Judgment — ECLI:EU:C:1998:172
Date: 1998-04-28
Language of the case: German
Court formation: Full Court
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: Right of establishment;Intellectual, industrial and commercial property;Approximation of laws;Freedom to provide services;Copyright and related rights
Concepts: Copyright and related rights;Freedom to pursue trade or professional activities
Procedure: Reference for a preliminary ruling
Origin: Germany

Summary of the Judgmen t 
1. Approximation of laws — Copyright and related rights — Directive 92/100 — Renting out 
and lending of originals and copies of copyright works — Exclusive rental right introduced by 
the directive — Breach of the principle of the exhaustion of distribution rights — None 
(EC Treaty, Art. 36; Council Directive 92/100) 
2. Community law — Principles — Fundamental rights — Right to property — Freedom to 
pursue a trade or profession — Restrictions — Directive 92/100, introducing an exclusive 
rental right and including among the holders of that right producers of sound recordings — 
Restriction justified by the general interest — Breach of the principle of proportionality — 
None 
(EC Treaty, Arts 36 and 128; Council Directive 92/100) 
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SUMMARY — CASE C-200/96 
1. The introduction, by Directive 92/100 on 
rental right and lending right and on cer­
tain rights related to copyright in the field 
of intellectual property, of an exclusive 
rental right for copyright works cannot 
constitute any breach of the principle of 
the exhaustion of the distribution right, 
the purpose and scope of which are dif­
ferent. 
The principle of exhaustion of distribu­
tion rights in the event of the offering for 
sale, by the rightholder or with his con­
sent, of copyright works derives from 
settled case-law of the Court of Justice, 
according to which the exclusive right 
guaranteed by the legislation of a Mem­
ber State on industrial and commercial 
property is exhausted when a product has 
been lawfully distributed on the market 
in another Member State by the actual 
proprietor of the right or with his con­
sent. However, literary and artistic works 
may be the subject of commercial exploi­
tation by means other than the sale of the 
recordings made of them. 
By authorising the collection of royalties 
only on sales to private individuals and to 
persons hiring out those recordings, it is 
impossible to guarantee authors of works 
a remuneration which reflects the number 
of occasions on which the works are 
actually hired out and which secures for 
them a satisfactory share of the rental 
market. The release into circulation of a 
sound recording cannot therefore, by 
definition, render lawful other forms of 
exploitation of the protected work, such 
as rental, which are of a different nature 
from sale or any other lawful form of dis­
tribution. Just like the right to present a 
work by means of public performance, 
the rental right remains one of the pre­
rogatives of the author and producer not­
withstanding sale of the physical record­
ing. 
2. The freedom to pursue a trade or profes­
sion, and likewise the right to property, 
form part of the general principles of 
Community law. However, those prin­
ciples are not absolute but must be 
viewed in relation to their social function. 
Consequently, the exercise of the right to 
property and the freedom to pursue a 
trade or profession may be restricted, 
provided that any restrictions in fact cor­
respond to objectives of general interest 
pursued by the Community and do not 
constitute in relation to the aim pursued a 
disproportionate and intolerable interfer­
ence, impairing the very substance of the 
rights guaranteed. 
The objectives of Directive 92/100 in fact 
conform with the objectives of general 
interest pursued by the Community. 
First, the protection of literary and 
artistic property, which is a category of 
industrial and commercial property 
within the meaning of Article 36 of the 
I - 1954 
METRONOME MUSIK v MUSIC POINT HOKAMP 
Treaty, constitutes a ground of general 
interest which may justify restrictions on 
the free movement of goods and, second, 
the cultural development of the Commu­
nity forms part of the objectives laid 
down by Article 128 of the EC Treaty, as 
amended by the Treaty on European 
Union, which is intended in particular to 
encourage artistic and literary creation. 
More specifically, the inclusion of pro­
ducers of sound recordings among the 
beneficiaries of the exclusive rental right 
appears justified by the protection of the 
extremely high and risky investments 
which are required for the production of 
recordings and are essential if authors are 
to go on creating new works. The grant 
of an exclusive right to producers cer­
tainly constitutes the most effective form 
of protection, having regard in particular 
to the development of new technologies 
and the increasing threat of piracy, which 
is favoured by the extreme ease with 
which recordings can be copied. In the 
absence of such a right, it is likely that the 
remuneration of those who invest in the 
creation of those products would cease to 
be properly guaranteed, with inevitable 
repercussions for the creation of new 
works. 
Furthermore, the obligation to establish, 
for the producers of sound recordings 
and all other holders of rights in respect 
of such recordings, an exclusive right to 
authorise or prohibit the commercial 
rental of those products is in conformity 
with the combined provisions of the 
Agreement on Trade-Related Aspects of 
Intellectual Property Rights ('TRIPs'), 
annexed to the agreement establishing the 
World Trade Organisation. 
Since it does not appear that the objec­
tives pursued could have been achieved 
by measures which preserved to a greater 
extent the entrepreneurial freedom of 
individuals or undertakings specialising in 
the commercial rental of sound record­
ings, the consequences of introducing an 
exclusive rental right cannot be regarded 
as disproportionate and intolerable. 
I - 1955