• Judgment of the Court of 21 October 2010, C- 467/08, Padawan SL

SGAE is one of the bodies responsible for the collective management of intellectual property rights in Spain. Padawan markets CD-Rs, CD-RWs, DVD-Rs and MP3 players. SGAE claimed payment from Padawan of the ‘private copying levy’ provided for in Article 25 of the CTLIP for the years 2002 to 2004. Padawan refused on the ground that the application of that levy to digital media, indiscriminately and regardless of the purpose for which they were intended (private use or other professional or commercial activities), was incompatible with Directive 2001/29. By judgment of 14 June 2007, the Juzgado de lo Mercantil No 4 de Barcelona upheld SGAE’s claim in its entirety and Padawan was ordered to pay EUR 16 759.25 together with interest. Padawan appealed against that judgment to the Audiencia Provincial de Barcelona (Provincial Court, Barcelona).

The national court asks whether the concept of ‘fair compensation’, within the meaning of Article 5(2)(b) of Directive 2001/29, is an autonomous concept of European Union law which must be interpreted in a uniform manner in all Member States, irrespective of the Member States’ right to choose the system of collection. Also, the national court asks whether the ‘fair balance’ to be established between the persons concerned requires fair compensation to be calculated on the basis of the criterion of the harm caused to authors as a result of the introduction of the private copying exception. It also asks who, apart from the authors affected, are the persons concerned between whom a ‘fair balance’ must be established. Furthermore, the national court asks essentially whether, under Article 5(2)(b) of Directive 2001/29, there is a necessary link between the application of the levy intended to finance fair compensation with respect to digital reproduction equipment, devices and media, and the deemed use of the latter for the purposes of private copying. It also asks whether the indiscriminate application of the private copying levy, in particular with respect to digital reproduction equipment, devices and media clearly intended for uses other than the production of private copies, complies with Directive 2001. It also asks whether the system adopted by the Kingdom of Spain, which consists in indiscriminately applying the private copying levy to all types of digital reproduction equipment, devices and media, however the equipment, devices or media are used, is compatible with Directive 2001/29.

The Court concluded that the concept of ‘fair compensation’, within the meaning of Article 5(2)(b) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, is an autonomous concept of European Union law which must be interpreted uniformly in all the Member States that have introduced a private copying exception, irrespective of the power conferred on the Member States to determine, within the limits imposed by European Union law in particular by that directive, the form, detailed arrangements for financing and collection, and the level of that fair compensation. Also, according to the Court, Article 5(2)(b) of Directive 2001/29 must be interpreted as meaning that the ‘fair balance’ between the persons concerned means that fair compensation must be calculated on the basis of the criterion of the harm caused to authors of protected works by the introduction of the private copying exception. It is consistent with the requirements of that ‘fair balance’ to provide that persons who have digital reproduction equipment, devices and media and who on that basis, in law or in fact, make that equipment available to private users or provide them with copying services are the persons liable to finance the fair compensation, inasmuch as they are able to pass on to private users the actual burden of financing it. Furthermore, the Court concluded that Article 5(2)(b) of Directive 2001/29 must be interpreted as meaning that a link is necessary between the application of the levy intended to finance fair compensation with respect to digital reproduction equipment, devices and media and the deemed use of them for the purposes of private copying. Consequently, the indiscriminate application of the private copying levy, in particular with respect to digital reproduction equipment, devices and media not made available to private users and clearly reserved for uses other than private copying, is incompatible with Directive 2001/29.

• Judgment of the Court of 16 June 2011, C-462/09, Stichting de Thuiskopie

The Kingdom of the Netherlands has introduced an exception into its national law for copying for private use and according to Article 16(2) of that law, the manufacturer or importer of the item used for reproduction is responsible for paying the private copying levy. The Stichting is the Netherlands body responsible for the recovery of the private copying levy. Opus is a company based in Germany, which sells, via the internet, blank media. Its operations are focused in particular on the Netherlands by means of Dutch-language websites, which target Netherlands consumers. The contract of sale established by Opus provides that, where a Netherlands consumer makes an order online, that order is processed in Germany and the goods are delivered from Germany to the Netherlands, on behalf of and in the name of the customer, by a carrier, that carrier however in fact being engaged by Opus. Opus does not pay a private copying levy in respect of the media delivered to its customers in the Netherlands, either in that Member State or in Germany. In addition, the cost of the reproduction media thus sold by Opus does not include the private copying levy. Arguing that Opus had to be regarded as the ‘importer’ and, consequently, responsible for paying the private copying levy, the Stichting brought an action against Opus before the Netherlands courts, seeking payment of that levy. Referring to the provisions of the sales contract, Opus denied that it could be classified as an importer into the Netherlands of the reproduction media sold by it. It argues that it is the Netherlands purchasers, that is, individual consumers, who must be classified as importers. That argument relied upon by Opus in its defence was accepted by the Netherlands courts at first instance and then on appeal, which dismissed the Stichting’s action for payment. The Stichting then pursued an appeal in cassation before the referring court.

The Hoge Raad der Nederlanden (Supreme Court of the Netherlands) asks whether article 5(2)(b) and (5) thereof, must be interpreted as containing criteria which make it possible to determine who must be regarded as responsible for paying fair compensation on the basis of the exception of copying for private use. Furthermore, the referring court asks whether, in a case of distance selling between a purchaser and a commercial seller of reproduction equipment, devices and media, who are established in different Member States, Directive 2001/29 requires national law to be interpreted so that fair compensation can be recovered from the person responsible for payment who is acting on a commercial basis.

