For the half-year to 30 June 2014, the IPKat's regular team is supplemented by contributions from guest bloggers Alberto Bellan, Darren Meale and Nadia Zegze.

Two of our regular Kats are currently on blogging sabbaticals. They are David Brophy and Catherine Lee.

Thursday, 30 January 2014

Why Copydan may become a landmark case for the future functioning of copyright levies in Europe

Milly can't wait to receive her
early Valentines Day gift:
the Svensson judgment
Yesterday this Kat discovered (thanks to Twitter, in particular @cyberleagle) that the Court of Justice of the European Union (CJEU) will issue its judgment in Case C-466/12 Svensson [here, on which see independent opinions by the European Copyright Society (here and here) and ALAI (here)] on 13 February 2014 [this is probably because, muses Merpel, the CJEU intends it as a love gift for EU copyright enthusiasts].

Amidst excitement [or concern, depending on what your views are] for CJEU activism in the area of copyright, Svensson is certainly not the only case on which a decision is keenly awaited.

Amongst others, lovers of all things copyright levies are probably looking forward to the decision in Case C-463/12 Copydan Båndkopi [on which see 1709 Blog post here], a reference for a preliminary ruling from apparent copyright-loving Member State Denmark, seeking clarification as to copyright levies and their calculation, including consideration of technological protection measures [on TPMs, see the recent decision in Case C-355/12 Nintendo v PC Box: here and here].

Today the IPKat is delighted to host a super-sharp and thorough analysis of the Copydan case and its potential implications by Katfriend and IE Law School Professor Javier Ramirez. Although incidentally Javier is currently also Vice President for Regulatory Affairs (EMEA) at Hewlett-Packard, he wrote on a personal/professorial [is there are a difference, wonders Merpel?] capacity to tell the IPKat the following:

Javier Ramirez
"In the absence of the European Commission taking firm action to rationalise the functioning of copyright levies in the internal market, the CJEU has become the key instrument to set the principles under which copyright levy schemes must operate to conform to EU law.

Given the long line of cases already dealt by the CJEU [Case C-467/08 Padawan, Case C-462/09 Thuiskopie, Case C-277/10 Luksan, Joined Case C-457/11 to C-460/11 VG Wort, Case C-521/11 Amazon and, pending of Court judgment, Case C-435/12 ACI Adam], one may wonder whether Case C-463/12 Copydan may become a landmark judgment for the future of copyright levies and, even more, for the development of legitimate digital licensing models in Europe.

The answer is that, yes, Copydan may become a landmark case in this respect.

Firstly, the CJEU will specifically have to address some core principles not addressed in prior judgments. For example, in what cases the “de minimis” rule (Recital 35 in Directive 2001/29/EC, the 'InfoSoc Directive') applies, or whether a distinction in the application of levies is required depending if primary function of the devices is private copying (of protected works) or not.

More importantly, it is likely that the CJEU will also shed light on some core issues that were only partially addressed in earlier cases, including:

1.  Whether copying in the context of licensed online business models may be subject to additional compensation by mean of levies

In VG Wort the CJEU touched upon the role that rightholders’ authorisation plays in the requirement of fair compensation, providing some cryptic indications about the differences between exceptions and limitations. However the CJEU did not clearly deal with content licensed through digital platforms nor consider the InfoSoc Directive’s goal of fostering a legitimate digital internal market (Recital 2) where rightholders cannot be prevented from using contractual relations to ensure fair compensation (Recital 45 and Article 6, para 4, sentence 4). Furthermore, it did not deal with the role that the harm principle and the “de minimis” rule must play on
De minimis harm?
the definition of the level of compensation, and whether consent and/or payment implies that no additional compensation is due by means of levies (Recital 35); because either no harm or minimal harm is caused, or harm has been compensated by other means (eg, by the licence payment).

Consequently the Copydan judgment may be critical for the future of digital licensing models in Europe, especially if the CJEU follows Copydan and Austria’s position - and not the views of the Commission and the UK, amongst others - and concludes that rightholders are precluded from licensing their right of reproduction in Member States where a private copying exception has been transposed and, as a result, are arguably prevented from the normal exploitation of their works in the online environments, as required by the three-step test (Article 5, para 5) and Recital 45.

2.    Whether the mere ability for reproduction is sufficient to trigger application of levies

In Padawan, the CJEU resolved that use for private copying can be presumed when reproduction devices are made available to natural persons acting for private purposes. Then the CJEU referred to the “possible” harm that will be caused. However, this should not be interpreted as meaning that mere suitability for reproduction is sufficient to apply a levy to a device to compensate for any “potential” harm. The principles of harm, fair balance and the necessary link between application of compensation and the making of copies within the scope of the exception must be considered together with the prohibition of unjust enrichment and the right of property of those obliged to pay. All these imply that setting of levies must follow a two-step process:

1.  Step one: determine the categories of devices subject to payment of levies and its amount. In order to do this, it is necessary to assess statistically which device categories are actually used for private copying and make an objective quantification of harm resulting from typical use.

2.  Step two: following the determination in Step one in accordance with the criterion of harm, it is legitimate to presume and charge the levy to natural persons who acquire those devices for private purposes upon the basis that each individual is an average consumer making the average amount of private use copies.

3.    How the exoneration of business users must be practically implemented

In Amazon, the CJEU indicated its preference for the implementation of “a priori” exemptions of business users from payment of private copying levies. It provided that only if sufficient practical difficulties exist (in all cases) for such exoneration, then it can be substituted by a right of reimbursement which is effective and does not make repayment excessively difficult.

