Authored By: Luyando Chizongo
University of Lusaka
PARTIES
- Appellants: Radio Telefis Eireann (RTE) and Independent Television Publications Ltd (ITP)
- Respondent: European Commission
- Interveners: Magill TV Guide Ltd before the Court of First Instance, and Intellectual Property Owners Inc. (IPO) at appeal.
FACTS
The brief facts of the case are that RTE, ITP, and BBC (“the broadcasters”) held copyright over weekly television programme listings. At the material time, there was no comprehensive television guide available on the market in Ireland or Northern Ireland. Each of these stations produced television guide listings that indicated details such as programme content, broadcasting channel, date, time, and title of each programme. The broadcasters further claimed that these television guides were granted copyright protection under both the United Kingdom Copyright Act 1956 and the Irish Copyright Act 1963, which prevented reproduction by third parties.
As part of their dissemination policies, the broadcasters each provided their programme schedules to daily and periodical newspapers upon request, and at no charge. This was accompanied by a license, also at no charge, which outlined the conditions under which the information could be reproduced. They further ensured strict adherence to these licenses by instituting legal proceedings against publications that failed to abide by the conditions of the licenses. Magill TV Guide Ltd (“Magill”) attempted to publish a comprehensive weekly television guide, but was prevented from doing so by the broadcasters, who obtained injunctions prohibiting the publication of weekly listings.
Following this, Magill, relying on Article 86 of the Treaty of Rome (“the Treaty”), sought intervention by the Commission to declare that the broadcasters abused their dominant position by refusing to grant licenses for publication of their respective weekly listings. The Commission initiated proceedings at the end of which it was found that there indeed had been a breach of Article 86 of the Treaty, and ordered that the broadcasters put an end to this breach by supplying third parties with their individual advance weekly programme listings upon request of the third party, and on a non-discriminatory basis. The broadcasters were to permit the reproduction of their listings, and any royalties requested were to be reasonable. This decision prompted RTE and ITP (“the appellants”) to appeal, as well as seek an interim suspension of the Commission’s decision, which was granted by an order dated May 11th, 1989.
At first instance, the appellants sought the entire annulment of the Commission’s decision and an order for costs, both of which were dismissed. Upon appeal, the appellants sought that the judgment of the Court of First Instance be quashed, the decision of the Commission dated December 21st, 1988, be declared void, and that the Commission and Magill (“the intervener”) pay costs.
RTE advanced three grounds of appeal, namely;
- that the Court of First Instance misconstrued the concept of abuse of dominant position contained in Article 86 of the Treaty.
- that the Court of First Instance misconstrued the concept of effects on trade between Member States.
- that the Court of First Instance wrongly refused to take into consideration the Berne Convention of 1886.
ITP, in support of its appeal, relies on the first plea advanced by RTE (which was also supported by IPO in its two statements of intervention), alongside two additional grounds, namely;
- that the Court of First Instance misconstrued Article 3 of Regulation No. 17 by holding that the Commission had the power to require a proprietor of intellectual property rights to grant compulsory licences.
- that Article 190 of the Treaty was infringed insofar as the Court of First Instance held that the reasoning of the decision satisfied the conditions relating to observance of the rights of the defence.
On the contrary, the Commission contended that the appeals be dismissed, and that the appellants and IPO pay costs.
LEGAL ISSUE
Among the main issues of contention during this appeal was whether the refusal to license the reproduction of television guide listings to an independent multi-channel weekly guide constituted an abuse of dominant position in exceptional circumstances, i.e., the subsistence of copyright.
ARGUMENTS OF THE PARTIES
- The Appellants
The main stance of the appellants was that the Commission had overreached by transforming a law that allowed the exercise of copyright into an antitrust abuse.
- Refusal to grant licenses
It was contended by RTE that the exercise by an owner of intellectual property rights of their exclusive rights, particularly the refusal to license a third party, cannot in itself be regarded as an abuse of a dominant position. This contention was supported by the decision in Volvo v Veng and backed by the IPO. The appellants and IPO further contended that the right to exclusive production was an essential right of a copyright owner, which, having not been questioned by the Treaty rules, entitles the copyright holder to control the exclusive sale of related works containing the protected work, and consequently prevent competition by a third party in respect of those products.