The Court concluded that Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, in particular Article 5(2)(b) and (5) thereof, must be interpreted as meaning that the final user who carries out, on a private basis, the reproduction of a protected work must, in principle, be regarded as the person responsible for paying the fair compensation provided for in Article 5(2)(b). However, it is open to the Member States to establish a private copying levy chargeable to the persons who make reproduction equipment, devices and media available to that final user, since they are able to pass on the amount of that levy in the price paid by the final user for that service. The Court also concluded that Directive 2001/29, in particular Article 5(2)(b) and (5) thereof, must be interpreted as meaning that it is for the Member State which has introduced a system of private copying levies chargeable to the manufacturer or importer of media for reproduction of protected works, and on the territory of which the harm caused to authors by the use for private purposes of their work by purchasers who reside there occurs, to ensure that those authors actually receive the fair compensation intended to compensate them for that harm. In that regard, the mere fact that the commercial seller of reproduction equipment, devices and media is established in a Member State other than that in which the purchasers reside has no bearing on that obligation to achieve a certain result. It is for the national court, where it is impossible to ensure recovery of the fair compensation from the purchasers, to interpret national law in order to allow recovery of that compensation from the person responsible for payment who is acting on a commercial basis.

• Judgment of the Court of 11 July 2013, C-521/11, Amazon.com International Sales Inc.

Austro-Mechana is a copyright collecting society, which exercises rights of authors and holders of related rights to receive payment of the remuneration for recording media under Paragraph 42b(1) of the UhrG. Amazon is an international group, which sells products via the Internet, including recording media. In response to orders placed via the internet by customers in Austria who concluded contracts for that purpose, initially with Amazon.com International Sales Inc., established in the United States, and subsequently with Amazon EU Sàrl, established in Luxembourg, from May 2006 onwards Amazon placed recording media on the market in Austria within the meaning of Paragraph 42b(1) of the UhrG. Austro-Mechana brought an action against Amazon before the Handelsgericht Wien for the payment on the basis of joint and several liability of equitable remuneration within the meaning of Paragraph 42b(1) of the UhrG for recording media placed on the market in Austria from 2002 to 2004. The amount claimed by Austro-Mechana for recording media placed on the market in the first half of 2004 was EUR 1 856 275. For the remainder of the period to which its claim for payment relates, Austro-Mechana sought an order requiring Amazon to provide the accounting data necessary for it to quantify its claim. In its interim judgment, the Handelsgericht Wien granted the application for an order to produce accounts and reserved its decision on the claim for payment. As that judgment was upheld on appeal, Amazon brought the matter before the Oberster Gerichtshof as the court of final resort.

The referring court asks whether Article 5(2)(b) of Directive 2001/29 must be interpreted as meaning that it precludes legislation of a Member State which indiscriminately applies a private copying levy on the first placing on the market in national territory, for commercial purposes and for consideration, of recording media suitable for reproduction, while at the same time providing for a right to reimbursement of the levies paid in the event that the final use of those media does not meet the criteria set out in that provision. It also asks, essentially, whether Article 5(2)(b) of Directive 2001/29 must be interpreted as meaning that it precludes the establishment by a Member State of a rebuttable presumption of private use of recording media suitable for reproduction in the case of the marketing of such media to natural persons, in the context of a system of financing of fair compensation under that provision by means of a private copying levy imposed on persons who first place such media on the market in their territory for commercial purposes and for consideration. Furthermore, it asks whether Article 5(2)(b) of Directive 2001/29 must be interpreted as meaning that the right to fair compensation under that provision, or the private copying levy intended to finance such compensation, may be excluded if half of the funds received by way of such compensation or levies is paid, not directly to those entitled to such compensation, but to social and cultural institutions set up for the benefit of those entitled. Finally, the referring court seeks to know, essentially, whether Article 5(2)(b) of Directive 2001/29 must be interpreted as meaning that the obligation undertaken by a Member State to pay, on the placing on the market, for commercial purposes and for consideration, of recording media suitable for reproduction, a private copying levy intended to finance the fair compensation under that provision, may be excluded by reason of the fact that a comparable levy has already been paid in another Member State.

