No more levies as Spain takes the Nordic route

Private copying: how best can
Spain a-Fjord to pay?

This weblog is grateful to Sandra Alverà (Manager, European Legal and Government Affairs, Panasonic Europe) for some big news from Spain: the country has abolished its copyright levy system and is to establish a fresh one, based much on the Norwegian system: calculation of the payments will be determined by the government following dialogue with stakeholders, payments then being integrated into the national budget. Sandra adds that The Netherlands is also moving towards abolishment of copyright levies --  but is not there yet!

As for Spain itself, Sandra explains that the government is meeting commitments made in the recent electoral campaign: eight years after the controversial implementation of the “canon digital” [subsequently shot down by the Court of Justice of the European Union in Case C-467/08 Padawan], the government decided to abolish the present copyright levy system on Friday 31 December 2011. Criteria for payment under the new scheme will be defined in an official decree within the next two months. At the same time, the government agreed to pass the “Ley Sinde” (Law against Internet-Piracy and illegal downloads) which, among other things, is to introduce a Commission to protect Intellectual Property.

Private copying levy: societies "did not do enough", rules French court

From 1709 Blog team member Asim Singh (Cabinet Singh, Paris) comes this news:

"In a fascinating decision handed down by the Paris High Court (Tribunal de Grande Instance de Paris) on 2 December the Court found Sorecop and Copie France (since merged), the two entities responsible for collecting the private copy levy, negligent. The court ordered them to pay 1 million euros to Rue de Commerce.

The issue arose with respect to the so-called “grey market” i.e., the market in which French consumers purchase, via foreign EU-based websites (states that do not apply a levy or apply a lower one than that which is applied under French law), media subject to the levy. Unhappy about the uneven playing field this creates, Rue de commerce filed an action in unfair competition against certain such foreign operators. After several years of litigation, the French Supreme Court (Cour de cassation) dismissed the action holding that these foreign vendors were neither manufacturers nor importers of the media (nor consumers) and were therefore not liable for payment of the levy. The Court added that they did however have the duty to inform the French consumer of his obligation to pay the levy.

Following this decision, Rue de commerce decided to sue Copie France and Sorecop. It argued, first, that they were not ensuring payment of the levy from the consumers who were purchasing media on the grey market and, secondly, that they were not doing enough to harmonize the levy rates applied across Europe (given that their representatives formed a majority on the private copying commission). The Paris High Court referred to the recent Opus ruling by the Court of Justice of the European Union (June 16, 2011) where the CJEU held :

“Directive 2001/29 ..., 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. 

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.”

The Court held that, as direct collection from consumers was materially and financially unfeasible, the collection bodies ought to have taken action against the foreign sites. The Court pointed out that they should have brought proceedings for failure to inform French consumers
adequately of their liability to pay the levy. The Court states that 

“tasked by the French State to collect this remuneration in favour of authors and bound to fulfil this mission in compliance with Community law, Sorecop and Copie France, once they determined that there was a distortion of competition and loss of remuneration for authors due to the foreign vendors, should have, by taking collection action, if necessary judicial, for the private copying remuneration against these foreign distributors, sought the necessary interpretation of French law on the quality of the person liable for payment of this remuneration”. 

The Court also agreed with Rue de commerce that the two collection bodies could have done more to encourage harmonization of the levy rates across Europe in order to fight the grey market in light of their dominant position within the private copying commission.
The Court concluded that the two collection bodies had been negligent (within the meaning of the general tort in the Civil Code) and that their negligence had caused Rue de Commerce a loss of chance to limit or eliminate the grey market and awarded it 1 million euros by way of damages".

There's a link to the Paris High Court decision here

Thuiskopie, Opus and the private copying levy: what next?