Furthermore, ITP denied that the exercise of exclusive production rights in pursuit of an aim manifestly contrary to the objectives of Article 86 of the Treaty is itself an abuse since copyright owners ordinarily and naturally exercise their rights to restrict competition with their own products by products made using their copyright material; that is the essence of copyright. IPO also contended that the exercise of copyright, in fact, encouraged competition, as exclusive proprietary rights are only exercised over the expression of an idea, not the concept or idea itself. Additionally, RTE argued that a copyright owner was under no obligation to justify his refusal to grant a license to a third party, contrary to the Court of First Instance’s view, which, as stated by ITP, was imprecise and undermined legal certainty for copyright owners due to the absence of precedent from the Court of Justice. It was further submitted that consumer demand could not justify the application of Article 86 to the present case, and that the national legislature and not the Commission was to remedy such situations as had been in the United Kingdom. ITP additionally stated that the deprivation of consumers of the opportunity to obtain a copyright owner’s protected material from elsewhere was ordinarily the case with copyright.
IPO and RTE further noted that the view of copyright as a mere combination of the rights of attribution of authorship and the right to compensation for exploitation presents a clear conflict not only with laws of various Member States, but also with the Berne Convention, consequently curtailing the protection afforded by copyright.
- Existence of a dominant position
According to IPO, there was no presumption that the holder of an intellectual property right was in a dominant position within the meaning of Article 86 of the Treaty. Relying on the judgment in Michelin v Commission, IPO took the view that a dominant position presupposes a position of economic strength. It is for this reason that the analysis of the Court of First Instance was questioned; the determination that the appellants held a dominant position merely because they held copyrights without reference to any analysis of economic power in the marketplace. The Commission’s view of the appellants having held a ‘de facto monopoly’ (a monopoly arising from a force of circumstance) was considered flawed by IPO, stating that the concept was an artificial construct by which the Commission sought to justify the use of competition law to change the specific subject matter of copyright
- The Commission
The Commission maintained that the refusal to grant the license met the exceptional-circumstance criteria in that it prevented a new product, excluded competition on a separate market, and lacked objective justification. This would negatively impact trade between and among Member States. The remedy, which was supplying the listings on a non-discriminatory basis and on reasonable terms, was intended to bring the abuse to an end.
DECISION OF THE COURT
In disposing of the matter, the Court of Justice dismissed all appeals raised. It was also ordered that RTE and ITP pay the costs of the appeals lodged. The court also ordered that the Intellectual Property Owners Inc. (IPO) bear its own costs, as well as those incurred by the Commission as a result of IPO’s intervention.
RATIO DECIDENDI (LEGAL REASONING)
- Existence of a dominant position
The Court found that the appellants did, in fact, hold a dominant position. While acknowledging that the mere holding of intellectual property rights cannot confer such a position, it was noted that the basic information as to the channel, day, time, and title of the programmes could only be sourced from the broadcasters themselves. As such, the broadcasters did hold a de facto monopoly over the television programmes by force of circumstance, thus putting them in the position to prevent effective competition on the market in weekly television magazines.
- Existence of abuse
The Court further acknowledged that the determination of the conditions and procedure for granting intellectual property rights did remain with the national legislature in the absence of Community harmonisation. It was also acknowledged that the exclusive right of reproduction forms part of the author’s rights, so the refusal to grant a license, even if it is by a firm in a dominant position, cannot itself be considered abuse. However, the Court of Justice confirmed the circumstances considered by the Court of First Instance in finding that there was indeed an abuse of dominant position.
Firstly, there was no actual or potential substitute for a weekly television guide offering information on programmes for the week ahead. The lists published in television sections of magazines and newspapers were fairly limited, hence only provided limited substitutability to the advance information to viewers on all the week’s programmes. Only comprehensive compilations would enable consumers to decide in advance which programmes they wished to follow. Thus, the appellants, holding a de facto monopoly, gave viewers no other choice than to buy weekly guides from each station and carry out a comparison.
Secondly, the refusal to license was not justified by the specific needs of the broadcasting sector, nor by those peculiar to the activity of publishing television magazines. Thirdly and finally, the broadcasters were found to have reserved for themselves the secondary market of weekly television guides by excluding all competition on the market since they denied access to basic information needed for the compilation of such guides.
For these reasons, the Court upheld the Court of first Instance’s finding that there indeed was an abuse of a dominant position within the meaning of Article 86 of the Treaty.
CONCLUSION
This case demonstrates the interaction of intellectual property law and competition law. It shows that intellectual property rights are, in fact, not absolute. A refusal to deal or license, though within the rights of the intellectual property owner, may result in sanctions for abuse of dominant position on the market, particularly if such refusal prevents competition and new products or services. This case also demonstrates the application of the ‘essential facilities doctrine’ in competition law, which suggests that a company in a dominant market position may be obligated to provide access to essential facilities to competitors under particular circumstances.
