Belgian court rules on approach of collection agencies
Belgian courts are taking a closer look at the modus operandi of companies managing Intellectual Property rights of others (considering recent caselaw from the Court of Justice of the European Union).
In recent years we have seen a clear rise of companies who manage the Intellectual Property rights of photographers, authors, etc. These companies are usually the contractual holders of certain Intellectual Property rights, but do not use these rights themselves. They are in fact only functioning as “collection agencies” who actively look for violations on behalf of the author, using specific scanning technology or software (i.e. reverse image tracking technology).
Recently, the Court of Justice of the European Union[1] ruled that, in principle, these contractual holders have the same legal standing to invoke the measures, procedures, and remedies as the original holder(s) of the Intellectual Property rights, provided however that these rights are not abused, which is up to the national courts to assess.
On 3 November 2021, the Ghent Commercial Court was confronted with a claim by a Belgian company (X) managing the Intellectual Property rights of a photographer seeking the cessation of certain allegedly infringing acts by another Belgian company (Y), who, according to X, copied and used three images online without the permission of the original author.
The Ghent Commercial Court –considering the recent case law of the Court of Justice –ruled that the claim of Company X was not justified due to its modus operandi.
The court was of the opinion that the modus operandi of Company X –which did not actively exploit its rights –is to search the internet for copyright infringements of its clients by using specific tracking technology. It then proceeds by sending a formal notice to the (alleged) infringer stating that it violated the copyright(s) of X’s client and demanding to retroactively enter into a (unilateral) licensing agreement to regularize the (unlawful) use of the image/material concerned. The court found that, considering the facts of the case, Company X had no intention to stop the infringement but merely wanted the alleged infringer to pay damages for the (alleged) unlawful use, threatening the alleged infringer with legal action if it did not proceed to payment.
In its judgment of 3 November 2021, the Commercial Court of Ghent stated that Company X's claim constituted an abuse of right. According to the Court, Company X benefited financially from the fact that infringements of its clients’ copyrights are maintained.
Furthermore, the Ghent Commercial Court stated that Company X did not have sufficient proof that it indeed obtained certain (Intellectual Property) rights to the images. Finally, Company X simply assumed that the images concerned were protected by copyright without demonstrating that the conditions had been met.
The court thus ruled that Company X had improperly invoked the cessation remedy as a sanction for the alleged infringements.
It remains to be seen what influence the recent jurisprudence shall have on the revenue model and the modus operandi of similar IP-managing companies in the future.
[1] (C-597/19, 17 June 2021, MircomInternational Content Management & Consulting (M.I.C.M.) Limited/TelenetBVBA)