The Court concluded that article 5(2)(b) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that it does not preclude legislation of a Member State which indiscriminately applies a private copying levy on the first placing on the market in its territory, for commercial purposes and for consideration, of recording media suitable for reproduction, while at the same time providing for a right to reimbursement of the levies paid in the event that the final use of those media does not meet the criteria set out in that provision, where, having regard to the particular circumstances of each national system and the limits imposed by that directive, which it is for the national court to verify, practical difficulties justify such a system of financing fair compensation and the right to reimbursement is effective and does not make repayment of the levies paid excessively difficult. Also, according to the Court, article 5(2)(b) of Directive 2001/29 must be interpreted as meaning that, in the context of a system of financing of fair compensation under that provision by means of a private copying levy to be borne by persons who first place recording media suitable for reproduction on the market in the territory of the Member State concerned for commercial purposes and for consideration, that provision does not preclude the establishment by that Member State of a rebuttable presumption of private use of such media where they are marketed to natural persons, where the practical difficulties of determining whether the purpose of the use of the media in question is private justify the establishment of such a presumption and provided that the presumption established does not result in the imposition of the private copying levy in cases where the final use of those media clearly does not fall within the case referred to in that provision. The Court concluded also that article 5(2)(b) of Directive 2001/29 must be interpreted as meaning that the right to fair compensation under that provision or the private copying levy intended to finance that compensation cannot be excluded by reason of the fact that half of the funds received by way of such compensation or levy is paid, not directly to those entitled to such compensation, but to social and cultural institutions set up for the benefit of those entitled, provided that those social and cultural establishments actually benefit those entitled and the detailed arrangements for the operation of such establishments are not discriminatory, which it is for the national court to verify. According to the Court, article 5(2)(b) of Directive 2001/29 must be interpreted as meaning that the obligation undertaken by a Member State to pay, on the placing on the market, for commercial purposes and for consideration, of recording media suitable for reproduction, a private copying levy intended to finance the fair compensation under that provision may not be excluded by reason of the fact that a comparable levy has already been paid in another Member State.

• Judgment of the Court of 5 March 2015, C-463/12, Copydan Båndkopi

Copydan is a body responsible for the administration of copyright, which represents the holders of copyright in audio and audiovisual works. It is authorised by the Kulturministeriet (Ministry of Culture) to collect, administer and distribute among such copyright holders the levy charged for the use of those works. Nokia markets mobile telephones in Denmark. It provides those products to business customers, who sell them on both to individuals and to other business customers. All mobile telephones have an internal memory. Moreover, certain models have an additional memory card that is different from the SIM card. If a user has a mobile telephone, which has a memory card, he can store on it data, such as telephone numbers, contact details and photographs taken with the telephone. Files containing musical works, films and other protected works may also be stored on the card. Such files may be downloaded from the internet or from DVDs, CDs, MP3 players or the user’s computer. The parties to the main proceedings agree that if a user stores protected works in a mobile telephone with both an internal memory and a memory card, such works are, as a rule, stored on the memory card. However, if the user alters the settings of the telephone, he may also store those works in the internal memory. Copydan takes the view that mobile telephone memory cards should be covered by the fair compensation system established by the Copyright Act in accordance with the exception to the reproduction right (‘fair compensation’), except for those with very low storage capacity. For that reason, Copydan brought proceedings against Nokia, claiming that Nokia should be ordered to pay to it a private copying levy in respect of memory cards imported in the period from 2004 to 2009.

The national court asks whether Article 5(2)(b) of Directive 2001/29 precludes national legislation, which provides for the payment of fair compensation in respect of multifunctional media, such as mobile telephone memory cards, irrespective of whether the principle function of such media is to make copies for private use. It asks also whether Article 5(2)(b) of Directive 2001/29 precludes national legislation which makes the provision of media that may be used for making copies for private use, such as mobile telephone memory cards, subject to the private copying levy but does not make the provision of components whose primary purpose is to store copies for private use, such as the internal memories of MP3 players, subject to that levy. It also asks whether Article 5(2)(b) of Directive 2001/29 is to be interpreted as precluding national legislation which requires payment of the private copying levy by producers and importers who sell mobile telephone memory cards to business customers and are aware that those cards will be sold on by those customers but do not know whether the final purchasers of the cards are individuals or business customers. The national court also asks whether the answer to that question is affected by the fact that such producers and importers are exempt from the requirement to pay the levy if they sell memory cards to business customers registered with the organisation responsible for administering the levy, and may obtain reimbursement of the levy if the mobile telephone memory cards are used for business purposes, given that, in practice, only the final purchaser of such a memory card may obtain reimbursement of the private copying levy, provided that an application is submitted to the organisation responsible for administering the levy. The national court is asking, in essence, how Article 5(2)(b) of Directive 2001/29, read in the light of the statement in recital 35 in the preamble to the directive that in certain situations where the prejudice to the rightholder ‘would be minimal, no obligation for payment may arise’, is to be interpreted. The national court is asking, in essence, what are the effects of the fact that the rightholder has given his consent to the use for private copying purposes, inter alia, of files containing protected works, in the light of the requirements laid down in Article 5(2)(b) of Directive 2001/29, in particular in so far as concerns fair compensation. The national court is asking, in essence, whether the implementation of technological measures, as referred to in Article 6 of Directive 2001/29, for devices used to reproduce protected works, such as DVDs, CDs, MP3 players or computers, may have an effect on the fair compensation payable in respect of reproductions made for private use by means of such devices. The national Court is asking whether Directive 2001/29 precludes national legislation which provides for fair compensation to be paid in respect of reproductions made using unlawful sources, namely by means of protected works made available to the public without the rightholder’s consent. The national court is also asking, in essence, whether Directive 2001/29 precludes national legislation which provides for fair compensation in respect of reproductions of protected works made by a natural person by or with the aid of a device belonging to a third party. Furthermore, the national court is asking whether Directive 2001/29 precludes national legislation which provides for fair compensation in respect of reproductions made using unlawful sources ‘by some other means’, such as, for example, the internet.

