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Content updated: 13-12-2017 15:23

The provisions of the Law on Copyright and Related Rights regarding the right of a court to decide on the amount of royalties to be awarded were not in conflict with the Constitution

01-12-2017

By its ruling passed today, the Constitutional Court has recognised that 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 ATGTĮ), according to which a court, where it established that works or subject matter of related rights had been used without a licence of a collective administration association, could take a decision to exact from the user twice the amount of the royalties that would have been payable under the granted licence, was not in conflict with Paragraph 1 of Article 29 and Paragraph 1 of Article 109 of the Constitution, as well as the constitutional principles of justice and a state under the rule of law.

In this ruling of the Constitutional Court, it is noted that the constitutional grounds of the protection and defence of the interests of authors are enshrined in Paragraph 3 of Article 42 of the Constitution. The Constitutional Court has held that the defence of the rights and interests of authors against violations is a public interest. The Constitution gives rise to the duty of the legislature to establish such a legal regulation that would ensure effective protection of copyright and related rights. In implementing this duty, the legislature may provide for various methods of protecting copyright and related rights, whose application would, among other things, 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.

The Constitutional Court has noted that, in order to secure the aforementioned public interest, and taking into account the specifics of the protection of intellectual property, copyright, and related rights, among other things, 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.

In the opinion of the Supreme Court of Lithuania, the petitioner, the provision of the impugned provision of the ATGTĮ was expressed peremptorily, i.e., under this provision, a court could not follow, among other things, the principles of justice, reasonableness, and proportionality, nor was it allowed, by taking into account the relevant circumstances of the case, to adopt a different decision from the one provided for in the impugned provision. According to the petitioner, such a legal regulation restricted a court’s ability to administer justice.

When deciding whether the impugned 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, the Constitutional Court has noted that the impugned legal regulation may not be interpreted only literally, applying exclusively the linguistic method of interpretation.

Taking into account the intentions of the legislature, the Constitutional Court has noted that one of the objectives of this provision was to compensate for the specific expenses incurred by collective administration associations in protecting the interests of the owners of copyright and related rights.

The Constitutional Court has also noted that the impugned Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ must be interpreted in conjunction with the provisions of the Civil Code, according to which a court, when interpreting and applying laws, must follow the principles of justice, reasonableness, good faith, proportionality, and other general principles of law.

The Constitutional Court has also interpreted the impugned legal regulation in the light of the provisions of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, which was implemented, among other things, by Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ. The provisions of the said Directive, which establish a court’s right to set a lump/fixed sum for the determination of the amount of damage, do 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.

Taking into account the above, the Constitutional Court has held that the impugned 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 claims filed by collective administration associations, on the recovery of unpaid royalties for unlawful use of a work or subject matter of related rights, as a rule, had to take the decision to exact 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 rights. However, having assessed the circumstances relevant to the case and based on, inter alia, the principles of justice, reasonableness, good faith, and proportionality, the court could also take the decision to exact a different amount of royalties for the unlawful use of the work or subject matter of related rights.

Only if the impugned provision is understood in such a way, it does not violate the requirement (arising from Paragraph 1 of Article 109 of the Constitution and the constitutional principles 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, even if 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.

When deciding whether the impugned Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ was in conflict with the principle of the equality of rights, which is enshrined in Paragraph 1 of Article 29 of the Constitution, the Constitutional Court has mentioned that collective administration associations and the owners of copyright or related rights that protect their rights independently are not identical and they cannot be regarded as belonging to the same group of entities. They differ fundamentally, among other things, in that, as specific entities, collective administration associations bring together on a voluntary basis individual authors, performers, other entities 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. In view of the fact that the said entities are different (therefore, a differentiated legal regulation of such entities is possible), and in the light of the above, it has been ruled that Paragraph 3 of Article 86 (wording of 12 October 2006) of the ATGTĮ was not in conflict with the principle of the equality of persons, which is enshrined in Paragraph 1 of Article 29 of the Constitution.