Yesterday the Court of Justice of the European Union gave judgment in Case C-462/09 Stichting de Thuiskopie v Opus Supplies Deutschland GmbH, Mijndert van der Lee and Hananja van der Lee, a reference for a preliminary ruling from the Hoge Raad der Nederlanden (the Dutch Supreme Court).  This reference turned on Article 16c(1) of the Dutch copyright law, which provided an exception to copyright in favour of copying for private use. Article 16(2) additionally provides that a maker or importer of an item used for reproduction must pay a private copying levy. Stichting de Thuiskopie is the Dutch body responsible for recovering the private copying levy; Opus, a company based in Germany, sells blank media online via Dutch-language websites that target Netherlands consumers. Opus traded on terms that, where a Dutch consumer placed an order online, that order was processed in Germany and the goods were delivered from Germany to the Netherlands, on behalf of and in the name of the customer, by a carrierg engaged by Opus.

Opus paid no private copying levy in respect of the media delivered to its customers in the Netherlands, either in that Member State or in Germany; the cost of the reproduction media sold by Opus did not therefore include any element corresponding to 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 sued for payment of that levy. Opus denied liability, saying it couldn't be classified as an importer into the Netherlands of the reproduction media which it sold and that it was individual Dutch consumers who must be classified as importers. The trial court and first appellate court agreed with Opus, following which the Stichting appealed to the Hoge Raad. That court referred the following questions to the Court of Justice for a preliminary ruling:

‘(1) Does [the InfoSoc] Directive [2001/29], in particular Article 5(2)(b) and (5) thereof,  provide any assistance in determining who should be regarded under national law as owing the “fair compensation” referred to in Article 5(2)(b)? If so, what assistance does it provide? 

(2) In a case of distance selling in which the buyer is established in a different Member State to that of the seller, does Article 5(5) of Directive [2001/29] require national law to be interpreted so broadly that a person owing the “fair compensation” referred to in Article 5(2)(b) of the directive who is acting on a commercial basis owes such compensation in at least one of the Member States involved in the distance selling?’

The Court ruled today as follows:

"1. Directive 2001/29 ..., 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. 

2. 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."

Public comments from the English-speaking rights management and collection sectors are keenly awaited. Meanwhile, the Court's ruling looks like the source of major headaches for national legislatures (how to provide a scheme which ensures that authors actually receive the fair compensation), courts (how to achieve an appropriate means of enforcing local and EU law in respect of payment which may have to be recovered from a supplier which has no place of business in the jurisdiction or indeed anywhere but cyberspace) and authors and bodies collecting for them (how to identify chargeable uses and then to quantify payments).

Much Ado About Kindergarten - Part 2

Apologies for the delay in posting the promised rundown of the proposed changes to the German Copyright Act – sometimes life really gets in the way of one’s plans... Well, here it is now:

The aim of the draft bill submitted to the Bundestag by “the left party” (“DIE LINKE”) is to extend certain copyright exceptions and limitations to nursery schools (BT Drucksache 17/4876, http://dip.bundestag.de/btd/17/048/1704876.pdf).


Public communication of a published work

Currently, s. 52 subs. 1 sent. 1 German Copyright provides that the public communication of a published work shall be permissible at events that cumulatively meet the following requirements:
- they serve no gainful purpose on the part of the organiser,
- spectators are admitted free of charge, and
- the performers, if any, do not receive special remuneration.

According to s. 52 subs. 1 sent. 2, this is usually subject to payment of an equitable remuneration, but s. 52 subs. 1 sent. 3 contains a number of exceptions. Events by the Welfare Services and school events are exempt from the obligation to pay equitable remuneration, on condition that in accordance with their social or educational purpose they can only be accessed by a specifically limited circle of persons. Not all categories of works are covered, though. S. 52 subs. 3 provides that public stage performances and broadcasts of a work and public presentations of cinematographic works always require the consent of the copyright owner. The draft bill extends the above exception to events by child day-care centres and centres for the after-school care of pupils.

