ECJ: RTL vs Pestana Hotels – Use of TV signals in hotel rooms illegal?

10.01.2022

Prof. Dr. Stefan Sporn, Honorary Professor at the TH Köln and Speaker of the Advisory Board of the Cologne Research Center for Media Law*

This is especially true for the use of TV signals in the guest rooms of hotels in the European Union. While this attitude toward the services of authors and copyright holders may be morally questionable, whether it violates the law is an open legal question for most European countries. There is hope that this question will finally be clarified this year by the European Court of Justice (ECJ) in a landmark ruling. The Court must answer the following question: Is it „cable retransmission“ if a hotel receives TV signals via satellite antenna and then retransmits them through a cable network within the hotel to the rooms? If „yes“, then the hotels must license this right from the broadcasters or shut down the signals.

The background: Almost all hotels in the European Union refuse to pay license fees to „free-to-air“ broadcasters for the use of their signals in hotel rooms. To clarify the legal issues, the German broadcaster RTL sued the Portuguese hotel chain Pestana about eight years ago. In various hotels, the latter had offered the broadcast signals in hotel rooms without RTL’s consent. Pestana, however, refused to conclude a license agreement and pay license fees. After the two first-instance courts had rejected the broadcaster’s claim, the Portuguese Supreme Court decided, among other things, to refer the above question to the ECJ.

The bases for the claim: The plaintiff has based the claim only on its own rights and not on transferred or derived (copyrights) rights: On the „right of communication to the public“ and the ancillary copyright of „cable retransmission“. In its 2017 decision „Hettegger Hotel Edelweiss“ (which was also supported by RTL, among others), the ECJ had in the meantime rejected „communication to the public“ for the underlying facts. The required element „against payment of an entrance fee“ was not present in the case; however, this was required by the applicable and relevant EU-directive („InfoSoc“), which had to be interpreted. For RTL, this left only „cable retransmission“ as a basis for a claim, as it is also undisputedly valid as such for „classic“ cable- and IP-network operators in almost identical circumstances. The Cable and Satellite Directive (CabSat Directive) is relevant for understanding the law on cable retransmission, and only the European Court of Justice is authorized to make a binding decision on its interpretation. So, is a hotel to be equated with a cable network operator and do the provisions of the CabSat Directive also apply to hotels?

The significance of the proceedings: The significance of the proceedings can hardly be overestimated in commercial and legal terms. On the one hand, the underlying facts concern dozens of European public and private broadcasters who want to decide themselves on the use of their signals in hotels and possibly also earn money from it. On the other side are the hotels, which want to save themselves the license fees of these broadcasters.

The ECJ’s decision will have either only winners or only losers.

Should RTL win, then the licensing of TV stations and their content would run according to the known, well-rehearsed and orderly existing system as with the „classic“ cable network operators: The ancillary copyright of the cable retransmission would then be granted by the broadcasters, the copyrights of the individual rights holders (producers, authors, etc.) would – as demanded by CabSat and provided for in every national EU legal system – be collectively licensed to the hotels by the collecting societies. The result would benefit broadcasters, copyright holders and also the hotels, because they would simply get all the necessary rights from the hands of a few players (broadcasters + collecting societies) in a legally secure manner.

However, should Pestana win, it would superficially look like a legal and commercial victory for the hotels. It would be a Pyrrhic victory. Because then the described well-rehearsed system of licensing the necessary rights for hotel use would not apply; the rules of CabSat would not be applicable to hotel use – to the disadvantage of all parties involved: the collecting societies, the copyright holders, the broadcasters and the hotels.

In detail: There would no longer be any compulsion for authors to join collecting societies. The collecting societies would no longer be able to grant all necessary copyrights as before and would thus be weakened. Hotels would no longer be able to securely license the full copyrights to individual programs of TV broadcasters via collecting societies (as before). The result would be a high degree of legal uncertainty in the use of TV signals on the part of the hotels. At any time, there could be the threat of a (cease-and-desist) action by one or more copyright holders, who would then permissibly represent their rights individually. For a few strong and clever copyright holders, this would bring with it an unprecedented power over the licensing system, which they would certainly be happy to use to the detriment of the hotels and to their own advantage. For the majority of copyright holders, however, this would not be an option, putting them at a disadvantage. After all, the TV stations would have no rights of their own vis-à-vis hotels and would therefore not be able to decide either on the use or on license fees for their signals. It seems unlikely that this would mean that TV broadcasters would let go of hotels. Instead, it is to be expected that many broadcasters would then make claims (again) directly to the hotels with their own, transferred or derived copyrights instead of with an ancillary copyright right such as cable retransmission. Commercially, therefore, things are likely to be worse rather than better for hotels in Europe if the case is won. In any case, however, the entire licensing system would be considerably more complicated for everyone. And no one has anything to gain from that.

The further course: The Advocate General has announced his vote for March 10, 2022. The Court’s decision is expected in the middle of the year. We will report on in this blog.

*The author represents RTL as a party in the proceedings described above in his capacity as managing director of RTL International GmbH.