Belgium: SABAM Loses Battle Against Internet Service Providers

Last Updated: 20 September 2016
Article by Thibaut D'hulst

On 3 June 2016, the Court of Appeal of Brussels (the "Court") denied the Belgian Association for Authors, Composers and Publishers ("SABAM") the right to collect remuneration for communication to the public from internet service providers ("ISPs").

The dispute arose in 2011 after SABAM informed Belgian ISPs that a 3.4% fee would be charged on the total price paid annually by internet users to ISPs for their internet subscription. SABAM contended that, since ISPs offer access to the Internet, including copyrighted materials, ISPs were "communicating these materials to the public" within the meaning of Article XI.165 of the Code of Economic Law ((Wetboek Economisch Recht/ Code de Droit Economique – the "Law"). Because such communication was occurring without the authors' consent and since ISPs were generating income therefrom, SABAM alleged that it was entitled to collect remuneration from ISPs on the basis of Article XI.165, paragraph 1.4, of the Law.

Both the Belgian Ministry of Economy and ISPs challenged this measure before the President of the Court of First Instance of Brussels (Rechtbank van Eerste Aanleg / Tribunal de Premičre Instance) (the "CFI") who ruled in their favour (See VBB on Belgian Business Law, Volume 2015, No. 3, p. 14 and 15, available at www.vbb.com). In its decision, the CFI carefully examined the exact role played by ISPs in the communication process and concluded that the ISPs' intervention was not subject to copyright since ISPs merely enabled the "original communication" by providing equipment but did not make a second communication to the public. Hence, the CFI stated that ISPs were not a component of the communication process but intermediaries indispensable to the functioning of the Internet.

Unfortunately, this issue was completely overlooked by the Court who dismissed SABAM's appeal exclusively on the grounds that SABAM was not authorised, by law or any other means, to collect such remuneration from ISPs.

The Court first recalled that Article XI.165, paragraph 1.4, of the Law only grants authors an exclusive right to communicate their works to the general public. The provision remains silent as to the authors' right to collect any remuneration from third parties where they authorised such communication. Hence, the Court found that Article XI.165, paragraph 1.4, of the Law could not serve as a legal basis for the disputed remuneration.

In the absence of a legal basis, the Court went on to state that SABAM is not an administrative authority and, as a result, is not authorised to establish administrative fees/charges on third parties.

The Court therefore assessed whether there was any contractual basis to the remuneration that SABAM intended to collect from ISPs. Given the principle of freedom of contract, i.e. the right to refuse to contract, and the absence of any legal obligation to contract with SABAM, the Court held that SABAM was in no position to force ISPs to enter into a contract with it.

As a consequence, the Court decided that the remuneration that SABAM intended to collect from ISPs had to be withdrawn.

SABAM is currently considering whether to appeal the Court's decision before the Belgian Supreme Court (Hof van Cassatie/Cour de Cassation). In a press release, SABAM pointed out that the Court ignored the key issue discussed in first instance of whether ISPs communicate works to the public within the meaning of the Law. During the proceedings before the Court, SABAM and ISP Proximus had suggested that questions for a preliminary ruling be referred to the EU Court of Justice in that respect. The EU Court of Justice already ruled on communication to the public for satellite package providers (See VBB on Belgian Business Law, Volume 2011, No. 10, p.13, available at www.vbb.com) and broadcasters (See VBB on Belgian Business Law, Volume 2015, No. 11, p.14, available at www.vbb.com) but not yet for ISPs, whose service and technical communication is different. Unfortunately, the Court declined the request to refer a preliminary question to the EU Court.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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