For the half-year to 30 June 2015, the IPKat's regular team is supplemented by contributions from guest bloggers Suleman Ali, Tom Ohta and Valentina Torelli.

Regular round-ups of the previous week's blogposts are kindly compiled by Alberto Bellan.

Friday, 6 March 2015

Can a decision on the VAT Directive mean that there is no general digital exhaustion under EU copyright?

Yesterday was a big IP day at the Court of Justice of the European Union (CJEU), with both the judgment in Copydan (private copying levies) [here] and the Opinion of Advocate General Jääskinen in Saatgut-Treuhandverwaltungs (plant variety rights) [here].

However, while browsing the Curia calendar and press releases, this Kat's attention was drawn to another case which, although not strictly IP-related, might be very relevant IP-wise, especially for copyright aficionados and those (like this Kat) with a thing for digital exhaustion.

It is European Commission v France, a case concerning reduced VAT rates for ebooks [yawn, says Merpel, but she may be wrong: keep reading].

In a nutshell, what happened here is that France and Luxembourg had reduced VAT rates for ebooks, and the Commission was not happy with that. 

The Commission actually claimed that, by setting reduced rates, these Member States acted in breach of their obligations under EU law, ie Article 96 and 98 of the VAT Directive. The CJEU was thus asked to declare that, by applying a reduced VAT rate to the supply of digital (or electronic) books, France failed to fulfil its obligations under Articles 96 and 98 of this directive.

In particular, Article 98(2) of the VAT Directive provides that the reduced rates of VAT may apply only to supplies of goods and services referred to in Annex III to that directive. 


Ben pictured while daydreaming
about VAT rates and copyright
The latter would be inapplicable to ebooks, so the only way these could be eligible for reduced rates would be if they could be considered as "goods". 

But are ebooks more akin to goods or services?

All in all, the Court agreed with the Commission, and held that an ebook is not a good, but rather an "electronically supplied service" within the meaning of the second subparagraph of Article 98(2).

What does all mean copyright-wise? Possibly not much, but perhaps it can be considered as a further hint to support the view that there is no such thing as a general doctrine of digital exhaustion under EU copyright law.

Recital 29 in the preamble to the InfoSoc Directive states in fact that: "The question of exhaustion does not arise in the case of services and on-line services in particular."

Readers will remember that a few weeks ago, the CJEU issued its important decision in Art&Allposters [here]. Although not a case on digital exhaustion, there the Court held that exhaustion under Article 4 of the InfoSoc Directive only applies to the tangible support of a work. By doing so the CJEU appeared to imply that there is no general digital exhaustion under EU copyright. 

In other words: the decision in UsedSoft [on which see Katposts here and 1709 Blog posts here] was possible only because of the lex specialis nature of the Software Directive [which the CJEU itself re-affimerd in Nintendo, here here and here], but that the principles expressed therein cannot be extended to other works.

By suggesting yesterday that ebooks are services, rather than goods (although in the context of the VAT Directive), the CJEU appeared to imply that, lacking a change in the law, it may be unwilling in a future case to extend the principles expressed in UsedSoft to digital subject-matter other than software, ie ebooks, videogames, audio/video files, etc.

What do readers think?

Cindy Crawford: the picture that was, or wasn't ...

This Kat is usually about as far away from the world of fashion as can be. Indeed, he barely recognized the name of Cindy Crawford when a picture of the 49-year supermodel went viral last month. What grabbed everyone's attention was lingerie-clad Crawford's less than taut midriff as well as other bodily signs that age had begun to take revenge on her picture-perfect figure. The picture was said to have taken in connection with the preparation of a cover story for a December 2013 issue of the magazine Marie Claire's Mexico and Latin America edition. How the photo came to be published is not known. The magazine issued a statement saying:
"No matter where the photo came from, it's an enlightenment - we've always known Crawford was beautiful, but seeing her like this only makes us love her more."
The publication of the photo caused a torrent of comment on the internet about how visual images of supermodels at the height of their careers place a premium on perfection and the extent to which the need to appear perfect is perfectly mated with the ability to alter a photograph. Most of us are never in attendance at the catwalk where designers show their new collection via strutting models, much less are any of us present when a photographer and a model are involved in a picture-shooting session. The result is that our impressions of a model and the sheer beauty that she conveys is framed by pictures and other visual contexts, in which we are never certain the extent to which the perfection that we are seeing is real or is partially a function of the retouching or other visual manipulation of the image. The statement of the magazine well reflected the view expressed on the internet -- that Crawford was giving us a different meaning for beauty, where the model comes to terms with herself and challenges the viewer to reconfigure his understanding in that context.

But a report has now surfaced that in fact it may be the case that it was the picture itself that was doctored. According to the report, the photographer, John Russo, is claiming that the original photo was stolen and that changes were made to Crawford's midriff to make her look worse than she really does. Russo is threatening to sue those responsible for the altered photo. As well, he is asking online outlets to take down the apologize.

Against this background, an interesting IP back story is taking place. From the copyright perspective, we have claims being made by the photographer, which are presumably based on copyright and, to the extent that a jurisdiction will permit, moral rights resulting from the alleged material distortion of the photo. As for the copyright claim, it first and foremost depends upon his owning the copyright in the photo. As for the moral rights claim, since that right will reside with the photographer, the issue is finding a jurisdiction that enforces moral rights in this sense (indeed, this Kat many years ago published an article that considered the challenges of foreign-shopping in filing a moral rights claim.) And what about fair use--shouldn't the public be allowed to republish the picture in order to facilitate comment on it in light of the pubic discourse that has arisen since its publication? There is also an inversion of the role played by the retouching of the photo of a model. It is usually the case that such doctoring is intended to enhance the visual image, even at the price of distortion; here, the opposite is true.

