Are Italian provisions on collective copyright management compatible with EU law? The Court of Justice of the European Union says no

This article examines the evolution of Italian copyright laws applicable to collective rights management, the case between LEA and Jamendo that led to the CJEU ruling, and the implications of the CJEU decision.

1. The Evolution of Italian Laws on Collective Copyright Management

Historically, Italian law granted the SIAE (in English, the Italian Society of Authors and Publishers) a legal monopoly over collective management of copyright in the music industry. This monopoly excluded other entities, both domestic and foreign, from operating in the field of copyright intermediation.

However, the situation changed when the EU enacted Directive 2014/26 on the collective management of copyright and related rights (the “Directive”).

The Directive established two types of collecting societies to which rightsholders can assign the duty of managing rights: copyright management organizations (“CMOs”) and independent copyright management entities (“IMEs”). CMOs are nonprofit entities controlled by rightsholders,^[2] and IMEs are for-profit business entities controlled by shareholders (as distinguished from rightsholders).^[3]

Although the Directive primarily focused on CMOs (established in Italy or elsewhere), it also acknowledged the role IMEs play in copyright collective management and extended some of the CMO obligations to IMEs.

Italy implemented the Directive. However, when the Directive was transposed, the provision setting forth the SIAE monopoly was initially left unchanged. This gave rise to debate on whether the SIAE monopoly was compatible with the new regulatory framework, as the framework granted multiple copyright-related rights to CMOs.

In 2017, the law was amended. The amendment opened the Italian copyright intermediation market to other CMOs.

This marked the end of the SIAE monopoly, and the liberalization of the Italian market was more open than it previously had been, but IMEs were still barred from Italian collective rights management. This exclusion was the central issue in LEA v. Jamendo.

2. LEA v. Jamendo and the Preliminary CJEU Ruling

LEA, a CMO founded in 2018 under Italian law, filed an injunction against Jamendo, a Luxembourg company operating in Italy as an IME. LEA alleged that Jamendo’s copyright intermediation activities in Italy were unlawful under Italian law as:

1. Jamendo was not listed in the registry of subjects authorized to conduct copyright intermediation activities because it did not qualify as a CMO;
2. Jamendo did not meet the requirements set forth by the law;
3. Jamendo failed to notify the Italian Communications Authority (“AGCOM”) before undertaking operations in Italy.

Jamendo responded that Italy had incorrectly transposed Directive 2014/26 because it had failed to grant IMEs the rights provided by the Directive itself. The Luxembourg company argued that by giving CMOs a monopoly over copyright intermediation, Italian copyright law unduly obliged IMEs to enter into representation agreements with SIAE and other collecting societies, such as LEA, to operate in the field of copyright intermediation, thereby restricting their freedom to provide services in Italy.

The Court of Rome referred the matter to the CJEU, asking it to answer the following question: “Must Directive [2014/26] be interpreted as precluding national legislation that reserves access to the copyright intermediation market, or in any event the granting of licences to users, solely to entities which can be classified, according to the definition in that directive, as collective management organisations, to the exclusion of those which can be classified as independent management entities incorporated in that Member State or in other Member States?”

The CJEU confirmed the partial admissibility of the preliminary ruling (with regard to foreign IMEs only, not Italian IMEs) and ruled on the merits of the issue.

First, the CJEU determined that Directive 2014/26 does not explicitly require Member States to grant IMEs access to the copyright and related rights intermediation market. While Recital 19 of the Directive states that rightsholders should have the freedom to assign their rights to any entity, this principle is not reiterated in the Directive’s binding provisions. As a result, Member States are not obligated to allow foreign IMEs the right to operate within their borders and may regulate IMEs differently from CMOs at their discretion.

However, the CJEU also stated that such a provision might have impact on other EU rules.

The CJEU then turned to the matter of the lawfulness of this provision with regard to Directive 2000/31 (on the freedom to operate of information society services) and Directive 2006/123 (on the free movement of services). However, both directives exclude the field of copyright and related rights from their scope of application.

As neither of these directives was applicable to the issue at hand and the field of copyright and related rights is not harmonized at the EU level, the CJEU held that Italian legal provisions covering collecting societies had to be analyzed in light of the general principles of EU law, and more specifically in light of Article 56 TFEU on the freedom to provide services.

The CJEU recognized that a rule that restricts IMEs established in other Member States from providing their services in Italy restricts the freedom to provide services guaranteed in Article 56 TFEU. Therefore, it is unlawful unless it is proportionate, necessary, and justified by an overriding reason of public interest.

The Italian government argued that limiting copyright management to CMOs ensures effective protection of IP rights (in part because CMOs are governed by rightsholders themselves and operate on a nonprofit basis), which is an overriding reason of public interest. The CJEU accepted this justification but noted that the measure also needed to be proportionate and necessary, and stated that the measure in question is neither. According to the CJEU, the measure goes beyond what is necessary for the protection of copyright. By excluding IMEs entirely, Italy imposed excessive restriction on IMEs and failed to balance copyright protection with fair competition and market access.

Therefore, the CJEU stated that a provision stopping an IME established in one Member State from providing copyright management services in a different Member State is incompatible not with Directive 2014/26 but with Article 56 TFEU, as the measure goes beyond what is proportionate and necessary to ensure the protection of copyright in the European Union.

3. Conclusions

This judgement had significant implications for Italian copyright law. Following the ruling, Italy was obligated to amend the copyright law and permit IMEs to enter the copyright and related rights intermediation market, now allowed by Article 180, para. 1 as recently amended on November 14, 2024.^[4]

With this amendment, Italian law is compatible with the copyright provisions of EU law. It is a significant milestone in Italian copyright law.

[1] Court of Justice of the European Union, March 21, 2024, LEA v Jamendo, Case C‑10/22, ECLI:EU:C:2024:254. Available here.

[2] Article 3 (1) (a) of Directive 2014/26/EU.

[3] Article 3 (1) (b) of Directive 2014/26/EU.

[4] Decree-Law No. 131 of September 16, 2024, converted into law by Law No. 166 of November 14, 2024.