The Court concluded that article 5(2)(b) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society does not preclude national legislation which provides that fair compensation is to be paid, in accordance with the exception to the reproduction right for copies made for private use, in respect of multifunctional media such as mobile telephone memory cards, irrespective of whether the main function of such media is to make such copies, provided that one of the functions of the media, be it merely an ancillary function, enables the operator to use them for that purpose. However, the question whether the function is a main or an ancillary one and the relative importance of the medium’s capacity to make copies are liable to affect the amount of fair compensation payable. In so far as the prejudice to the rightholder may be regarded as minimal, the making available of such a function need not give rise to an obligation to pay fair compensation. The Court concluded also that Article 5(2)(b) of Directive 2001/29 does not preclude national legislation which makes the supply of media that may be used for copying for private use, such as mobile telephone memory cards, subject to the levy intended to finance fair compensation payable in accordance with the exception to the reproduction right for copies for private use, but does not make the supply of components whose main purpose is to store copies for private use, such as the internal memories of MP3 players, subject to that levy, provided that those different categories of media and components are not comparable or the different treatment they receive is justified, which is a matter for the national court to determine. The Court ruled that Article 5(2)(b) of Directive 2001/29 must be interpreted as not precluding national legislation which requires payment of the levy intended to finance fair compensation, in accordance with the exception to the reproduction right for copies for private use, by producers and importers who sell mobile telephone memory cards to business customers and are aware that those cards will be sold on by those customers but do not know whether the final purchasers of the cards will be individuals or business customers, on condition that the introduction of such a system is justified by practical difficulties; the persons responsible for payment are exempt from the levy if they can establish that they have supplied the mobile telephone memory cards to persons other than natural persons for purposes clearly unrelated to copying for private use, it being understood that the exemption cannot be restricted to the supply of business customers registered with the organisation responsible for administering the levy; the system provides for a right to reimbursement of that levy which is effective and does not make it excessively difficult to repay the levy and only the final purchaser of such a memory card may obtain reimbursement by submitting an appropriate application to that organisation. Also, according to the Court, Article 5(2)(b) of Directive 2001/29, read in the light of recital 35 in the preamble to that directive, must be interpreted as permitting the Member States to provide, in certain cases covered by the exception to the reproduction right for copies for private use, for an exemption from the requirement under that exception to pay fair compensation, provided that the prejudice caused to rightholders in such cases is minimal. It is within the discretion of the Member States to set the threshold for such prejudice, it being understood that that threshold must, inter alia, be applied in a manner consistent with the principle of equal treatment. The Court ruled that Directive 2001/29 is to be interpreted as meaning that, where a Member State has decided, pursuant to Article 5(2) of that directive, to exclude, from the material scope of that provision, any right for rightholders to authorise reproduction of their works for private use, any authorisation given by a rightholder for the use of files containing his works can have no bearing on the fair compensation payable in accordance with the exception to the reproduction right for reproductions made in accordance with Article 5(2)(b) of that directive with the aid of such files and cannot, of itself, give rise to an obligation on the part of the user of the files concerned to pay remuneration of any kind to the rightholder. The Court concluded that the implementation of technological measures under Article 6 of Directive 2001/29 for devices used to reproduce protected works, such as DVDs, CDs, MP3 players and computers, can have no effect on the requirement to pay fair compensation in accordance with the exception to the reproduction right in respect of reproductions made for private use by means of such devices. However, the implementation of such measures may have an effect on the actual level of such compensation. Also, according to the Court, Directive 2001/29 precludes national legislation which provides for fair compensation, in accordance with the exception to the reproduction right, in respect of reproductions made using unlawful sources, namely from protected works which are made available to the public without the rightholder’s consent. The Court concluded also that Directive 2001/29 does not preclude national legislation which provides for fair compensation, in accordance with the exception to the reproduction right, in respect of reproductions of protected works made by a natural person by or with the aid of a device which belongs to a third party.

• Judgment of the Court of 12 November 2015, C- 572/13, Hewlett-Packard Belgium SPRL

Hewlett-Packard imports into Belgium reprographic devices for business and household use, including ‘multifunction’ devices, the main function of which is the printing of documents at different speeds depending on the print quality. Reprobel is the management company entrusted with collecting and distributing sums corresponding to fair compensation under the reprography exception. By fax of 16 August 2004, Reprobel informed Hewlett-Packard that the sale of ‘multifunction’ printers by that company should entail, in principle, the payment of a levy of EUR 49.20 per printer. As the meetings held and correspondence exchanged between Hewlett-Packard and Reprobel did not result in an agreement regarding the rate to be applied to those ‘multifunction’ printers, by writ of 8 March 2010 Hewlett-Packard summoned Reprobel before the Tribunal de première instance de Bruxelles (Court of First Instance, Brussels). It claimed that that court should rule that no remuneration was owed for the printers which it had offered for sale, or, in the alternative, that the remuneration which it had paid corresponded to the fair compensation owed pursuant to the Belgian legislation, interpreted in the light of Directive 2001/29. It also claimed that Reprobel should be ordered to carry out within the year, on pain of a periodic penalty payment of EUR 10 million, a study consistent with that referred to in Article 26 of the Royal Decree and concerning, inter alia, the number of printers in dispute and their actual use as copiers of protected works for the purpose of comparing that use with the actual use of all other devices for the reproduction of protected works. On 11 March 2010, Reprobel summoned Hewlett-Packard before that court so that the latter might be ordered to pay to Reprobel the provisional sum of EUR 1 towards the remunerative payments which Reprobel considered were owed pursuant to the Royal Decree. The Tribunal de première instance de Bruxelles (Court of First Instance, Brussels) joined those two sets of proceedings. By judgment of 16 November 2012, the Tribunal de première instance de Bruxelles (Court of First Instance, Brussels) ruled that the first paragraph of Article 59 and the third paragraph of Article 61 of the LCRR were incompatible with EU law. Hewlett-Packard and Reprobel have appealed against that judgment to the Cour d’appel de Bruxelles (Court of Appeal, Brussels).