There is also a reputation issue here. Is Crawford's reputation better off or worse off as a result of this episode (assuming that Russo is accurate in his claims that the picture had been doctored)? What is interesting is that Crawford has not commented on any of this (although her husband posted a pool-side picture showing her midriff in perfect shape). On the one hand, Crawford was the recipient of much praise for coming to terms with her body, thereby removing the distance between her and her admirers. On the other hand, Crawford is a fabuously successful businesswoman (who, this Kat notes, was valedictorian of her high school class and the recipient of an scholarship to study chemical engineering at Northwestern University). The root of her success until now derives from her supermodel, picture-perfect beauty. Is it time to rework that image, based on the positive statements following the publication of the picture (and the fact that she is nearly 50), or does she still need to hang on to her current image? Or perhaps the trick is for her to balance between them. This Kat, for one, would not bet against her; after all, she is reported to be a descendent of no less than Charlemagne.

Friday fantasies

Forthcoming events. There's always plenty going on, so why not check, out the IPKat's Forthcoming Events page and see if there's anything you fancy?  Not all the events cater for main-line IP interests: plenty of esoteric topics are tackled too. For example, there's the Secured Transaction Law Reform Project Seminar, "Security Interests over IP Rights", 27 March 2015 in the London office of Olswang LLP (full details can be found on the IP Finance weblog here). Also, registration is now open for "Cultivating Innovation: How (and How Not) to Think About Intellectual Property in Agriculture and Plant Science", coming up on 14 April (details can be found here).


Journal of Intellectual Property Law & Practice (JIPLP).  First, just to let you know that Oxford University Press-published JIPLP, in which many members of the IPKat team are heavily involved on the editorial side and/or as contributors, is planning a conference on Thursday 26 November to mark ten years of publication.  Further details of this event will be announced in due course. Meanwhile, if you'd like to join us for what should be a wonderful day, mark your diaries now.  Secondly, the jiplp weblog carries not just the contents list for the March issue of the Journal of Intellectual Property Law & Practice but also fellow Kat Eleonora's editorial on whether 2015 is the year of the blocking injunction, so do take a peep if you feel tempted to do so.  Thirdly, if you are thinking of writing for JIPLP or are just curious to see what it looks like, here's a reminder that it's possible to view a sample issue online and it won't cost you a penny to do so: for further details click here.


Around the weblogs. The 1709 Blog has another CopyKat round-up from Ben Challis, while former guest Kat Marie-Andrée Weiss comes up with a real cracker on one of those "it could only happen in America" cases, where a dentist tries to use copyright as a means of suppressing a patient's critical comments. Class 46 has reported a trilogy of cases of note this week. In the first two, potted by Laetitia, the General Court finds INTERFACE and INTERFOG confusingly similar for fungicides, herbicides and other Class 5 products, notwithstanding the fact that they both start with the not entirely distinctive prefix "inter", while the earlier ZITRO SPIN BINGO mark is incapable of blocking the registration of the lovely figurative mark on the right, even for the same goods and services. In the third, from Yvonne Onomor, the French Cour de Cassation dismissed an appeal by Hachette ('Paris March') against a ruling that it was barred by acquiescence from suing dating website Match.com.


A performer feels the pain. Following Cat the emeritus Kat's post earlier this week on the Wu-Tang Clan's ingenious (though not, it seems, quite so original) plan for launch the group's latest album as, quite literally, a one-off, the Kats have had the pleasure of receiving an email from Les Hurdle. Les -- a veteran bass guitarist whose varied career stretches from playing with the Wombles (right) to Lou Reed -- paid a visit to Whosampled.com.  From this visit Les discovered that the Wu-Tang Clan have sampled 209 other recordings, while 507 others have sampled the Wu-Tang Clan.  Adds Les:
"What is always interesting to note in most discussions re sales or copyright is the lack of reference to the engine in all of these productions, the performers! Of the 209 samples used by Wu-tang Clan (left) it is likely more than 1,000 performers have been taken advantage of. How many received a share of the licence fee, how many of those 209 recordings are registered at PPL etc., how many times are the performers not paid for broadcasts [worldwide], how many times do broadcasts go unnoticed [worldwide], how many times are the performers not accounted to! Similar issues re the 500+ productions which have 'used' Mssrs Tang and Co., yet nary a word, anywhere. Wu-Tang Clan are but a drop in the bucket with regard to 'numbers' on a global scale and the [ab]use of performers attached to this 'market' is immeasurable. The sampling and mash-up business is huge yet for some reason it goes by without much notice and very little in the way of reimbursement [oil] for the engine, least of all any actual accounting". 
Thanks, Les!

Thursday, 5 March 2015

Not yet finito for Finita: plant varieties reference races through the CJEU

With so much else going on today, it seems almost a pity to let everyone know that the tangled world of plant variety protection was stirred to its roots by the publication of the Opinion of Court of Justice of the European Union (CJEU) Advocate General Jääskinen in Case C‑242/14 Saatgut-Treuhandverwaltungs GmbH v Gerhard und Jürgen Vogel GbR, Jürgen Vogel and Gerhard Vogel, this being a request for a preliminary ruling from the Landgericht Mannheim, Germany, on Council Regulation 2100/94 of on Community plant variety rights

In the underlying legal action that led to this CJEU reference, Saatgut-Treuhandverwaltungs GmbH (STV), a German company which brings together different plant variety right holders, was asserting the rights of the holder of the winter barley variety ‘Finita’, which is protected at EU level under the Basic Regulation. STV's website lists all the protected plant varieties administered by it and the fees payable for planting those varieties. STV asks farmers annually, to provide general information on any planting of one of those varieties and, for that purpose, sends them declaration forms together with a guide listing all the protected varieties administered by it in the relevant marketing year and the identity of the corresponding right holders and persons enjoying rights of exploitation.