At first glance, such events appear to be similar to school events, which would militate in favour of the proposed amendment. However, things are a bit more complicated. School attendance is both compulsory (at least for nine or ten years) and – more crucially – free of charge. Nursery school attendance is not compulsory, but neither is it free. Even most state-run nursery schools charge fees, e.g. €150 per month per child. While I’m aware that this is probably not enough to recoup costs, let alone make a profit, I still wonder if in respect of events at such nursery schools, spectators (i.e. the children) can be deemed to be admitted free of charge for the purposes of s. 52 subs. 1 sent. 1, and if the public communication might serve a gainful purpose on the part of the organiser (i.e. the nursery school). Does anyone have any thoughts on this?


Reproductions of small parts of printed works or of newspaper articles

The second change proposed by the draft bill concerns s. 53 subs. 3 sent. 1, according to which it shall be permissible to make or cause to be made copies of small parts of a printed work or of individual contributions published in newspapers of periodicals for personal use
- in teaching, in non-commercial institutions of education and further education or in institutions of vocational education in the quantity required for one school class; or
- for examinations in the above institutions as well as for State examinations and examinations in schools and universities in the required quantity. The draft bill extends this exception to education in child day-care centres and in centres for the after-school care of pupils.

I have no objections to this. It should be pointed out, however, that this exception only concerns the making of copies of small parts of a printed work or of newspaper articles. S. 53 subs. 3 sent. 2 (and the proposed sent. 3) expressly stipulates that the reproduction of a work that is intended for teaching purposes at schools (or purposes of education in nursery schools) shall only be permissible with the consent of the copyright owner. Consequently, copying a whole work or substantial parts of a work is still subject to a licence and nursery schools may not, for instance, make free copies of sound recordings either.


Reproduction of graphic recordings of musical works and inclusion in private copying levy

Arguably the most controversial amendment proposed by the draft bill relates to the reproduction of graphic recordings of musical works. At the moment, s. 53 subs. 4 lit. a) provides that reproduction of such works shall only be permissible without the consent of the copyright owner
- if carried out by manual copying;
- for the inclusion in a personal archive, if and to the extent that reproduction is necessary for this purpose and if a personal copy of the work is used as the model for reproduction; or
- for personal use if the work has been out of print for at least two years.

The draft bill adds a second sentence to this that reads as follows: “In the cases of subsection 3, number 3 [i.e. education in child day-care centres and in centres for the after-school care of pupils], by way of derogation from sentence 1 lit. a), the reproduction [of graphic recordings of musical works] shall be permissible without the consent of the copyright owner.”

So there we have it: a special exception just for nursery schools! Schools, universities, music schools, private music teachers, the Welfare Services, choirs, the YMCA, you, me – everybody has to obtain a licence, only nursery schools get a free ride. I find that very peculiar, to say the least.

Finally, to make up for this new exception to a certain extent, the draft bill proposes to amend s. 54 and 54a to include graphic recordings of musical works in the private copying levy. In other words, copyright owners are supposed to receive equitable remuneration for the nursery school copies from the producers and importers of reprographic appliances such as photocopiers and scanners.

To my mind, this is all quite messy. The reason why the current exceptions do not include graphic recordings of musical works anymore – they did until 1985 – is that there was a dramatic rise in the number of copies due to the advances in reprographic technology. Choirs and other groups would not buy a copy of the work for each member, but only buy or even borrow a single copy and then make the required number of photocopies. Since the production of sheet music is expensive, the legislature deemed this unacceptably detrimental to authors and other copyright owners and prohibited the reproduction of graphic recordings of musical works except in the abovementioned cases (BT Drucksache 10/387, http://dipbt.bundestag.de/dip21/btd/10/008/1000837.pdf).

Cynics might say that in practice probably nothing much changed and choirs (and kindergarten teachers...) continued their copying frenzies regardless or even in ignorance of the law (one has to admit that, being an exception from an exception that again has exceptions, it is rather complicated). Prosecution would be both impracticable and unpopular. Perhaps, then, it would be better to create a proper private copy exception for sheet music and give composers and lyricists a fair share in the private copying levy. After all, nowadays it is possibly even easier to copy a sound recording than to copy sheet music, but there is no exception from the exception for sound recordings. On the other hand, that would be one more stone paving the way to a "culture flat rate", and I'm not sure that I should like that.