The referring court asks, in essence, whether Article 5(2)(a) and Article 5(2)(b) of Directive 2001/29 are to be interpreted as meaning that, with regard to the phrase ‘fair compensation’ contained in those provisions, it is necessary to draw a distinction according to whether the reproduction on paper or a similar medium effected by the use of any kind of photographic technique or by some other process having similar effects is carried out by any user or by a natural person for private use and for ends that are neither directly nor indirectly commercial. The referring court also asks, in essence, whether Article 5(2)(a) and Article 5(2)(b) of Directive 2001/29 preclude national legislation, such as that at issue in the main proceedings, which authorises the Member State in question to allocate a part of the fair compensation payable to rightholders to the publishers of works created by authors, the publishers being under no obligation to ensure that the authors benefit, even indirectly, from some of the compensation of which they have been deprived. Furthermore, the referring court asks, in essence, whether Article 5(2)(a) and Article 5(2)(b) of Directive 2001/29 preclude national legislation, which introduces an undifferentiated system for recovering fair compensation which also covers the copying of sheet music and counterfeit reproductions made from an unlawful source. Also, the referring court asks, in essence, whether Article 5(2)(a) and Article 5(2)(b) of Directive 2001/29 preclude national legislation, such as that at issue in the main proceedings, which combines, in order to finance the fair compensation granted to rightholders, two forms of remuneration, namely, first, lump-sum remuneration paid prior to the reproduction operation by the manufacturer, importer or intra-Community acquirer of devices enabling protected works to be copied, at the time when such devices are put into circulation on national territory, the amount of which is calculated solely by reference to the speed at which such devices are capable of producing copies, and, second, proportional remuneration, recovered after the reproduction operation, determined solely by means of a unit price multiplied by the number of copies produced, which also varies depending on whether or not the person liable for payment has cooperated in the recovery of that payment, which, in principle, is to be made by natural or legal persons who make copies of works.

The Court concluded that article 5(2)(a) and Article 5(2)(b) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that, with regard to the phrase ‘fair compensation’ contained in those provisions, it is necessary to draw a distinction according to whether the reproduction on paper or a similar medium effected by the use of any kind of photographic technique or by some other process having similar effects is carried out by any user or by a natural person for private use and for ends that are neither directly nor indirectly commercial. According to the Court, article 5(2)(a) and article 5(2)(b) of Directive 2001/29 preclude national legislation, such as that at issue in the main proceedings, which authorises the Member State in question to allocate a part of the fair compensation payable to rightholders to the publishers of works created by authors, those publishers being under no obligation to ensure that the authors benefit, even indirectly, from some of the compensation of which they have been deprived. According to the Court, Article 5(2)(a) and Article 5(2)(b) of Directive 2001/29 preclude, in principle, national legislation, such as that at issue in the main proceedings, which introduces an undifferentiated system for recovering fair compensation which also covers the copying of sheet music, and preclude such legislation which introduces an undifferentiated system for recovering fair compensation which also covers counterfeit reproductions made from unlawful sources. Furthermore, the Court ruled that Article 5(2)(a) and Article 5(2)(b) of Directive 2001/29 preclude national legislation, such as that at issue in the main proceedings, which introduces a system that combines, in order to finance the fair compensation payable to rightholders, two forms of remuneration, namely, first, lump-sum remuneration paid prior to the reproduction operation by the manufacturer, importer or intra-Community acquirer of devices enabling protected works to be copied, at the time when such devices are put into circulation on national territory, and, second, proportional remuneration paid after that reproduction operation and determined solely by means of a unit price multiplied by the number of copies produced, which is payable by the natural or legal persons who make those copies, in so far as the lump-sum remuneration paid in advance is calculated solely by reference to the speed at which the device concerned is capable of producing copies; the proportional remuneration recovered after the fact varies according to whether or not the person liable for payment has cooperated in the recovery of that remuneration; the combined system, taken as a whole, does not include mechanisms, in particular for reimbursement, which allow the complementary application of the criterion of actual harm suffered and the criterion of harm established as a lump sum in respect of different categories of users.

• Judgment of the Court of 22 September 2016, C-110/15, Microsoft Mobile Sales

The applicants in the main proceedings produce and sell inter alia personal computers, recorders, storage media, mobile telephones and cameras. Those applicants brought actions before the Tribunale amministrativo regionale del Lazio (Lazio Regional Administrative Court, Italy) seeking annulment of the decree of 30 December 2009. In support of those actions, they maintained that the national legislation in question is contrary to EU law, inter alia on account of the private copying levy for persons acting for purposes clearly unrelated to private copying, in particular, legal persons and persons engaged in professional activities. They also claimed that the delegation of powers by MIBAC to the SIAE, which is the body in charge of the collective management of copyright in Italy, is discriminatory, since the Italian legislation empowers the SIAE to designate the persons who should be exempted from payment of the private copying levy and those entitled to benefit from the procedure for reimbursement of that levy, where it has been paid. The Tribunale amministrativo regionale del Lazio (Lazio Regional Administrative Court) dismissed those actions. The applicants in the main proceedings appealed against the decision dismissing those actions before the Consiglio di Stato (Council of State, Italy).

