Spain lashed by EU court on royalties

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The European Court of Justice ruled Thursday that Spain broke European Union law by failing to provide royalties for copyright holders from the public lending and rental of items like videos and DVDs.

The Luxembourg-based court ordered Spain to amend its laws and provide compensation for rights holders through royalty mechanisms.

The case, brought by the European Commission, the EU's executive authority, said Spain's interpretation of the royalty rules breached a 1992 EU directive on rental and lending rights. Spain's rules, adopted as part of a cultural promotion program, recognize the right to remuneration but exempted all categories of public-lending establishments.

The court ruled that this exemption was unlawful and unfairly denied rightsholders their royalties.

"By exempting almost all, if not all, categories of establishments undertaking the public lending of works protected by copyright from the obligation to pay remuneration to authors for the lending carried out, the Kingdom of Spain has failed to fulfill its obligations," the court said in its ruling.

The 1992 directive gives authors of films, music, books and any other copyright works an exclusive right to license or ban the lending of their works by institutions like libraries.

Spain had claimed that its efforts at cultural promotion took precedence over guaranteeing that authors received appropriate income.

The court said, however, that ensuring rightsholders receive remuneration was a specific objective of the 1992 directive and that any exemptions should be strictly limited. The court said that Spain took advantage of the flexibility by recognizing the EU's Public Lending Right in principle while excluding the lending out of works by public libraries from any obligation on the part of the government to provide royalties.

The court also echoed the commission's arguments that royalty payments were crucial for both copyright holders and for the commercial rental market. For example, if a DVD can be borrowed from a public library, there may be less demand to buy it, which can reduce income for rightsholders, unless they also receive payment when their work is lent by public libraries.

Spain now has to pay costs and will be given a timetable to change the laws to comply with the findings.
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