The Vogels, who had no contractual relations with STV, did not respond to those requests for information. However, in December 2011, STV received information that, in the marketing year 2010/2011, the Vogels had been processing ‘Finita’ seeds. In May 2012, STV wrote to ask the Vogels to verify that information, which indicated undisclosed use of propagating material of that variety obtained by planting the variety, asking them to reply by 20 June 2012 at the latest. The Vogels did not comply with that request.

In July 2012, STV asked the Vogels to pay EUR 262.50, this being the full fee that would be due for licensed use of ‘Finita’ seeds (STV;s "C- Licence fee") as compensation for the damage suffered as a result of the undisclosed planting of that protected variety. No payment being received, STV sued the Vogels for it before a local court in Euskirchen. In September 2013 that court declined jurisdiction and referred the case to the Landgericht (Regional Court), Mannheim.

Vogels among the barley
Said STV, the Vogels had to pay it reasonable compensation under Article 94(1) of the Regulation [which provides for injunctive relief and payment of compensation, or both, in the case of an infringement] in the amount of the full C-Licence fee because their planting constituted an infringement, since the Vogels were not ‘entitled’ to plant the seeds within the meaning of that provision. Said STV, the Vogels could rely on the derogation under Article 14(1) of that Regulation ["... for the purposes of safeguarding agricultural production, farmers are authorized to use for propagating purposes in the field, on their own holding the product of the harvest which they have obtained by planting, on their own holding, propagating material of a variety other than a hybrid or synthetic variety, which is covered by a Community plant variety right"], as they did not comply with the obligation to pay the plant variety right holder the equitable remuneration referred to in Article 14(3), adding that any farmer should fulfil that payment obligation in principle before sowing, but in any event by the end of the marketing year in which the protected variety was planted. What's more, the farmer should do so on his own initiative, irrespective of whether or not a request for information was made in time by the right holder.

No, said the Vogels:at the very most, they only owed the reduced fee for ‘authorised’ planting under the derogation laid down in Article 14(1) of the Regulation. What's more, for the conditions governing entitlement to compensation to be satisfied, there would have to be an infringement of the obligation to provide information to the right holder, as laid down in EU law, which was not proven here. At this point the Landgericht Mannheim decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:
‘1. Is a farmer who has planted propagating material obtained from a protected plant variety without having concluded a contract for so doing with the plant variety right holder required to pay reasonable compensation, as provided for in Article 94(1) ..., and — if he has acted intentionally or negligently — to compensate the holder for any further damage resulting from the infringement of the plant variety right in accordance with Article 94(2) ..., where he has not yet fulfilled his obligation under Article 14(3), fourth indent, of that regulation, in conjunction with Articles 5 and 6 of [the Implementing Regulation], to pay an equitable remuneration (planting fee) at the time when he actually made use of the product of the harvest for propagating purposes in the field?

2. If the first question is to be answered to the effect that the farmer can still fulfil his obligation to pay an equitable planting fee even after he has actually made use of the product of the harvest for propagating purposes in the field, are the aforementioned provisions to be interpreted as fixing a period within which a farmer who has planted propagating material obtained from a protected plant variety must fulfil his obligation to pay an equitable planting fee in order for the planting to be capable of being regarded as “authorised” for the purposes of Article 94(1) of [the Basic Regulation] in conjunction with Article 14 of that regulation?’
This morning the Advocate General proposed that the Court answer the questions as follows:
Articles 14 and 94 of Council Regulation ... 2100/94 ... on Community plant variety rights in conjunction with Article 5 et seq. of Commission Regulation ... 1768/95 ... implementing rules on the agricultural exemption provided for in Article 14(3) of Regulation ... 2100/94 must be interpreted to the effect that a farmer is able to make use of the product of the harvest which he has obtained by planting, on his own holding, propagating material obtained from a protected variety without the authorisation of the right holder, provided he pays the holder an equitable remuneration in accordance with Article 14 within a period beginning on the date on which the farmer actually seeded the product of his harvest and expiring at the end of the marketing year in which that use took place.
The Opinion highlights some of the elements of the Regulation that lack clarity, but seems to make sense of them, balancing the public interest with the farmer's right and the concerns of right holders.

Once again this case is an example of the increased speed with which the CJEU is processing intellectual property cases. The reference for a preliminary ruling was received only in May of last year and we have already got as far as the Advocate General's opinion. According to the IPKat's calculations, we should be sure of a final ruling this summer.

Breakdown in management-staff relations at the European Patent Office

Merpel has received a very sad communication from the European Patent Office (EPO)  Described as "Open Letter from the representatives of the management during the GCC on 27.02.2015" it appears to describe a complete breakdown in relations and communications between management and staff representatives at the EPO.  Written by the management, it blames the staff representatives for this sorry state of affairs, but one might wonder whether the fact that trust has been eroded to this point suggests that it is surely not solely the responsibility of the employees.

The meeting was apparently to discuss amendments to the sick leave and invalidity provisions of the EPO.  As Merpel understands it, by working for the EPO, employees place themselves outside of national welfare provisions, so the EPO's own provisions represent the only safety net that employees have.  It would therefore be understandable that amendments to these provisions would cause some concern.  Merpel does not at this stage know what the precise proposed changes are, but has heard these amendments among the list of stated concerns of EPO employees (along with such issues as the Investigation Guidelines, the changes in career structure and evaluation of productivity).

