AG Sharpston's VG Wort Opinion: another case on copyright levies and fair compensation

AG Sharpston

This morning Advocate General Eleanor Sharpston delivered her much-awaited Opinion in Joined Cases C-457-460/11 VG Wort v KYOCERA Document Solutions Deutschland GmbH and Others, a reference from the Bundesgerichtshof (Federal Court of Justice, Germany), seeking clarification as to the proper interpretation of Article 5(2) of the InfoSocDirective (Directive 2001/29/EC), in particular letters (a) and (b), according to which:

Member States may provide for exceptions or limitations to the reproduction right provided for in Article 2 in the following cases:

(a) in respect of reproductions on paper or any similar medium, effected by the use of any kind of photographic technique or by some other process having similar effects, with the exception of sheet music, provided that the rightholders receive fair compensation;

(b) in respect of reproductions on any medium made by a natural person for private use and for ends that are neither directly nor indirectly commercial, on condition that the rightholders receive fair compensation which takes account of the application or non-application of technological measures referred to in Article 6 to the work or subjectmatter concerned;

In Germany fair compensation is achieved by levying a charge on those who manufacture, import or sell devices capable of making reproductions. The Bundesgerichtshof has to decide whether the charge should be levied on printers or personal computers able to make reproductions only when linked to one or more other devices, such as scanners, which may themselves be subject to the same charge. 

Background

VG Wort is the collecting society that has exclusive responsibility for representing authors and publishers of literary works in Germany. As such, it is entitled to claim remuneration from manufacturers, importers or distributors of devices subject to the requirement to pay remuneration to authors under Paragraph 54a(1) of the UrhG [the UrhG is the German law on copyright and related rights and this proviso echoes Article 5(2)(a) of the InfoSoc Directive]. 

VG Worth has sought to claim such remuneration from the other parties to the main proceedings (‘the suppliers’), by way of a levy on personal computers, printers and/or plotters marketed in Germany between the beginning of 2001 [the InfoSoc Directive entered into force on 22 June 2001 but became applicable only on 22 December that year] and the end of 2007. 

The suppliers argue that printers and plotters as such are incapable of reproducing any work on their own. They can do so only when linked to a device which can use a photographic technique or process having similar effects in order to create an image of the work. Consequently, compensation should be levied only on such devices, not on printers or plotters.

The German court decided to stay the proceedings and revert to the Court of the Justice of the European Union (CJEU) for guidance on how to interpret certain provisions of the UrhG in accordance with those of the InfoSoc Directive. It asked the following questions, one of these concerning the applicability of the Directive ratione temporis and four the interpretation of substantive provisions:

1.   In interpreting national law, is account to be taken of the Directive in respect of events which occurred after the Directive entered into force on 22 June 2001, but before it became applicable on 22 December 2002?

2.   Do reproductions effected by means of printers [or personal computers] constitute reproductions effected by the use of any kind of photographic technique or by some other process having similar effects within the meaning of Article 5(2)(a) of the Directive?

3.   If Question 2 is answered affirmatively: can the requirements laid down in the Directive relating to fair compensation for exceptions or limitations to the right of reproduction under Article 5(2) and (3) of the Directive, having regard to the fundamental right to equal treatment under Article 20 of the EU Charter of Fundamental rights, be fulfilled also where the appropriate reward must be paid not by the manufacturers, importers and distributors of the printers [or personal computers] but by the manufacturers, importers and distributors of one or more other devices in a chain of devices capable of making the relevant reproductions?

4.   Does the possibility of applying technological measures under Article 6 of the Directive suffice to render the condition relating to fair compensation within the meaning of Article 5(2)(b) thereof inapplicable?

5.   Is the condition relating to fair compensation (Article 5(2)(a) and (b) of the Directive) and the possibility thereof (see recital 36 in the preamble to the Directive) inapplicable where the rightholders have expressly or implicitly authorised reproduction of their works?

The AG's Opinion, as delivered in handy 137 paragraphs

As recalled by the AG, the CJEU has dealt with the interpretation of Article 5(2) of the InfoSoc Directive in a number of occasions, the most relevant of which (at least for the sake of the present proceedings) was the 2010 judgment in Case C-467/08 Padawan (on which see Kat posts here and here), a case which dealt with the private copying exception.

Following an analysis of the relationship between the lengthy and detailed preamble of the InfoSoc Directive [which is 40% longer than the enacting terms!] and its actual provisions, the AG examined the relationship between the Directive and the German legislation and held, among other things, that:

1-  An exception or limitation to the reproduction right which goes farther than what is authorised by one or other of the provisions of Article 5(2) or (3) will be incompatible with the InfoSoc Directive. However, given the optional nature of the provisions and the possibility of introducing a limitation rather than an exception, a measure which goes less far will be compatible with the directive;

2-  The InfoSoc Directive does not require national exceptions or limitations to be drafted so as to fit in each case within a single one of the 20 situations set out in Article 5(2) and (3). However, since it must not go beyond what is permitted by those provisions, care must be taken to ensure that any such ‘hybrid’ exception does not combine conditions in such a way as to cover an area which falls outwith any of those permitted by the directive.