The referring court asks, in essence, whether EU law, in particular Article 5(2)(b) of Directive 2001/29, must be interpreted as precluding national legislation, such as that at issue in the main proceedings, which, on the one hand, subjects exemption from payment of the private copying levy for producers and importers of devices and media intended for use clearly unrelated to private copying to the conclusion of agreements between an entity which has a legal monopoly on the representation of the interests of authors of works, and those liable to pay the compensation, or their trade associations, and, on the other hand, provides that the reimbursement of such a levy, when it has been unduly paid, may be requested only by the final user of those devices and media.

The Court concluded that EU law, in particular, Article 5(2)(b) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, must be interpreted as precluding national legislation, such as that at issue in the main proceedings, that, on the one hand, subjects exemption from payment of the private copying levy for producers and importers of devices and media intended for use clearly unrelated to private copying to the conclusion of agreements between an entity which has a legal monopoly on the representation of the interests of authors of works, and those liable to pay compensation, or their trade associations, and, on the other hand, provides that the reimbursement of such a levy, where it has been unduly paid, may be requested only by the final user of those devices and media.

Judgment of 9 Jun 2016, C-470/14 (EGEDA)

An EU directive established, from 2001, a harmonised legal framework on copyright and related rights based on a high level of protection for rightholders. To that end, Member States must guarantee, inter alia, the exclusive right to authorise or prohibit the reproduction of their works to authors. They may however establish exceptions to that exclusive right of reproduction, in particular in relation to reproductions made by a natural person for private use and for noncommercial ends (‘the private copying exception’). In that case, the right holders should receive fair compensation.

Since 2012, the fair compensation for private copying in Spain has been financed by the General State Budget. Under that scheme, the amount of that compensation is determined annually within the budgetary limits established for each financial year.

In February 2013, a number of intellectual property rights collecting societies, entitled to collect that fair compensation, brought an action for annulment of the Spanish legislation at issue before the Tribunal Supremo (Supreme Court, Spain). In that context, the Tribunal Supremo (Supreme Court) asks the Court of Justice whether the directive precludes a scheme for fair compensation for private copying financed from the General State Budget which does not make it possible, as is the case in Spain, to guarantee that the cost of the fair compensation is ultimately borne by the users of private copies.

By today’s judgment, the Court holds that the directive precludes such a scheme in so far as the scheme does not guarantee that the cost of the fair compensation is ultimately borne by the users of private copies.

Even though the most commonly chosen scheme for financing the fair compensation to date is that of a levy, the Court emphasises that the directive does not, in principle, preclude Member States which have decided to introduce the private copying exception from opting to finance it from their budget (a solution which has also been adopted in Estonia, Finland and Norway). Indeed, provided that such an alternative scheme guarantees the payment of fair compensation to rightholders, on the one hand, and that its detailed arrangements guarantee actual recovery on the other, it must be regarded as being, in principle, compatible with the objective of ensuring a high level of intellectual property protection.

Nevertheless, the Court notes that the private copying exception is intended exclusively for natural persons who make, or have the capacity to make, reproductions of protected works or subject matter for private use and for non-commercial ends. It is those persons who cause harm to the rightholders and who are, in principle, required to finance, in return, the fair compensation payable to those rightholders. For their part, legal persons are excluded from benefiting from that exception.

In that context, although Member States are indeed free to establish a scheme under which legal persons are, under certain conditions and for practical reasons, required to finance the fair compensation, such legal persons should not be the persons ultimately liable for payment of that burden. That requirement applies in all situations in which a Member State has introduced the private copying exception, regardless of whether it establishes a fair compensation scheme financed by a levy or by its budget.

In the present case, the Tribunal Supremo (Supreme Court) states in the order for reference that the scheme for financing the fair compensation from the Spanish budget does not guarantee that the cost of the compensation is ultimately borne solely by the users of private copies. Indeed, due to the lack of definite allocation of revenue – such as revenue from a specific levy – to particular expenditure, the budgetary item intended for the payment of the fair compensation must be regarded as being financed from all the budget resources of the State budget and, consequently, from all taxpayers, including legal persons. Moreover, it has not been established that there is a particular measure in Spain allowing legal persons to request to be exempted from contributing to the financing of that compensation or, at least, to seek reimbursement.

Retrieved by: https://curia.europa.eu/jcms/upload/docs/application/pdf/2016-06/cp160060en.pdf

Judgment of 21 Apr 2016, C-572/14 (Austro-Mechana)

Austro-Mechana is a copyright-collecting society whose objects include collecting the ‘fair remuneration’ provided for in Paragraph 42b(1) of the UrhG.

Amazon, which has its headquarters in Luxembourg and Germany, belongs to an international group which sells goods through the internet, including the recording materials mentioned in that provision. According to Austro-Mechana, Amazon is first to place recording materials on the market in Austria, and as a result is liable to pay that remuneration.

The dispute between the parties concerns whether the Austrian courts have international jurisdiction under Article 5(3) of Regulation No 44/2001 to entertain the legal proceedings brought by Austro-Mechana seeking payment of that remuneration from Amazon.