The full letter, in which Merpel has interpolated some comments of her own, reads as follows.
Dear Colleagues, 
After long and careful reflection [actually not that long since the meeting was on Friday 27 February and the letter is dated Tuesday 3 March -- with just one clear working day in between], it is with a great deal of regret that we, the undersigned, are writing this letter to inform the staff concerning several serious incidents which occurred during the last General Consultative Committee on 27 February 2015. This session was mainly dedicated to discuss the sick leave and invalidity reform. A full day was booked for this purpose. Sadly, we have to report our concerns about serious obstruction to the consultative process from the side of the staff representation. 
First, despite the fact that all those full and alternate members elected by the staff and still in place after the series of recent resignations had received in due time an invitation to participate in the meeting, only 9 staff representatives [out of how many?] attended it. It became obvious that there had been a choice to come in such reduced composition to pretend that the consultation was flawed and to request its postponement, although no quorum is needed following the rules of procedures of the GCC [Was this really the reason? Merpel has heard reports of intimidation of staff representatives: might this have had a role to play?]. Elected members from The Hague threatened to leave the room if the meeting was not postponed but they finally stayed. Only after 1.30 hour of procedural debates, the discussions on the main purpose of the meeting, i.e., the sick leave and invalidity reform could really start. 
Not the GCC Manual ...
A CSC [Central Staff Committee] member from Vienna presented to the meeting the list of staff concerns on this reform, which was then completed by a CSC member from Berlin. However when PD [Principal Director] Human Resources and PD Legal Services started to address the various points raised by the staff representation, the representatives from The Hague and a representative from Munich disrupted violently the debate with shouts, protests, cries and insulting comments at the two management representatives, who nevertheless went on to answer the questions. Unfortunately, their answers were only turned into twisted interpretations and excessive comments, aiming at provoking incidents. When she was trying to present the points on which the management could, after the various consultations (COHSEC, BFC), propose some changes in the texts, PD 4.3 was once again violently interrupted and was prevented from presenting the modifications which the Management envisaged to introduce in the final document to be presented to the March Council. At 13:00, the staff representatives had no further question or comments, despite several encouragements from the chairman to take the floor, and the GCC meeting was closed. [This paragraph is full of obfuscation - there must have been some reason for the outbursts and there is no indication of what they concerned.
Such misbehaviour and personal attacks are an affront to the dignity of the representatives of the Management, which are as well members of the EPO staff, that cannot be ignored. Remaining silent would be tantamount to condoning this as acceptable. It is not. As managers, we all well understand that there can be differing opinions, even lively discussions, on topics that are so important to the future of all of our colleagues at the Office and the GCC is the highest forum for such discussions. It is expected, even required under their mandates, that staff representatives raise all the concerns the staff may have about management proposals and that we debate these concerns. However, repeated and malicious personal attacks on other staff members regarding their professional competence, sleights against their intentions and even direct attacks as to their integrity are unacceptable. We simply cannot and will not accept that these attacks continue and go unaddressed. 
Good behaviour: is it
best when reciprocated?
Therefore, we have decided that we have no other choice than to inform the staff about such misbehaviours of its representatives. Well-founded opinions and clear arguments do not need such tricks, misinformation of colleagues and outrageous comments, in order to defend the interests of the staff. Respect of the rules and the individuals are core values of the EPO and a pre-requirement to a constructive social dialogue. Finally, such misconducts and repetitive violations of the minimal and basic principles to be respected by any international civil servant constitute a clear abuse of the freedom of speech, which is granted to the staff representatives, with the purpose of defending the interests of the staff. They do not serve the purpose for which such freedom is intended and are detrimental to the image of the Office. 
Signed: all management members present on 27.02.2015
Merpel is interested to note that the letter appears to presuppose that ordinary EPO employees will share the indignation of the management present at the behaviour of the staff representatives.  From what Merpel has seen in the comments on the IPKat blog, such support seems highly unlikely and it seems far more likely, by contrast, that many EPO staff will endorse the behaviour of their representatives, even though at this stage it is not clear what that was, or why it was felt necessary or appropriate.

Merpel would welcome further information about what took place at this meeting, and what it is about the reforms to the sick leave provisions that is causing concern.

A landmark decision from the CJEU on private copying levies? Case C-463/12 Copydan Båndkopi

This morning the Court of Justice of the European Union (CJEU) issued its decision in Case C-463/12 Copydan Båndkopi, a reference for a preliminary ruling from Denmark, seeking clarification on key questions relating to the so-called ‘private copying’ exception under Article 5(2)(b) of the Information Society Directive 2001/29. [For those seeking a high-level refresher on this copyright exception, see yesterday’s Katpost here]

In reaching its decision, the CJEU has certainly taken its time: almost 9 months have passed since Advocate-General Villalón’s Opinion of 18 June [finally now available in English here]. It is a lengthy decision (almost 100 paragraphs) covering a wide range of vexing issues relating to the private copying exception, with the CJEU handing down eight rulings in response to the six lengthy questions referred to it [For an overview of the CJEU preliminary reference procedure, see previous Katpost here].

Having had an initial read of the Rulings and the preceding explanatory paragraphs, this Kat has sought in this post to summarise (and to some extent, paraphrase the often inaccessible CJEU language) to draw out the key issues before the CJEU and their responses. Copydan is likely to give our readers plenty to chew on and is ripe for further detailed analysis - but for now, here is a high-level overview of this important decision.