She then turned to consider the questions referred by the German court, starting with the four substantive questions. 

Question 2: the criteria in Article 5(2)(a)

Merpel assumed a serious look just to
 read AG Sharpston's Opinion ...

As clarified by the AG, this question turns on the distinction between copies of an original ‘analogue’ document and reproductions of a ‘digital’ document, as what the national judge is asking is whether "reproductions on paper or any similar medium, effected by the use of any kind of photographic technique or by some other process having similar effects" include copies made from a digital source or only those of an analogue original.

The answer, according to the AG, should be that the scope of the exception or limitation permitted by Article 5(2)(a) of the Directive, while including situations in which an analogue to analogue reproduction involves an intermediate digital phase, should exclude situations in which the process as a whole is carried out neither by the same person nor as a single operation.

Question 3: reproductions involving a chain of devices

If the reproductions covered include those made using printers or computers, the question is then whether a charge to provide fair compensation can be levied from the manufacturers, importers or distributors not of the printers or computers but of one or more other items in a chain of devices capable of making the relevant reproductions.

While recalling the ruling in Padawan, the AG responded to this question holding that it should be for the national court to examine the levy set up by the UrhG. In doing so, it should look at the way in which the levy is calculated with regard to photocopiers and examine how far that calculation can be carried across to a chain of devices which can together make comparable copies but in which no single device can do so independently and each device is commonly used for other purposes. It should consider whether the application of the levy to such a chain of devices, or to individual devices within the chain, provides a fair balance of rights and interests between rightholders and users. With regard to the principle of equal treatment, which is the Bundesgerichtshof’s principal concern, it should consider in particular the aspect of equal treatment of the purchasers of devices (including other devices with comparable functions) and not merely that of importers or distributors, since the burden of the levy will be borne ultimately by those purchasers.

Question 4: technological measures to combat unauthorised copying

Article 5(2)(b) requires that rightholders receive fair compensation which takes account of the application or non-application of technological measures to the protected material concerned. The question is whether the possibility of applying such measures – as opposed to their actual application – suffices to render the condition relating to fair compensation in Article 5(2)(b) inapplicable.

According to AG Sharpston, the correct interpretation should be that Article 5(2)(b) allows Member States to choose whether and to what extent fair compensation should be provided for where technological measures are available to rightholders but not applied by them.

Question 5: fair compensation in the event of authorisation for copying

Where a Member State has implemented an exception or limitation to the reproduction right, with entitlement (whether compulsory or optional) to fair compensation, does that entitlement apply where the rightholders have expressly or implicitly authorised reproduction of their works?

... but she quickly found something slightly
more appealing to read instead 

The answer seems to be that where a Member State has provided for an exception or limitation to the reproduction right, it is no longer possible for the rightholders concerned to exercise any control over copying of their works by granting or refusing authorisation. When providing for fair compensation in such circumstances, Member States may nonetheless allow rightholders either to renounce any claim to fair compensation or to make their works available subject to contractual arrangements which enable them to receive fair compensation for future copying. In either of the latter cases, the rightholder’s entitlement to fair compensation should be considered to be exhausted, and should not be taken into account when calculating the financing of any general scheme of fair compensation.

Question 1: relevance of the Directive ratione temporis

When applying domestic law, a national court is bound to interpret that law in light of the wording and the purpose of the directive concerned in order to achieve the result sought by the directive and consequently comply with the third paragraph of Article 288 TFEU. However, that obligation applies only once the period for the transposition of the directive has expired. Until then, and from the date of entry into force, the only requirement is that national courts must refrain as far as possible from any interpretation which might seriously compromise, after the period for transposition has expired, the attainment of the objective pursued by the directive. Furthermore, not only the national provisions specifically intended to transpose a directive but also, from the date of that directive’s entry into force, the pre-existing national provisions capable of ensuring that the national law is consistent with it must be considered to fall within the scope of that directive. 

Consequently, any relevant provision of national law must be interpreted in conformity with the InfoSoc Directive in respect of all periods subsequent to 22 December 2002. In respect of the period from 22 June 2001 to 22 December 2002, it does not have to be interpreted in that way, provided that its interpretation does not seriously compromise the subsequent attainment of the objective pursued – although there is no general principle or provision of EU law which precludes a national court from interpreting its domestic law in conformity with a directive before the period for its transposition has expired. That means inter alia that, where a Member State has provided for an exception or limitation to the reproduction right in accordance with Article 5(2)(a) and/or (b) of the Directive, it is required to ensure that rightholders receive fair compensation in respect of relevant events after 22 December 2002 but, in principle, not necessarily before. However, under Article 10(2), the Directive applies without prejudice to any acts concluded and rights acquired before that date. That is a specific rule which does appear to preclude interpreting national law in conformity with the Directive if such interpretation would affect ‘acts concluded’ before 22 December 2002.

We’ll see whether the Court decides to uphold Sharpston’s Opinion. In the meanwhile Merpel recalls that this is not the only case currently pending before the CJEU on fair compensation under the InfoSoc Directive (here and here). Will the Court shed some light on the evanescent notion of what is a fair compensation?