EUPillar C-533/07 Falco Privatstiftung and Thomas Rabitsch v Gisela Weller-Lindhorst (Fourth Chamber) [2009] ECR I-03327

Summary

This case on Art 5(1)(a) and the second indent of Art 5(1)(b) was referred to the CJEU in proceedings between Falco (a foundation established in Austria) and Mr Rabitsch (residing in Austria), and Ms Weller-Lindhorst (domiciled in Germany), concerning the performance of a contract pursuant to which the claimants licensed the defendant to market, in Austria, Germany and Switzerland, video recordings of a concert and, the marketing of audio recordings of the same concert without any contractual basis. The defendants brought their claims in Austria. They demanded the payment of royalties calculated based on sales of video recordings of the concert under the contract, and also provision of an account of all sales of video and audio recordings and the payment of supplementary royalties based on a copyright infringement with no contractual basis. Considering the close link between the rights relied on, the court decided that it had jurisdiction under Art 5(3) of Brussels I to decide on all claims. On appeal, it was held that Art 5(3) was not applicable to contractual rights and that Art 5(1)(b) was not applicable either, since the contract was not a provision of services contract. On appeal on a point of law, the referring court noted that the concept of ‘provision of services’ is not defined in Brussels I and asked the CJEU some questions. The first question was whether the contract in question is a contract for the provision of services under Art 5(1)(b). After noting that the wording of the provision does not answer this question, the CJEU examined the question in the light of the origins, objectives and scheme of Brussels I, and also took account of the objectives of Recitals 2 and 11. The CJEU observed that the general jurisdiction rule in Art 2 is complemented, in Art 5(1), by a special jurisdiction rule in matters relating to a contract on the basis of proximity, ie the existence of a close link between the contract and the court called upon to hear and determine the case. Agreeing with AG Trstenjak, it stated that the owner of an intellectual property right does not perform any service in granting a right to use that property and undertakes merely to permit the licensee to exploit that right freely. The CJEU took the view that it is immaterial whether the licensee of an intellectual property right holder is obliged to use the intellectual property right licensed. It underlined that the broad logic and scheme of the jurisdiction rules in Brussels I require a narrow interpretation of the special jurisdiction rules, including the rule in Art 5(1). It also considered the definition of the concept of ‘services’ in the Community directives on VAT. Agreeing with the AG, it stated that that definition is a negative definition which is, by its very nature, necessarily broad and thus it did not interpret the concept in Art 5(1)(b) in the light of the definition given in the Community directives on VAT. It also observed that extending the scope of application of the second indent of Art 5(1)(b) would amount to circumventing the intention of the Community legislature in that respect and would have a negative impact on the effectiveness of Art 5(1)(c) and (a). Thus, it found that a contract under which the owner of an intellectual property right grants its contractual partner the right to use that right in return for remuneration is not a contract for the provision of services under Art 5(1)(b). The other question was, whether, in order to determine jurisdiction under Art 5(1)(a), reference must still be made to the principles which result from the CJEU case-law relating to Art 5(1) of the Brussels Convention. The CJEU observed that those provisions are identical. Considering Recital 19 and also the continuity of the Convention and the consistency between the two instruments, the CJEU gave an affirmative answer. This is an excellent AG’s Opinion and judgment of the CJEU showing full respect for the legislature.