Key factual background 
  • Finland-based Nokia sold mobile phones to business customers in Denmark, who resold them to both individuals and business customers.
  • Whilst all Nokia phones have an internal memory (i.e. the storage device is non-detachable), certain models have an additional memory card (i.e. which is detachable). 
  • On these detachable memory cards, users could store data (e.g. contact details, photographs) as well as files containing audiovisual works (e.g. music, films which may have been downloaded from the web or from DVDs, CDs, MP3 players etc). 
  • In this regard, these memory cards are “multifunctional media” with the capacity to be used for private copying (in relation to the audiovisual files), as well as for uses unrelated to private copying (e.g. storing personal data). 
  • Nokia disputed its liability to pay a private copying levy to the Danish collecting society, Copydan Båndkopi, in relation to the detachable memory cards that were imported into Denmark for use in its mobile phones between 2004 and 2009. 

As is now customary, the CJEU ‘re-organised’ the six referred questions and answered all of them (except one) in its eight Rulings, as summarised below:

Multifunctional media (Question 4 / Ruling 1)

Q: In relation to multifunctional media (e.g. a memory card capable of being used for both private copying and unrelated purposes), to what extent does its function affect the requirement to pay fair compensation?

CJEU's response: 
  • Article 5(2)(b) permits national legislation to require fair compensation to be paid in principle where at least one of the functions of the media enables the operator to use them for private copying purposes – even where that is merely an ancillary function. [This is because, as indicated in Case C-467/08 Padawan, final users are deemed to take full advantage of all the functions provided by the medium – and there is no requirement to show that private copies are actually made.]
  •  The amount of fair compensation payable is liable to be affected by:
    • whether its function to enable private copying is a main or an ancillary one; [which presumably would be a question of fact for the national court in each case] and
    • the relative importance of the medium’s capacity to make copies.
  •  Where prejudice to the rights holder is “minimal” [on which, see Ruling 4 below], the making available of such a function need not give rise to an obligation to pay fair compensation.

Minimal or de minimis harm (Question 3 / Ruling 4)

[As a quick reminder to readers: although one of the conditions under the private copying exception is that rights holders receive “fair compensation”, recital (35) of InfoSoc provides that “in circumstances where the prejudice to the rightholder would be minimal, no obligation for payment may arise”.]

Q. At what point is harm considered sufficiently minimal (or de minimis) such that fair compensation is not required to be paid?

CJEU’s response: 
  • Just as Member States have the discretion to decide whether or not to adopt the private copying exception into their national law, they also have the discretion to decide where the threshold lies below which prejudice or harm might be classified as “minimal” for the purposes of recital (35). [A classic CJEU gloss over?] 
  • However, Member States must apply the threshold in a manner which is consistent with the principle of equal treatment. [i.e. comparable situations must not be treated differently and different situations must not be treated in the same way unless such treatment is objectively justified.]

[The concept of de minimis harm is of particular significance to the UK, where the private copying exception recently came into force via The Copyright and Rights in Performances (Personal Copies for Private Use) Regulations 2014 (SI 2014/2361).

The UK government’s implementation of the private copying exception is currently being challenged due to its failure to provide for a private copying levy in the implementing regulations. In a judicial review claim filed in late November last year, the claimants (BASCA, the Musicians’ Union and UK Music) claim that, in failing to make any provision for compensation, the UK government acted contrary to EU law such that the implementing regulations as a whole are ultra vires (i.e. invalid) and liable to be quashed. 

It is a little disappointing in this Kat’s view that the CJEU did not use this opportunity to provide more meaningful guidance on what constitutes de minimis harm, over and above highlighting the importance of the principle of equal treatment.]

Detachable vs. Non-Detachable Integrated Media (Question 5 / Ruling 2)

Q. Is it permissible for national legislation to distinguish between detachable and non-detachable integrated media in determining the application of the levy system?

CJEU's response: 
  • Yes – but only where in making that distinction, the national legislation is consistent with the principle of equal treatment.
  • It is for the national court to decide whether the detachable and non-detachable media in question are comparable. If they are comparable, their different treatment must be objectively justified. Such objective justification might arise, for instance, in respect of the non-detachable integrated components where rights holders receive fair compensation “in another form” [an example of which might be downloading music from lawful sources such as iTunes onto your smartphone, where fair compensation is provided via the licence fee].

[This ruling is likely to be of particular interest to the smartphone industry (amongst others), where the recent design trend (e.g. iPhones and Samsung’s Galaxy S6) appears to be towards integrated storage only]  

The relevance of technological protection mechanisms (Question 1(c), (d) and 2; Ruling 6)

Q. What effect, if any, does the implementation of technological protection measures (TPMs) on relevant media have on the requirement to pay fair compensation?

CJEU’s response: 
  • Even where it is possible to implement TPMs on relevant media to reduce the risk of unauthorised copying, this does not affect the requirement to pay fair compensation in principle. [The CJEU followed its previous reasoning in Case C-457/11 VG Wort (see previous Katpost here) in reaching this conclusion]
  • However, Member States have the discretion to consider whether such TPMs are being applied when calculating the actual level of compensation owed to rights holders. [The underlying rationale was to encourage the rights holder to make use of TPMs and “thereby voluntarily contribute to the proper application of the private copying exception” ([72]) – although whether this is practicable at a commercial level is an entirely separate matter...]

Rights holder’s consent for private copying uses (Question 1(a)-(b); Ruling 5)

Q. Where the rights holder gives their consent to the use of their work for private copying purposes, what effect, if any, does this have on the requirement to pay fair compensation?

