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Decision regarding the protection of the fundamental rights of legal entities from the European Union and of distribution rights under the Copyright Act (imitation designer furniture)
Press Release No. 56/2011 of 09 September 2011
Order of 19 July 2011
1 BvR 1916/09
According to the Copyright Act (Urheberrechtsgesetz - UrhG), the author of a work has the exclusive right of distribution. § 17.1 UrhG defines the distribution right as the right to offer to the public or to put into circulation the original work or copies thereof. The provision serves, inter alia, to implement Article 4 of European Copyright Directive 2001/29/EC in German domestic law. In the general view to date, the term distribution encompassed any act offering the work to the general public, for which any assignment of ownership was sufficient. Additionally, § 96 UrhG contains a prohibition of exploitation for unlawfully made copies.
The complainant, a limited liability company under Italian law headquartered in Italy, manufactures furniture according to plans of the architect and designer Le Corbusier, who died in 1965, and exercises his copyright under license. The plaintiff of the original proceedings, a cigar manufacturer, furnished a cigar lounge in an art and exhibition hall in which it placed imitations of Le Corbusier furniture. Upon the complainant's request, the Regional Court (Landgericht) issued a judgement to cease and desist, which was subsequently upheld by the Higher Regional Court (Oberlandesgericht).
The Federal Court of Justice (Bundesgerichtshof), by contrast, rejected the action on the ground that the placing of the furniture violated neither the distribution right nor the prohibition of exploitation. It based its ruling on a judgment of the European Court of Justice (ECJ), which had ruled in a parallel case referred by the Federal Court of Justice that distribution within the meaning of Article 4.1 of the Copyright Directive applied only in case of transfer of ownership. The Federal Court of Justice held that according to this judgment of the ECJ, the distribution right was not violated if imitations of copyrighted furniture were merely made available for use by the public without involving a transfer of ownership. The Copyright Directive was found to establish the maximum level of protection that a Member State could not surpass. The complainant considers this to violate its constitutional right of ownership. Furthermore, it contends that the ruling violates its right to a statutory judge, alleging that the Federal Court of Justice should have previously submitted to the ECJ the questions as to whether offering works for use in any form was within the scope of application of the Copyright Directive at all and whether the directive comprised the maximum of the protection of distribution rights.
The First Senate of the Federal Constitutional Court rejected the constitutional complaint as unfounded. As a foreign legal entity incorporated in the European Union, the complainant is a holder of fundamental rights under the Basic Law (Grundgesetz - GG). However, in the case at dispute its constitutional rights have not been violated.
In essence, the decision is based on the following considerations:
1. The Federal Constitutional Court decided that foreign legal entities incorporated in the European Union may be holders of substantive fundamental rights of the Basic Law.
According to Article 19 § 3 GG, fundamental rights under the Basic Law also apply to domestic legal entities to the extent that the nature of such rights permits. Even if legal entities from Member States of the EU are not "domestic" within the meaning of the Basic Law, an expansion of the application of the protection of fundamental rights to such legal entities corresponds to the obligations assumed by Member States under the European Treaties, which in particular are expressed in the fundamental freedoms and the general ban on discrimination on grounds of nationality enshrined in EU law. These oblige the Member States and all their bodies and agencies to also place legal entities from another EU Member State on the same footing as domestic entities with regard to the legal protection that can be obtained. The provisions of European Union law do not suppress Article 19.3 GG, but only prompt an extension of the protection of fundamental rights to cover further legal subjects of the European Single Market. The extension is contingent on the legal entity having an adequate domestic connection, which will generally be the case if the foreign legal entity operates in Germany and is able to file lawsuits and be sued before the ordinary (non-constitutional) courts in this country.
2. Furthermore, the Federal Constitutional Court had to clarify whether and to what degree the ordinary courts have to test the German law which they are to apply, be it fully or partly harmonised by Union law, by the standard of the German Basic Law and of the law of the European Union, and to what degree the Federal Constitutional Court in turn reviews the ordinary courts' interpretation of the European Directive in terms of the Basic Law. When interpreting domestic copyright law, the civil courts have to take the protection of property rights under the Basic Law into account, insofar as European law leaves leeway with regard to national implementation. If the courts consider full harmonisation by Union law to be evident without referring the case to the ECJ for a preliminary ruling, this is subject to review by the Federal Constitutional Court. If such a case arises, the latter is not restricted to a mere review of arbitrariness. If the Member States have no leeway in the implementation of EU law, the courts must review the applicable Union law where appropriate as to its reconcilability with the fundamental rights of Union law and, where necessary, refer the matter to the ECJ.
According to these standards, the complainant's copyright protected by Article 14.1 GG to control the distribution of copies of the furniture was not violated by the impugned judgment. The presumption by the Federal Court of Justice that the Copyright Directive, as interpreted by the ECJ, did not leave any latitude to domestic law with regard to protecting the mere offering of imitated furniture for use as copyright, is constitutionally unobjectionable. In the parallel case, the ECJ did not mention any leeway in implementation, and explicitly reserved any expansion of the term "distribution" to the Union legislature. The Federal Court of Justice was able to presume that regarding the interpretation of § 17 UrhG, the ECJ judgment did not leave it any latitude.
3. The impugned judgment does not deprive the complainant of its statutory judge (Article 101 § 1 sentence 2 GG). According to the case-law of the ECJ, a national court of final instance must comply with its obligation of reference under Article 267 of the Treaty on the Functioning of the European Union if a question of Union law arises in proceedings pending before it, unless the court has found that the question is not material to the ruling, that it has already been the subject of interpretation by the ECJ, or that the correct application of Community law is so obvious as to leave no room for any reasonable doubt. The Federal Constitutional Court only reviews whether the application of these rules is manifestly untenable.
Having submitted the questions it considered relevant for the ruling to the ECJ in the parallel case, the Federal Court of Justice has not fundamentally misjudged its obligation to refer to the ECJ in the case at hand. From the impugned judgment, one can deduce the reasonable conviction of the Federal Court of Justice that Article 4.1 of the Copyright Directive constitutes a fully harmonised provision of the distribution right and that the ECJ has finally and comprehensively clarified the interpretation of the definition of distribution contained in the directive.