The Oberster Gerichtshof (Supreme Court) decided to stay the proceedings before it and to refer one question to the Court for a preliminary ruling: By its question, the referring court asks essentially whether Article 5(3) of Regulation No 44/2001 must be interpreted as meaning that a claim for payment of remuneration, such as that at issue in the main proceedings, due by virtue of a national law implementing Article 5(2)(b) of Directive 2001/29, falls within ‘tort, delict or quasi-delict’ within the meaning of Article 5(3) of that regulation.

The Court ruled as follows:

Article 5(3) of Regulation No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters must be interpreted as meaning that a claim seeking to obtain payment of remuneration due by virtue of a national law implementing the fair compensation system provided for in Article 5(2)(b) of Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society, which provides that the author is entitled to fair compensation where it is to be anticipated that, by reason of the nature of a broadcast work, made available to the public or captured on an image- or sound-recording medium manufactured for commercial purposes, it will be reproduced for personal or private use when recording material is placed on the domestic market on a commercial basis and for consideration.

The concept of matters relating to tort, delict or quasi-delict covers all actions which seek to establish the liability of a defendant and which are not related to a contract within the meaning of Article 5(1)(a) of Regulation No 44/2001.

In that connection, first, such a connecting factor is lacking since the obligation was not freely consented to by the person responsible for payment, but was imposed on it by national law by reason of the making available, for commercial purposes and for consideration, of recording media suitable for reproduction of protected works.

Second, that claims seeks to establish the liability of a defendant since that claim is based on an infringement, by the latter, of the provisions of national law concerned imposing on it the obligation to pay fair compensation and that infringement is an unlawful act causing harm to the claimant. The failure to collect the fair compensation constitutes a harmful event, within the meaning of Article 5(3) of Regulation No 44/2001, since that compensation is intended to compensate authors for the private copy made without their authorisation of their protected works, so that it must be regarded as compensation for the harm suffered by the authors resulting from such unauthorised copy by the latter. The fact that that fair compensation must be paid not to the holders of an exclusive reproduction right that it aims to compensate, but to a copyright-collecting society is irrelevant in that respect, since, according to the national law concerned, those societies alone are authorised to exercise the right to that remuneration. (see paras 32, 37, 38, 43-46, 50, 53, operative part)

Judgment of 10 Apr 2014, C-435/12 (ACI Adam)

The Copyright Directive permits Member States to lay down an exception to the exclusive reproduction right of holders of copyright and related rights so that private copies may be made (the private copying exception). It also provides that Member States which decide to introduce such an exception into their national law are required to provide for the payment of ‘fair compensation’ to copyright holders in order to compensate them adequately for the use of their protected works or other subject-matter.

ACI Adam and Others are importers and/or manufacturers of blank data media such as CDs and CD-Rs. Under Netherlands law, those companies are required to pay a private copying levy to a foundation, Stichting de Thuiskopie. The amount of that levy is determined by another foundation, ‘SONT’.

ACI Adam and Others take the view that, when determining the amount of the levy, SONT should not have taken into account the harm which may be suffered by copyright holders as a result of copies made from unlawful sources.

Against that background, the Hoge Raad der Nederlanden (Supreme Court of the Netherlands) decided to seek a preliminary ruling from the Court of Justice.

In its judgment delivered today, the Court points out that if Member States were free to adopt legislation permitting, inter alia, reproductions for private use to be made from an unlawful source, the result of that would clearly be detrimental to the proper functioning of the internal market.

Similarly, the objective of proper support for the dissemination of culture may not be achieved by sacrificing strict protection of copyright or by tolerating illegal forms of distribution of counterfeited or pirated works.

Consequently, the Court holds that national legislation which makes no distinction between private copies made from lawful sources and those made from counterfeited or pirated sources cannot be tolerated.

First, to accept that such private reproductions may be made from an unlawful source would encourage the circulation of counterfeited or pirated works, which would inevitably reduce the volume of sales or of lawful transactions relating to the protected works and would consequently have an adverse effect on normal exploitation of those works. Secondly, the application of such national legislation may unreasonably prejudice copyright holders.

Furthermore, the Court states that it is for the Member State which has authorised the making of private copies to ensure the proper application thereof and to restrict acts which are not authorised by the rightholders. National legislation which does not distinguish between lawful and unlawful private reproductions is not capable of ensuring a proper application of the private copying exception. The fact that no applicable technological measure exists to combat the making of unlawful private copies is not capable of calling that finding into question.

Furthermore, the levy system must ensure that a fair balance is maintained between the rights and interests of authors (as the recipients of the fair compensation) and those of users of protected subject-matter.

A private copying levy system, which does not, as regards the calculation of the fair compensation payable to its recipients, distinguish between the lawful or unlawful nature of the source from which a private reproduction has been made, does not respect that fair balance.

Under such a system, the harm caused, and therefore the amount of the fair compensation payable to the recipients, is calculated, according to the Court, on the basis of the criterion of the harm caused to authors both by private reproductions which are made from a lawful source and by reproductions made from an unlawful source. The sum thus calculated is then, ultimately, passed on in the price paid by users of protected subject-matter at the time when equipment, devices and media which make it possible to create private copies are made available to them.