CJEU’s response: Such consent or authorisation has no bearing on whether fair compensation is owed [following its approach in Case C-457/11 VG Wort]

Knowledge of the end-user: individuals or business customers? (Question 6 / Ruling 3)

[Essentially, when Nokia sold its memory cards to business customers in Denmark, it did not know whether the ultimate users of those memory cards would be individuals or business customers. The Danish levy system provides an exemption from paying the levy where the memory cards were sold to businesses customers who were registered with the organisation responsible for collecting the levy (the “Exemption”)] 

Q. Is it permissible for national legislation to have a levy system which requires producers / importers of memory cards to pay a levy in respect of memory cards sold to business resellers where the producer / importer does not know whether the final purchasers of those cards are individuals (who might use it for private copying purposes) or business customers?

Is the answer to that question affected by:

a) the existence of the Exemption; or
b) the producer / importer being able to obtain a reimbursement of that levy if the memory card is used for business purposes (i.e. not for private copying) given that in practice, only the end-user is able to apply to the levy organisation to obtain a reimbursement?

CJEU's response:

It is permissible for national legislation to have such a levy system in place (as explained in the question above) provided that: 
  • it is justified by “practical difficulties” [e.g. in identifying the final users of the memory card and requiring them to compensate rights holders for the harm caused by private copying – see further Case C-521/11 Amazon, in particular at [24], [31]-[35] (see here)];
  • the producers / importers responsible for paying the levy are exempted if they can establish that the memory card was provided to “persons other than natural persons” (i.e. business customers) for purposes unrelated to private copying;
  • that exemption should not be restricted solely to those business customers who are 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; 
  • only the final purchaser of the memory card may obtain reimbursement by submitting an appropriate application to that levy organisation.
Copies via third party devices (Question 1(e); Ruling 7)

Q. Is it permissible for fair compensation to be provided in relation to copies of works made by an individual “by or with the aid of a device belonging to a third party”?

CJEU's response with somewhat questionable analysis
  • Article 5(2)(b) indicates that the private copying exception is applicable to “reproductions on any medium”, but it does not contain any reference to the legal nature of the connection (e.g. a right in property) between the person making the copy and the device used by that person to do so.
  • The absence of any such reference indicates that “the EU legislature did not consider [the legal relationship between the person making the private copy and the device used to make that copy] to be relevant, in the light of the objective which it pursued by its measure of partial harmonisation.”
  • “It follows that the question whether the device used by a private individual to make copies for private use must belong to that person or whether it may belong to a third party falls outside the scope of Article 5(2)(b)”
  • “In the light of the foregoing, the answer to question 1(e) is that Directive 2001/29 does not preclude 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 which belongs to a third party.”

Copies made from unlawful sources (Question 1(f) / Ruling 7)

Q. Is it permissible for national legislation to provide for fair compensation in respect of reproductions made using unlawful sources – i.e. where the work has been made available to the public without authorisation?

CJEU’s response:
  • In order to strike a fair balance between the interests of rights holders and users, a private copying levy system must distinguish between copies made from lawful and unlawful sources.
  • In light of this, fair compensation is not required to be paid in respect of reproductions made from unlawful sources, that is where works are made available to the public with the rights holder’s consent. [This is not a surprising outcome, given the CJEU’s previous approach in C-435/12 ACI Adam (see here and here).]

The Danish court had also asked the CJEU at Question 1(g) to consider whether fair compensation should be provided in respect of “files copied lawfully by some other means from, for example, the internet (from lawful sources where no licence has been granted)”. In response, the CJEU appears to have run out of steam and decided that the referring court had failed to provide sufficient factual or legal material necessary to enable it to give a “useful answer” – and thus rejected the question as inadmissible.

***

There is plenty of scope for more detailed analysis on today’s judgment, but for now, this hopefully provides readers with an overview of the key issues. 

Wu-Tang Clanger -- or have the rappers got it right?

Old Kats occasionally come back as guest Kats, which is why this weblog is so pleased to give a hearty welcome to this post by emeritus Kat Catherine Lee (a.k.a. Cat the Kat). Recent readers may not know that Cat is the author of two of this weblog's all-time most-visited blogpost, "Goodbye Cathy: Hello Kitty and Miffy settle copycat case", which has received 238,887 "hits".

