mardi, janvier 18, 2011

Spain: Indiscriminate application of private copying levy is illegal

Indiscriminate application of private copying levy is illegal

Contributed by Grau & Angulo


Background

Article 5.2(b) of the EU Copyright Directive (2001/29/EC) allows member states to include in their legislation the concept of a private copy as an exception to the exclusive right of reproduction which belongs to every author, provided that the relevant rights holders receive fair compensation.

Thus, in all EU member states which have adopted this exception in their national legislation, it is perfectly legal for a private individual to copy a digital work (eg, a song on an MP3 player) and to play it at any time in private, with no consequences.

Spanish implementation

Spain has included this exception in its legislation – specifically, in Article 25 of the Intellectual Property Law (1/1996) – and has made use of the fair compensation payment established by EU law by imposing the private copying levy, which must be paid to the rights holders of works subject to private copying.

The private copying levy:

  • is collected by the bodies responsible for the collective management of IP rights in Spain, such as the Sociedad General de Autores y Editores (SGAE);
  • covers all digital devices (eg, CDs, DVD-R, MP3s); and
  • must be paid by the manufacturers, commercial distributors and importers of these types of equipment.

So far, the private copying levy has been imposed indiscriminately on all digital devices, regardless of whether the person who acquires the equipment is a private individual or a company.

ECJ referral

In an October 21 2010 judgment, the European Court of Justice (ECJ) stated that the indiscriminate implementation in Spain of the private copying levy is incompatible with EU law as it does not fulfil the 'fair compensation' requirement.

The judgment was issued in response to questions referred to the ECJ in a preliminary ruling by the Barcelona Court of Appeal in litigation between SGAE and PADAWAN, which markets digital storage equipment. SGAE brought the action against PADAWAN in order to claim payment of the private copying levy for digital devices marketed between September 2002 and September 2004.

In order to clarify whether the Spanish rules that indiscriminately impose the private copying levy on digital reproduction equipment, devices and media accord with the Copyright Directive, the Barcelona Court of Appeal referred the following questions to the ECJ:

  • Must the concept of fair compensation set out in Article 5.2(b) of the directive be interpreted in the same way in all EU member states?
  • Regardless of the system used by each member state to calculate fair compensation, must a fair balance be ensured between the affected persons (the IP rights holders and the persons liable to pay the compensation)? And should that balance be determined by the justification for fair compensation, which compensates the harm arising from the private copying exception?
  • Must the fair compensation be linked to the presumed use of digital reproduction equipment, devices and media for making reproductions covered by the private copying exception in order for the private copy levy to be justified?
  • Is the indiscriminate application of the private copying levy to companies and professionals who clearly purchase digital reproduction devices and media for purposes other than private copying compatible with the concept of fair compensation?
  • Does the Spanish system of applying the private copying levy indiscriminately infringe the directive because it is applied to different situations in which the limitation of rights justifying the compensation does not exist?

The ECJ responded as follows:

  • The concept of fair compensation, as set out in Article 5.2(b) of the directive, is an autonomous concept of EU law which must be interpreted in the same way in all EU member states that have introduced a private copying exception.
  • The fair balance between the persons concerned means that fair compensation must be calculated on the basis of the harm caused to authors of protected works by the reproduction for private use of the protected works without their authorisation. This is consistent with the fair balance requirement that the debtors of the fair compensation are those individuals who make digital reproduction equipment, devices and media available to private users.
  • The indiscriminate application of the private copying levy with respect to all digital reproduction equipment, devices and media is incompatible with Article 5.2(b) of the directive, because according to the article, a link is necessary between the application of the levy and the deemed use of the mentioned equipment for the purposes of private copying.
  • The national court is competent to determine the compatibility of the Spanish private copying levy with the directive.

Comment

In light of the ECJ's comments, it can be concluded that the private copying levy is lawful, but that its indiscriminate application to all digital devices, without taking into account who acquires them and whether the presumed use will be for private copy, is not.

The Barcelona Court of Appeal must now determine whether the application of the private copying levy is consistent with the law.

For further information on this topic please contact Leticia Lloret or Jana Salvador at Grau & Angulo by telephone (+34 91 353 36 77) or by fax (+34 91 350 26 64) or by email (l.lloret@gba-ip.com or j.salvador@gba-ip.com).