Thus, all users are indirectly penalised since they necessarily contribute towards the compensation payable for the harm caused by private reproductions made from an unlawful source. Users consequently find themselves required to bear an additional, non-negligible cost in order to be able to make private copies.

Retrieved from:

Judgment of 26 Apr 2012, C-510/10 (DR, TV2 Danmark)

The applicants in the main proceedings are DR, a public radio and television broadcasting organisation which has the obligation to provide public service programming as an independent public institution financed by the audiovisual licence fee, and TV2 Danmark, a commercial public television broadcasting organisation, financed by advertising, which also has the obligation to provide public service programming. The radio and television programmes broadcast by DR and TV2 Danmark may be programmes produced internally or programmes produced by third parties under specific agreements with a view to being broadcast for the first time by DR or TV2 Danmark.

The defendant in the main proceedings, NCB, is a company which administers the rights to record and copy music for composers, songwriters and music publishers in a number of Nordic and Baltic States.

The dispute in the main proceedings relates to whether the exception for ephemeral recordings also covers recordings made by legally independent external television production companies in cases where those recordings have been commissioned from them by DR or by TV2 Danmark for initial broadcast on DR or TV2 Danmark.

The Østre Landsret (Eastern Regional Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

By its first question, the national court asks, in essence, whether the term ‘by means of their own facilities’ in Article 5(2)(d) of Directive 2001/29, as clarified by recital 41 in the preamble to that directive, is to be interpreted with reference to national law or to European Union law.

By its second question, the national court asks whether Article 5(2)(d) of Directive 2001/29, read in the light of recital 41 in the preamble thereto, is to be interpreted as meaning that a broadcasting organisation’s own facilities include the facilities of a person acting ‘on behalf of and under the responsibility of the broadcasting organisation’ or as meaning that a broadcasting organisation’s own facilities include the facilities of a person acting ‘on behalf of or under the responsibility of the broadcasting organisation’.

By its third question, the national court asks, in essence, what the applicable criteria are for ascertaining, specifically, whether a recording made by a broadcasting organisation, for its own broadcasts, with the facilities of a third party, is covered by the exception laid down in Article 5(2)(d) of Directive 2001/29 in respect of ephemeral recordings.

The Court ruled as follows:

The expression ‘by means of their own facilities’ in Article 5(2)(d) of Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society, under which Member States may provide for exceptions or limitations to the reproduction right laid down in Article 2 of that directive in respect of ephemeral recordings of works made by broadcasting organisations by means of their own facilities and for their own broadcasts, must be given an independent and uniform interpretation within the framework of European Union law.

In that regard, the European Union is obliged to comply with, inter alia, Article 11bis of the Berne Convention for the Protection of Literary and Artistic Works, which expressly states that it is a matter for legislation in the countries of the Berne Union to determine the regulations for ephemeral recordings made by a broadcasting organisation by means of its own facilities and used for its own broadcasts. However, by adopting Directive 2001/29, the European Union legislature is deemed to have exercised the competence previously devolved on the Member States in the field of intellectual property. Within the scope of that directive, the European Union must be regarded as having taken the place of the Member States, which are no longer competent to implement the relevant stipulations of the Berne Convention. (see paras 27, 29-31, 37, operative part 1)

2. Article 5(2)(d) of Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society, read in the light of recital 41 in the preamble to that directive, must be interpreted as meaning that a broadcasting organisation’s own facilities include the facilities of any third party acting on behalf of or under the responsibility of that organisation.

The first case, namely, that in which the third party acts ‘on behalf of’ the broadcasting organisation, presupposes a direct and immediate link between the two parties, on the basis of which the third party in question does not, as a general rule, have any degree of independence. That link is unambiguous vis-à-vis other persons, since, by definition, all of the third party’s activities are necessarily attributable to the organisation in question.

The second case, in which the third party acts ‘under the responsibility’ of the broadcasting organisation, implies a more complex, mediate link between the two parties, which allows the third party a degree of freedom in the use of its facilities, while protecting the interests of other persons vis-à-vis the organisation in question, given that it is that organisation which is ultimately responsible for such use, in respect of compensation, with regard to other persons, in particular authors.

Each of the two conditions set out in recital 41 in the preamble to Directive 2001/29 is, in itself and independently of the other, capable of fulfilling the objective pursued by Article 5(2)(d) of that directive, read in the light of that recital. Accordingly, those two conditions must be understood as being equivalent and, therefore, alternative in nature.

3. For the purposes of ascertaining whether a recording made by a broadcasting organisation, for its own broadcasts, with the facilities of a third party, is covered by the exception laid down in Article 5(2)(d) of Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society in respect of ephemeral recordings, it is for the national court to assess whether, in the circumstances of the dispute before it, that party may be regarded as acting specifically ‘on behalf of’ the broadcasting organisation or, at the very least, ‘under the responsibility’ of that organisation. As regards whether that party may be regarded as acting ‘under the responsibility’ of the broadcasting organisation, it is essential that, vis-à-vis other persons, among others the authors who may be harmed by an unlawful recording of their works, the broadcasting organisation is required to pay compensation for any adverse effects of the acts and omissions of the third party, such as a legally independent external television production company, connected with the recording in question, as if the broadcasting organisation had itself carried out those acts and made those omissions.

By contrast, the question of who took the final artistic or editorial decision on the content of the reproduced programme commissioned by the broadcasting organisation is irrelevant.