Wu-Tang Clan

The music industry is no stranger to publicity stunts creativity when it comes to releasing new albums to the public.  For instance, in December 2013, after months of rumours of scrapped songs and delays, Beyonce released her self-titled album Beyonce on iTunes without prior announcement or promotion. At the time, Beyonce stated that this was "an unprecedented strategic move" and that this was music "stripped of gimmicks, teasers and marketing campaigns".  The album went on to sell more than five million copies around the world and to be awarded numerous platinum and gold certifications.  
Then more recently in September 2014, U2 added its album Songs of Innocence to the libraries of over half a billion iTunes users without permission and without clear instructions on how to delete it.  The release was described in the Washington Post as "rock-and-roll as dystopian junk mail" and later led lead singer Bono to apologise:  
"Oops, I'm sorry about that … "I had this beautiful idea and we got carried away with ourselves. Artists are prone to that kind of thing".
The latest attempt at milking the publicity potential for an album launch comes courtesy of American hip hop group Wu-Tang Clan.  The efficacy of this publicity stunt can be measured from the fact that this emeritus Kat must admit to not having heard of this group before preparing this post.  However, she notes that Rolling Stone labelled Wu-Tang Clan "the best rap group ever" and NME described them as "one of the most influential groups of the last ten years".
Wu-Tang Clan
Wu-Tang Clan's latest album Once Upon a Time in Shaolin is available for purchase on art online auction house Paddle8.  The album contains 31 tracks from 9 members and took 6 years to make. The catch?  Once Upon A Time In Shaolin is described as 'An edition of one and one alone, for all time'.  In the words of Wu-Tang Clan, the album is a 'piece of art in the same way that the Mona Lisa or the Sculpture of David is a piece of art'.  Like a piece of art, the album is available for purchase and ownership by one individual only. It is also described in Paddle8's catalogue: 
'It is presented in a hand-carved nickel-silver box and accompanied by a 174-page manuscript containing lyrics, credits, and anecdotes on the production of each song, printed on gilded Fedrigoni Marina parchment and encased in leather by a master bookbinder'.  
Wu-Tang Clan will provide the Buyer with a Certificate of Authenticity for the Artwork at the time the Artwork is delivered to the Buyer'. 
Further, the terms of sale provide that the Buyer’s right of ownership of the Artwork and its content is for private use only.  This is because Wu-Tang Clan felt that 
'retail commercialization and mass replication would dilute the status of the album as a one-off work of art and compromise the integrity of our statement'.  
As is explained on Paddle8: 
"When you buy a painting or a sculpture, you’re buying that piece rather than the right to replicate it. Owning a Picasso doesn’t mean you can sell prints or reproductions, but that you’re the sole owner of a unique original. And that’s what Once Upon a Time in Shaolin is. It’s a unique original rather than a master copy of an album". 
Accordingly, the Buyer will "acquire full public and commercial rights in the Artwork eighty eight (88) years from the date of sale". Wu-Tang Clan has agreed, 
"as a condition of the sale, not to ever release any of the content on the Artwork in any form, format, channel, medium or manner (including, print, disk, tape, electronic or virtual) to the public. This Artwork is offered for sale without copyright, broadcast rights, performers (sic) consents, and other reproduction rights. The Buyer must apply to the relevant parties to obtain such clearance and consents as may be necessary." 
Shaolin monks: not to be trifled with?
So what does this mean?  Although not drafted in eloquent terms as one would normally see in a copyright assignment or licence, the intention of Wu-Tang Clan is that 'the right to release the album would be transferred only after 88 years have passed'.  On the duration of 88 years, Wu-Tang Clan stated it placed great symbolic significance on the number eight:  Wu-Tang Clan originally had eight members; Paddle8 has eight in its name; it is the sum of the digits in 2015 when the record is being sold; and when read horizontally, it is the symbol for infinity. 
Not surprisingly there has been much speculation about the album.  The IPKat notes some of them here.  Apparently 
  • the single copy is locked away in a hotel vault in Marrakesh, Morocco [there is an alternative reading of this link, notes Merpel, which would suggest that it is the group who are locked away in the hotel vault].   
  • 200 people attended a public listening to a 13 minute excerpt from the album in New York City this week, where all mobile phones were handed over to the front desk.
Merpel cannot help but wonder: is this an example of music reaching the highest form of fine art?  What are the terms of sale and are they enforceable?  What would you do if you purchased Once Upon a Time in Shaolin? She also recalls that the Shaolin monks have an interest in their name too, and wonders what their reaction might be.  The IPKat suspects that there is no unusual means of promoting an album by a famous band or artist will will not succeed, given its inherent newsworthiness and the vast amount of free publicity in which the launch will be bathed.

All Kats are now seriously considering contacting Paddle8 about the prospect of auctioning their next blogpost, making it available only to the highest bidder.

Katpat to Chris Torrero for sending us the original news item on which this post is based.

Wednesday, 4 March 2015

Wednesday whimsies

The Law Society, England and Wales, is advertising vacancies on its Committees. One of these is the Intellectual Property Committee, which has no fewer than four vacancies to fill. If you are an "exceptional solicitor" who will join "a talented team to oversee important decisions about the Law Society's policy on matters of legal policy", do be sure to apply by 1700 GMT on Friday 19 March.


Digital skills. This Kat has been informed that the United Kingdom's House of Lords published its digital skills report on Monday.  The report -- full name Make or Break: The UK's Digital Future -- and all the documents surrounding it can be accessed via the Digital Skills Committee's web page here.


Fordham 2015 open for registration. The Fordham IP Institute's 23rd Annual Conference on Intellectual Property Law and Policy takes place this year in Cambridge, England, on 8 and 9 April.  This Kat has just been informed that it's now open for registration, so get a move on and click here to sign up for the most exciting and, if you are invited to speak, potentially scary event you are likely to experience.


A Kat, live and in colour! Yesterday fellow Kat Eleonora was telling the European Parliament all about copyright and the possibilities for establishing open norms for copyright in Europe.  Today, in "Towards a New Legislation on Intellectual Property in the Digital Single Market", you can enjoy her wise words on YouTube here.


Copyright in fragrances.  The IPKat's joint seminar with BLACA last week was great fun. Sadly Sergio Balañá Vicente could not be there to join us, but he has sent us three items which he has written on this very subject: (i) in English: Book review: Fehlbaum, P. "Les creations du domaine de la parfumerie: quelle protection?" GRUR Int. 3 Heft, 2009, p. 270 (here); (ii) in French: "L'industrie du parfum à l'assault du droit d'auteur... ¿fumus boni iuris?" Propriétés Intellectuelles nº 16, 2005, p. 254 (here); (iii) in Spanish: "La protección del perfume por el derecho de autor. Comentario a la sentencia de la Cour d'Appel de Paris de 25 de enero de 2006 en el caso L'Oréal c. Bellure" pe.i. Revista de Propiedad Intelectual, nº 22, 2006, p. 107 (here).  Thanks so much, Sergio!

Copyright and the ‘private copying’ exception: what’s all the fuss about?

