Constitutionality of Multiple Lump-Sum as Compensation for Copyright Infringement: Commentary by JP Kolczyński, Attorney-at-law

12.09.2019

The Constitutional Tribunal (hereinafter: CT) received an inquiry from the Supreme Court (hereinafter: SC) pertaining to the constitutionality of provision of Art. 79.1.3 of the Act on Copyright and Neighbouring Rights of 4 February 1994 (Polish Journal of Laws [Dz.U.] of 2019, item 1231) in reference to the possibility of authors seeking a double amount of remuneration for copyright infringement. The institution of a lump-sum compensation was introduced in Poland already in 1994, offering benefits to authors. Authors, seeking compensation, do not have to calculate the sustained damage in detail in Poland; they can specify it in the petition in the form of a lump-sum, corresponding to the adequate remuneration in similar cases. Until 2015, a compensation model functioned in Poland which was based on the possibility of demanding a triple adequate remuneration for deliberate infringement, even of the culpa levissima type (negligence arising from the slightest fault). After such triple lump-sum was repealed by the CT, a double lump-sum compensation was left, which, according to the statutory structure, may be sought by the author even for completely faultless infringement. Given the non-uniform practice of courts in Poland, the CT is going to examine such double lump-sum compensation now.

The issue for the Polish legal press was commented by Attorney Janusz Piotr Kolczyński from C.R.O.P.A. Legal Counsels’ Firm.

The commentator has indicated that the model of a multiple lump-sum as compensation for copyright infringement is a quite risky institution in Poland. In his opinion, a system that is, in fact, uncontrolled by  courts (if there is no obligation of calculating the damage precisely), violates the balance of the parties, and also constitutes a threat to fundamental rights, i.e. freedom of business operation, as referred to in Art. 16 of the Charter of Fundamental Rights of the European Union.

Furthermore, the functioning of the discussed model - in the expert’s opinion - may lead to the violation of the proportionality principle, which was noted by the SC in decision of 9 April 2019 (V CKS 108/18) on presenting a legal inquiry to the CT.

In relation to the above, in Attorney Kolczyński's opinion, the response of the CT should only be of formal nature for the judicial practice. Even nowadays courts in Poland refuse (even though not uniformly) to award compensation in a double amount determined in the form of a lump-sum. Furthermore, the effect of the judgement of the CT should be - in the commentator’s opinion - determination of compliance of the model of a lump-sum compensation in the copyright provisions with the Constitution in principle:

“The answer of the CT in this case should be affirmative. This is indicated by, e.g., the distributed interpretation of the Constitution made by the common courts in multiple various cases on compensation. Even today, courts frequently refuse to award a double lump-sum compensation.”

On the other hand, as noted by Attorney Kolczyński, it seems that the Polish legislator does not currently have any idea on how to regulate the double lump-sum compensation in compliance with the standpoint of the European Court of Justice (“ECJ”) of 2017. At that time, the Court noted that the lump-sum model and the double amount of compensation applied in Poland was permissible in the light of the European Union law, yet only in the form of exceptions, e.g. when the compensation calculated in this manner does not  “explicitly and significantly” exceed the actually sustained damage. In the attorney’s opinion, the model of double remuneration would require a serious interference of the Polish legislator in the content of Art. 79.1.3 letter b) of the Copyright Law, which may not be possible within a short period of time, given the necessity of thought-through legal solutions, balancing various, contradictory interests and degrees of fault of entities that infringe copyright. Such balancing is also indispensable and mandatory for the legislator. This was also noted by the ECJ in a ruling in the case of Promusicae of 29 January 2008. (C-275/06, point 68):

the Member States must, when transposing the directives mentioned above, take care to rely on an interpretation of the directives which allows a fair balance to be struck between the various fundamental rights protected by the Community legal order. Further, when implementing the measures transposing those directives, the authorities and courts of the Member States must not only interpret their national law in a manner consistent with those directives but also make sure that they do not rely on an interpretation of them which would be in conflict with those fundamental rights or with the other general principles of Community law, such as the principle of proportionality (...).”

Furthermore, Attorney Kolczyński believes that from the point of view of literal interpretation, the current provision of Art. 79.1.3. letter b) of the Copyright Law does not lead to such unanimous conclusions, e.g. such that seeking a lump-sum compensation in the form of a single licence remuneration is possible. The provision stipulates a double amount of compensation, and in the past - a triple amount (until 2015). It does not mention a single amount of compensation. Therefore, excluding the presumption of constitutionality with respect to the double amount, the CT will have a chance (at least for a while) to keep in power the institution of a lump-sum compensation as such, which, in the attorney’s opinion, seems to be desirable in the near future.

Nevertheless, liquidation of the double lump-sum compensation will not - in the expert’s evaluation - entail that infringement will become profitable. As noted by Attorney Kolczyński, there are still such instruments as, e.g., the necessity of settling statutory interest as of the day of using the work or a request for publishing apologies in the press, which are frequently related to significant costs. This may be an effective discouragement from potential infringement.

The fragment of the commentary was published in Dziennik Gazeta Prawna in article entitled “Czy za piractwo trzeba płacić podwójnie” (“Is Piracy Punishable By Double Penalty?”)