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25. June 2014

Music played on radio in rental cars: no obligation to pay compensation

This has recently been stated in a judgment from Borgarting Court of Appeal ..... Lovdata 

Artists, musicians and producers are entitled to compensation when their music is played on radio or otherwise is performed publicly. This follows from the Copyright Act § 45 b. Payment of compensation is made through the organization Gramo, which collects payments and allots to the various right holders. Gramo has agreements with a number of industries (hotels, shops, clubs, gyms, etc.) that regulates compensation for their use of music.

In 2010 Gramo initiated negotiations with several car rental agencies with the goal of reaching a compensation agreement. The car rental companies on their part claimed that there is no basis for claiming compensation for music played on the radio in the car, as this can not be considered to be a public performance. Gramo then filed a lawsuit against the major car rental agencies requesting a declaratory judgment that compensation should be paid by according to the Copyright Act § 45 b.

The provision reads: "Recording of performing artists' performances can within the in § 45 mentioned period against compensation be made available to the public by public performance . This does not apply to transfer in such a way that the individual can choose the time and place of access to the recording”. Subject matter raises the question of whether the transfer is a performance, that is, a publishing, of the music. It generally requires a certain connection (closeness) between the action (the vehicle has a mounted radio) and the general public’s access to the music.

The District Court in Asker and Bærum concluded that the rental of vehicles with fixed radio entails payment obligation under the provision, as it was considered to be publication of music in terms of the Copyright Act. The rental companies appealed, and the Court of Appeal came to the opposite conclusion:

The court primarily emphasizes that the rental companies’ purpose with making available rental cars with fixed radio is not giving customers access to copyright protected music – in contrast to for example hotels, whose installation of radio and television in the guestrooms is a deliberate act based on a motive of economic profit. Car rental companies do not enrich themselves at the expense of the right holders by offering vehicles with radio. It is further emphasized that in practice they can not offer cars without mounted radio. A radio receiver is today a fixed integral part of the vehicle's control system, which can not be removed because of the way it is integrated with other necessary functions.

The Court of Appeal states that the car rental companies’ hire of cars with mounted radio in itself is not an act that involves performance in the sense of the Copyright Act § 45 b. The court  discusses therefore not whether the act is public.

After this, compensation for music played on radio in rental cars should not be paid.