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European AG says private copy compensation doesn’t have to come from device levy

By | Published on Wednesday 20 January 2016


The European Court Of Justice’s Advocate General has said that it is fine for member states of the European Union to compensate copyright owners for private copying through a general fund rather than a device levy.

As much previously reported, in most countries – though not the UK – it is legal for individuals to make copies of recordings they bought legitimately so that they can listen to said tracks on multiple devices, or have a handy back up. So, when people buy a CD and rip it to a computer and then transfer tracks to a smartphone, that is all legal. Whereas in the UK, that is technically copyright infringement.

Where the private copy rights exists, copyright owners are often compensated for the private copies being made. Indeed, European law says that “rightholders should receive fair compensation to compensate them adequately” when private copies are allowed; ‘fair’ being assessed, in part, based on the “possible harm to the rightholders resulting from the act”.

The European directive on private copying allows some room for manoeuvre for each EU country’s copyright system. Though when the UK government decided to introduce a private copy right with no levy – the argument being the “harm” of a narrow private copy right was negligible – the music industry successfully had the new law overturned in court on the basis it didn’t comply with the directive.

Which means that private copying is illegal again here. And having another go at introducing the right – either with a levy, or by better arguing the case that there is no harm – is not currently on the UK Intellectual Property Office’s agenda.

Meanwhile, elsewhere in Europe, there has been much debate over the best way to compensate rights owners for private copying. The classic method was to apply a levy to blank cassettes and CDRs, the assumption being most people buying those media would, at some point, use them to make private copies. That money was then passed back to the music industry, benefiting rights owners, artists and songwriters.

As sales of blank cassettes and CDRs waned, the question was asked: what else can you apply the levy to? MP3 players maybe, but as digital media consumption shifted to devices with many other uses – ie smartphones and tablets – it’s been controversial to suggest the levies should be applied there. Though in some countries they have been. Indeed a new levy was applied to such devices in Germany at the start of the year.

Some other countries have tackled the problem by rejecting the levy approach entirely, and instead the government just sets aside a pot of cash for affected rights owners funded by the taxpayer. A few years back, Spain opted for this approach, initially on an interim basis and then, in 2014, permanently.

Some Spanish copyright societies hit out at this system, mainly because they felt the sums of money being set aside weren’t enough, though their complaints put the focus on the entire ‘general pot’ over ‘device levy’ approach to private copy compensation. The Spanish Supreme Court then passed the issue to the European Court Of Justice in 2014 to check whether having the taxpayer compensate for private copies complied with the aforementioned directive.

As part of that process, Maciej Szpunar, an Advocate General for the ECJ, has now said that the general pot system is just fine. Faced with the argument that paying for private copy compensation out of tax income would be unfair to those tax payers who don’t benefit from the exception – companies, for example – he said tax payers often pay for things they don’t directly benefit from.

According to The Register, the AG noted: “There is no link between the taxes paid by taxpayers, including those who, like corporations, cannot benefit from the exception, on the one hand, and the financing of compensation under this exception from the general budget of the State, on the other. It would be different only if a tax or a specific tax were introduced for the purpose of this funding, but this is not the case of the Spanish system at issue”.

The opinion is good news for Spain and other countries which have opted for this approach, which includes Finland and Estonia. Assuming the ECJ subsequently rules in line with the AG’s opinion, it could spark speculation that the UK government might go the ‘general pot of cash’ route if and when it has another go at introducing the private copy exception, to satisfy European law without having to work out how a levy system might work, and what devices to levy. And without having to feel the heat from the tech industry lobby, which is obviously anti all such levies.

UPDATE 20 Jan 2016, 16.00: The original version of this story said the ECJ itself had ruled on this case. Rather, the Advocate General has provided his opinion. The court is now expected to adopt his viewpoint, though the final ruling is still pending.