(Post-lunch) format shifting
Does copyright strike an appropriate balance between competing interests? The adequacy (or otherwise) of copyright law is a political hot potato in the EU, and none more so than in relation to the scope of copyright exceptions which have come under increasing scrutiny in recent years, primarily prompted by the digital landscape which has led to a seismic change in the way in which we create, distribute and access content.

One category of copyright exception currently in the judicial spotlight is the so-called 'private copying' exception, where there is a raft of decisions pending from the CJEU in C-463/12 Copydan, C-572/13 Hewlett-Packard and C-470/14 Egeda [see previous Katposts here, here and here].

Given that the Copydan decision is due to be handed down by the CJEU tomorrow (Thursday, 5 March), this Kat thought it would be a timely opportunity to step back and provide a high level overview of why the private copying exception has been in the legal limelight.

What is the private copying exception?

As readers will be aware, copyright gives rights holders certain exclusive rights (e.g. copying, communicating to the public), but also provides certain permitted acts (or exceptions) in relation to a copyright work which do not require the rights holder’s permission.

In essence, the private copying exception permits a ‘natural person’ to make copies of lawfully acquired copyright works for private (non-commercial) use such as for:
  • format-shifting (e.g. from a CD onto your MP3 player)
  • time-shifting (e.g. saving Downton Abbey onto your Personal Video Recorder or PVR) or
  • making back-up copies.
Its legislative basis is found in Article 5(2)(b) of the Information Society Directive 2001/29The exception is subject to the Berne ‘three-step test', namely that it should not conflict with the normal exploitation of the work or unreasonably prejudice the legitimate interests of the rights holder.

Importantly, the exception permits the creation of a copy of the work in certain circumstances (i.e. it is a permitted act in relation to the reproduction right); it does not therefore extend to other uses of the work such as communicating or distributing the work to the public.

What is a private copying levy?

Under the InfoSoc Directive, the private copying exception is provided on the condition that the rights holder receives “fair compensation”, which is “recompense for the harm suffered by the author” (Case C-467/08 Padawan).

The majority of Member States provide for “fair compensation” through a system of levies to compensate rights holders for the “harm” caused by private copying – i.e. via a private copying levy.

In general, private copying levies were implemented on purchases of blank media (e.g. CDs, DVDs) and on recording equipment (e.g. MP3 players, PCs, printers), with collected revenues then redistributed to rights holders by collecting societies.

It is also worth noting that Recital (35) to the InfoSoc Directive provides that “in circumstances where the prejudice to the rightholder would be minimal, no obligation for payment may arise”. In other words, where there is minimal or de minimis harm, no fair compensation is required. 

Why has the private copying exception been in the judicial spotlight?

There is an unhappy lack of clarity regarding the scope and application of the private copying exception across the EU. For instance, although “fair compensation” is an autonomous concept of EU law (i.e. it is supposed to must be interpreted in a uniform manner across all Member States that have introduced this non-mandatory exception) there is a significant disparity across the EU in the manner in which private copying levies are applied.

Key points that are in the judicial spotlight include:
  • What constitutes “harm” suffered by the author, and in what circumstances is there “minimal” or "de minimis" harm such that fair compensation is not required? [Further clarity on what constitutes de minimis harm will hopefully be provided in the pending Copydan decision. This is a key point in the pending judicial review application before the courts of England & Wales in relation to the UK’s failure to provide a levy system in its implementation of the private copying exception – see The 1709 Blog post here.]
  • Who is responsible for discharging the obligation to pay fair compensation: should it be the manufacturer / producer, the importer, the reseller / retailer? [Whilst Member States enjoy a broad discretion in this regard (see Case C-462/09 Thuiskopie), this issue still requires further clarification, particularly in the context of multi-level, cross-border distribution systems where it might not be possible to know whether the final end-user is a business or private user]
  • Does the levy system safeguard a “fair balance” between the interests of authors and the end-users of the work? [One point which arose in striking this “fair balance” was whether the exception applies only to lawful copies of the work, to which the CJEU’s response in Case C-435/12 ACI Adam was Yes – see previous Katposts here and here]
Other important considerations include the extent to which the exception should apply to copies made on cloud-based online services (i.e. cloud storage). There is debate on whether the application of the exception to cloud-based technology leads to legal uncertainty because the technology potentially allows for widespread sharing of content online beyond the private sphere, and thus erodes the distinction between ‘private’ and ‘public’ use. In this respect, the UK has chosen to permit the making of private copies on “an electronic storage area”.

What policy initiatives have there been on private copying?

Private copying levies were the subject of an industry mediation process, led by former Commissioner António Vitorino, who delivered his report on 31 January 2013 making a number of key recommendationsWhilst some of his recommendations were cautiously welcomed (e.g. by the IFRRO, which also expressed certain reservations), others disagreed strongly (e.g. the Society of Audiovisual Authors).

In short therefore, there is plenty of scope for further progress at a policy level.  

In conclusion…

In this Kat’s view, the legal framework in the EU is a bit of a mess, largely due to the absence of adequate harmonisation and sufficient detail that leads to a distorted and inconsistent application of copyright law across the various Member States. This is exemplified by the current lack of certainty in relation to the scope and application of the private copying exception, where the onus has primarily rested with the CJEU to find that vexing “fair balance” between competing interests.

Is copyright in a catatonic state?
It remains to be seen whether judicially-led incremental change is adequate, or whether more fundamental change at a legislative and policy level is required. There are diverging views in this respect, as seen recently in the Responses to the Public Consultation on the Review of the EU Copyright Rules (see here at Section V). Let’s see what additional clarity the CJEU can add in the pending decisions this year, starting with Copydan tomorrow.  

A helpful resource on the global position in relation to private copying – see the International Survey on Private Copying: Law & Practice 2013 (23rd ed.) here.

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