Member Article

&L Goodbody recently represented the Irish Nightclub Industry Association (INIA) and the Irish Hotels Federation (IHF) against Phonographic Performance (Ireland) Limited (PPI) in a case on copyright law which is a landmark judgment not only in Ireland but elsewhere. The INIA and IHF challenged an arbitrator’s award which had set copyright fees payable by nightclubs to Phonographic Performance (Ireland) Limited – “PPI”. PPI is the collecting society which represents record companies in Ireland. This is one of the few cases in which a national court has quantified the “equitable remuneration” due to record companies. The impact of the decision is also substantial – PPI was claiming payment for 15 years’ fees and the INIA and IHF’s High Court victory will considerably reduce the value of this claim. The background was that Irish nightclubs had been in dispute with PPI since the late 1980’s about the fees for playing records in their venues. In the early 1990’s, they referred their disputes to the Controller of Patents and Trade Marks. Under the then applicable Irish copyright legislation, PPI was entitled to “equitable remuneration” when its members’ records were played in public. The Controller determines the “equitable remuneration” in the event of a dispute. (Under Ireland’s current legislation, PPI is entitled to “fair payment”, but the Court’s judgment in this case suggests that the principle is the same). In 1996, the Controller referred the disputes to an arbitrator, who eventually gave an award in favour of PPI in 2003. The nightclubs then retained A&L Goodbody and appealed the arbitrator’s award to the High Court on the basis that it was excessive. The judge, Miss Justice Laffoy, demonstrated a clear understanding of both the legal and economic aspects of the case. She held that the arbitrator had erred in three significant respects: 1. His tariff took into account the underlying revenue stream and profit achieved by nightclubs. The nightclubs had argued that the use of PPI’s repertoire of records was not a factor which affected revenue or profitability; 2. Larger nightclubs were discriminated against under the tariff, in that practice it absorbed a greater share of the profit of these venues; and 3. He failed to take into account the equivalent tariffs operated by UK collecting societies. The UK levels of “equitable remuneration” were used as appropriate comparators. Consequently, Miss Justice Laffoy not only overruled the award, rather than refer the matter back, she proceeded to determine the appropriate level of remuneration, varying the award in favour of the nightclub owners. The learned judge set a rate that was considerably below that sought by PPI. For example, a nightclub operating in 1998 with 501-550 attendees will now pay €101.58 for each event it held that year (assuming no adjustment for other factors). The same nightclub would have paid €278.07 under PPI’s 1998 tariff, and €241.25 approximately under the arbitrator’s original award. The Court’s approach to “equitable remuneration” was crucial to the decision. “Equitable remuneration” is a concept running through the legislation of most European countries, and is the benchmark for determining the level of fees owed to record companies when their records are played in public. The Court noted that there was no definition of “equitable remuneration” either at an Irish or European level, but reasoned that it was “a fair price for the service provided” and a sum “which fairly reflects the value to the nightclub owner of the use of PPI’s repertoire, while fairly compensating PPI for the availability of the repertoire”. From this, and from examining comparable bargains and decisions in relation to “equitable remuneration”, in particular from the UK, the Court was able to set a fee which reflected this “fair price”, at a level substantially lower than that claimed by PPI.

 

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