, taking into consideration the fact that it might be difficult to identify some violations of copyright and related rights or the losses of the owners of copyright and related rights as a result of the said violations, the legislature may also establish, under Paragraph 3 of Article 42 of the Constitution, such a legal regulation whereby it would be possible to entrust the protection of copyright and related rights to special associated entities established for this purpose by the owners of copyright and related rights and to create the preconditions for carrying out effectively the functions entrusted to the said entities.

30.1. It has been mentioned that Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ, interpreted together with the provisions of Paragraph 1 of Article 65 (with the amendments of 12 October 2006), Paragraph 1 of Article 66, and Article 67 of the ATGTĮ, established that for the unlawful use of a work or subject matter of related rights, a court takes a decision to recover twice the amount of the royalties than it would be payable if they were used lawfully subsequent to the claims of collective administration associations – special entities established by the other owners of copyright and related rights or their unions for the administration of transferred economic rights, copyright and related rights and able, inter alia, to defend these rights without a special authorisation.

30.2. It should be held that collective administration associations and the owners of copyright or related rights that defend their rights independently are not identical and they cannot be regarded as persons belonging to a group of entities that are in the same (similar) situation or are with the same (similar) characteristics. They belong to different categories of persons – they differ fundamentally, inter alia, in that, as specific entities, collective administration associations bring together on a voluntary basis individual authors, performers, other owners of copyright and related rights or their associations and represent their interests by collectively administering and protecting the ownership rights entrusted to them, among other things, in cases where the individual administration or defence of some copyright and related rights is not effective. While implementing the functions entrusted to them, collective administration associations incur certain expenses (which must be compensated) related to the collective administration of rights and the collection and distribution of royalties, as well as to the detection of violations of copyright and related rights; meanwhile, the said expenses are not incurred by individual authors, performers, or owners of copyright or related rights.

30.3. Thus, by Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ, the legislature implemented the duty to ensure the effective protection of copyright and related rights, which stems from Paragraph 3 of Article 42 of the Constitution, and, while seeking to secure the public interest to defend copyright and taking into account the specificity of the protection of intellectual property, copyright, and related rights, established a legal regulation, under which the protection of copyright and related rights was entrusted to special associated entities established for this purpose by the owners of copyright and related rights and which created the preconditions for carrying out effectively the functions entrusted to the said entities.

Therefore, such a legal regulation has not violated the principle of the equality of the rights of persons consolidated in Paragraph 1 of Article 29 of the Constitution.

31. Taking account of the arguments set out, the conclusion is to be made that Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ was not in conflict with Paragraph 1 of Article 29 of the Constitution.

Conforming to Articles 102 and 105 of the Constitution of the Republic of Lithuania and Articles 1, 53, 531, 54, 55, and 56 of the Law on the Constitutional Court of the Republic of Lithuania, the Constitutional Court of the Republic of Lithuania gives the following

ruling:

To recognise that Paragraph 3 of Article 86 (wording of 12 October 2006; Official Gazette Valstybės žinios, 2006, No 116-4400) of the Republic of Lithuania’s Law on Copyright and Related Rights was not in conflict with the Constitution of the Republic of Lithuania.

This ruling of the Constitutional Court is final and not subject to appeal.

Justices of the Constitutional Court:           Elvyra Baltutytė

                                                                                Vytautas Greičius

                                                                                Danutė Jočienė

                                                                                Gediminas Mesonis

                                                                                Vytas Milius

                                                                                Daiva Petrylaitė

                                                                                Janina Stripeikienė

                                                                                Dainius Žalimas