I'll keep an eye on the fate of the draft bill while I continue to make up my mind...

The translations of the relevant provisions from the German Copyright Act are a combination of the WIPO translations (http://www.wipo.int/wipolex/en/text.jsp?file_id=126254#JD_DE080_S53) and my own.

Downloads and levies: it's Double Dutch Day!

In "Copyright owners better off in a regime that allows downloading from illegal sources" this weblog reported on the 15 November ruling of the Court of Appeal of the Hague in Eyeworks v FTD. Today the IPKat posted the an English translation of the judgment in full (here) together with a short note from Dutch copyright practitioner and scholar Dirk Visser.

Dirk has now been able to procure an English translation of an even more complex ruling, on some of the same issues and decided by the same court on the same day, in ACI Adam BV and others v Stichting de Thuiskopie and another (here).  Explains Dirk:

"Here is another decision by the same Court from the same day, parts of it are identical (on the private copying from an illegal source), but it is an entirely different case, between different parties, brought by the blank media industry against the home copying levy organisation in the Netherlands. This one is (even) more complicated.

The Court rules that downloading from an illegal source is permitted in The Netherlands -- and has to be compensated by ‘fair compensation’ (through levies or otherwise). The Court considers that this might be in violation of the Three-step test of article 5.5 of the Copyright directive, but also that an interpretation of Dutch national copyright law in line with the directive on this issue would result in an inadmissible interpretation ‘contra legem’".

Dirk feels disappointed that neither case got as far as a reference to the Court of Justice of the European Union and, in terms of clarifying the principles involved and ensuring that courts throughout the EU take the same line ie is quite right -- though a case can be made for saying that, if the Court of Appeal of the Hague could determine the issues before it without needing external help, it was right to do so.

Spanish private copying levy case: some early responses

It all adds up ...

The IPKat has already posted on today's ruling of the Court of Justice of the European Union in Case C‑467/08, Padawan SL v Sociedad General de Autores y Editores de España (SGAE), which ruled that indiscriminate copyright levies fall foul of harmonised European Union rules under the InfoSoc Directice (2001/29).  This post draws the attention to some of the early comments on it.

Arstechnica's "Europe smacks "indiscriminate" copyright levies on blank CDs, DVDs" (by Nate Anderson) explains the problem as follows:

"Spain allows its citizens to make private copies of copyrighted works—but it compensates creators for the economic harm of this practice by laying down a levy on digital media and devices. If you purchase blank CDs or DVDs, or if you buy DVD burners or possibly even an MP3 player, you have to pay up. But what if "you" aren't a person at all? Imagine a nonprofit that needs to back up its donor records, or a business that wants to burn its own promotional CDs, or a government agency that buys some computers with DVD burners built in. They won't be churning out Bob Dylan CD mixes, so how can it be fair to make them pay the levy?"

The author adds:

"This raises an obvious question: how do you know if blank media or burners will be used for private copying or not? The court laid down a distinction. When sold to "natural persons for private purposes," the country can assume that private copying will take place and impose the levy. But when sold to businesses or other non-natural persons, they can't; no levy is allowed.

The decision would appear to have little impact on consumers, though it does mean that business who sell such digital media and devices won't have to pay levies on every item they sell. The distinction the court makes here seems a sane one, though true fairness would obviously mean that the levy is only paid on each piece of media or device actually used for private copying".

English-language Basque website EITB's feature, "Europe rules Spanish digital copyright tax 'illegal'", carries only a short summary but reminds readers it's still for the Provincial Court of Barcelona to determine whether the Spanish levy (or 'canon') is "imposed indiscriminately".

From Hollywood Reporter comes "Spain's Tax for Purchasing Equipment to Record Digital Content Ruled Illegal" by Pamela Rolfe. This piece goes into detail as to the actual sums levied and lists the recording devices which the levy covered: these include mobile phones as well as more conventional hardware.  Rolfe observes that last year the levy pulled in a handsome 100 millions euros for collecting societies, of which SGAE received 26%,