The Copydan judgment will be important because it should address how the exoneration of business users must be implemented in multi-level distribution systems, where a levy has to be paid by a producer or importer who does not sell directly to end-users but through resellers and cannot know if final users will be business or private users. Consequently the CJEU will have to decide whether the alternative option recommended by Mediator Vitorino of shifting the obligation to pay the levies to the retailer who is in direct contact with the end-user - and may filter between business users and consumers, for example by requesting VAT numbers - will be a least onerous choice, more compliant with the principle of proportionality and the principle of fair balance between concerned stakeholders.

4.    How the principle of equal treatment affects the categories of devices subject to levies and the level of compensation

In VG Wort, the CJEU provided that the fundamental right to equal treatment under Article 20 of the Charter of Fundamental Rights of the European Union must be respected, but this does not prevent applying the levy only on one of the devices that are used in a chain of devices and by taking into account the level of harm caused (whilst the harm from each reproduction may not differ substantially, the number of reproductions produced may differ, and therefore the amount of compensation should be different).

Non-discrimination principle exam question:
Should Eric and Gustave be treated differently?
In compliance with settled case-law, the principle of non-discrimination or equal treatment requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified. In the levy context, the stick yard will be whether there is an identity or not between the compared devices attending to a variety of factors (primary users being private or business users, harm resulting from average use of those devices, reproduction of works as primary or ancillary function, different technologies, etc.). This is aligned with the mandate that “when determining the form, detailed arrangements and possible level of such fair compensation, account should be taken of the particular circumstances of each case” (Recital 35).

Advocate General Cruz Villalón Opinion on the Copydan case will be delivered on 3 April 2014. Let’s stay tuned."


Thanks so much Javier for this analysis of current EU framework for copyright levies and the potential implications of the forthcoming Copydan case. What do readers think? What should the future of levies be? In any case, those who wish to engage in further discussion with Javier, can do so by emailing him at Jramirez@faculty.ie.edu.

4 comments:

Anonymous said...

http://ipkitten.blogspot.be/2013/12/levies-fair-compensation-cjeu-its.html


OBloodyHell said...

I've been arguing for decades in favor of the natural requirement of a copyright levy as the only possible way for copyright to continue in a digital age.

Copyright-as-control is inherently doomed. Either it must change, or the Internet must be modified to openly allow censorship and supervision on a level the NSA can only drool over.

Digame:

First, it is generally argued as a truism that "The internet treats censorship as noise, and routes around it."

Shawn Fanning invents Napster. They shut down napster, and EDonkey, BitTorrent, Shareaza, Gnutella, WinMX, other clients all pop up to take its place, all lacking the centralized server "flaw" that enabled it to be shut down.

Playboy shuts down "ScanMaster", a lone high-quality scanner of Playboy's images. A hundred other "scanners" pop up to take his place, diversifying into a niche market of different images, from cheesecake photos to hard-core porn.

Q.E.D. -- The internet treats censorship as noise, and routes around it.

Now, consider --

Censorship is the government saying "This we deem dangerous, therefore, you may not access it."

Copyright is the government saying "This you have not paid for, therefore, you may not access it."

Both are about controlling ACCESS.

Therefore, it is also a truism that "the internet treats copyright-as-control as noise, and routes around it."

The only way to change this is to either stop implementing copyright-as-control, or to implement controls onto the internet, which will also implement controls allowing censorship.

This latter is throwing out the baby with the bath water. This latter is throwing the cat into the furnace because it has fleas. It is a "cure" worse than the disease.

Note that this is, in no sense, equating the MORAL underpinnings of Copyright with the MORAL (or immoral) underpinnings of censorship. It is solely noting that they are currently the same ACTION -- controlling access -- and hence intertwined in functionality. Enable one (if you can) and you enable the other.

Copyright is fully moral -- "information should be free" is a child's view of the world. DATA, perhaps, "should be free". Information, however, is a unique organization of data -- memes, notes, pictures, video, words -- created by an author, unique to that author, and designed to influence how someone else sees the world. If society wishes authors to take the time to produce, and, more critically, to commit their viewpoints to the public record, then society needs to REWARD those authors for the time and money spent in doing so.

But this does not mean society owes that creator anything they want for their works, any more than you owe me $1000 for this mud pie I just made in the dirt.

Society owes those creators no more than it is willing to pay for those creations, which needs to be enough that most authors WILL create and release, but not so much that ANY author will seek to create and release.

And the real fact is, the best way to reward creators, once you abandon the notion of control, is by some form of levy, dispensed by/with a suitable metric -- based, I would think, by and large, on things like search engine hits -- for memes and content people create and release.

And to anyone reading this, if you have not read J.P. Barlow's excellent Wired essay, I strongly recommend it. It is just as, if not more, pertinent now as it was 20 years ago, when first released.
The Economy of Ideas
http://www.wired.com/wired/archive/2.03/economy.ideas_pr.html

OBloodyHell said...

P.S., ideally, this piece should have provided more description of what, exactly, the Copydan case is, or at least posted a link to a decent description of it.

If it's there, I didn't spot it.

Your blog, but, at this moment, despite having read it, I'm far from clear on exactly what the hell the Copydan case is about.

Eleonora Rosati said...

@OBloodyHell: You can find more background information to Copydan at http://eulawradar.com/case-c-46312-copydan-bandkopi-danish-private-copy-fair-compensation-and-eu-copyright-law/

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