BREAKING NEWS: AG Cruz Villalón says that private copying levies may be imposed on memory cards for mobile phones

Here's another day in the exciting world of the private copying exception within Article 5(2)(b) of the InfoSoc Directive. 

Following the judgment of the Court of Justice of the European Union (CJEU) in Case C-435/12 ACI Adam [here and here] earlier this year, and pending adoption in the UK of the private copying exception [here], this morning Advocate General (AG) Cruz Villalón issued his 113-paragraph Opinion [Katdrama: the Opinion is neither available in English nor Italian, and the Court has not issued a press release, so this Kat had to struggle with the unfamiliar French version, with some assistance from Google Translate. In all this Merpel wonders whether the CJEU should not hire more English translators, since there is a growing number of AG Opinions that are not made available in this language] in Case C-463/12 Copydan Båndkopi, a reference for a preliminary ruling from the Østre Landsret (High Court of Eastern Denmark).

As Katfriend Javier Ramirez explained a few months ago, this case is important because the CJEU has been asked to address issues that were left outwith earlier case law on private copying and private copying levies [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], such as in what cases the de minimis rule in Recital 35 applies [this has been pretty central to UK debate on private copying], or whether a distinction in the application of levies is required when the primary function of a certain device is to allow the reproduction of works for private use. In this particular case, the background question is whether memory cards for mobile phones should be subject to payment of private copying levies.

But let's start from the beginning.

Background

Copydan Båndkopi, a Danish collective rights management organisation, asked Nokia to pay DKK 14826828,99 [that is nearly EUR2m] as a private copying levy for the reproduction of music and videos over the memory cards for mobile phones that it imported and marketed in Denmark between 2004 and 2009. Litigation ensued over Nokia's refusal, and the Østre Landsret referred the following questions to the CJEU:

1.  Is it compatible with Directive 2001/29/EC [that's still the InfoSoc Directive] for Member States to have legislation which guarantees compensation for the rightholders for reproductions made using the following sources:

a.  files where the use in question is approved by the rightholders and paid for by the customer (licensed content from online shops, for example);

b.  files where the use in question is approved by the rightholders and not paid for by the customer (licensed content, for example, in connection with a marketing action);

Clearly not a Nokia phone,
but at least a Kat cover

c.  the user's own DVD, CD, MP3 player, computer, etc., where effective technological measures are not applied;

d.  the user's own DVD, CD, MP3 player, computer, etc., where effective technological measures are applied;

e.  a third party's DVD, CD, MP3 player, computer, etc.;

f.  unlawfully copied works from the Internet or other sources;

g.  files copied lawfully in some other way from, for example, the Internet (from lawful sources where no licence has been granted)?

     2.    How must effective technological measures be taken into account, (ref. Article 6 of the Directive) in the Member States' legislation on compensation for rightholders (ref. Article 5(2)(b) of the Directive)?

     3.    In the calculation of compensation for private copying (ref. Article 5(2)(b) of the Directive), what constitutes 'situations where the prejudice to the rightholder would be minimal', as referred to in recital 35 in the preamble to the Directive, with the result that it will not be compatible with the Directive for the Member States to have legislation which provides for compensation for rightholders for such copying for private use (ref. in this connection the survey referred to in part 2 above)?

     4.    a) If it is assumed that the primary or most important function of memory cards in mobile phones is not private copying, is it compatible with the Directive for the Member States to have legislation which guarantees compensation for rightholders for copying on mobile phone memory cards?

b) If it is assumed that private copying is one of the several primary or essential functions of memory cards in mobile phones, is it compatible with the Directive for the Member States to have legislation which guarantees compensation for rightholders for copying on mobile phone memory cards?

     5.    Is it compatible with the concept of 'fair balance' in recital 31 in the preamble to the Directive and with the uniform interpretation of the concept of 'fair compensation' (ref. Article 5(2)(b) of the Directive), which must be based on 'prejudice', for the Member States to have legislation under which remuneration is collected for memory cards, whereas no remuneration is collected for internal memory such as MP3 players or iPods, which are designed and primarily used for private copying?

     6.    a) Does the Directive preclude the Member States from having legislation which provides for the collection of remuneration for private copying from a producer and/or importer who sells memory cards to business concerns which sell the memory cards on to both private and business customers, without the producer's and/or importer's having knowledge of whether the memory cards have been sold to private or business customers?

b) Is the answer to question 6(a) affected if provisions are laid down in a Member State's legislation which ensure that producers, importers and/or distributors do not have to pay remuneration for memory cards used for professional purposes, that producers, importers and/or distributors, where the remuneration has nevertheless been paid, can have the remuneration for memory cards refunded in so far as they are used for professional purposes, and that producers, importers and/or distributors can sell memory cards to other undertakings registered with the organisation which administers the remuneration scheme, without payment of remuneration?

c)    Is the answer to questions 6(a) and 6(b) affected

1)     if provisions are laid down in a Member State's legislation ensuring that producers, importers and/or distributors do not have to pay remuneration for memory cards used for professional purposes, but the concept of 'professional purposes' is interpreted as conferring a right of deduction applying only to undertakings approved by Copydan, whereas remuneration must be paid for memory cards used professionally by other business customers which are not approved by Copydan;

2)     if provisions are laid down in a Member State's legislation ensuring that producers, importers and/or distributors, where the remuneration has in fact been paid (theoretically), can have remuneration for memory cards refunded where they are used for professional purposes, but (a) it is in practice only the purchaser of the memory card who can have the remuneration refunded, and (b) the purchaser of memory cards must submit an application for refund of remuneration to Copydan;

3)     if provisions are laid down in a Member State's legislation ensuring that producers, importers and/or distributors may sell memory cards to other undertakings registered with the organisation which administers the remuneration scheme, without payment of remuneration, but (a) Copydan is the organisation which administers the remuneration scheme and (b) the registered undertakings have no knowledge of whether the memory cards have been sold to private or business customers?

Probably less messy than
the questions in Copydan

The AG Opinion

Even the AG acknowledged that the questions were a bit messy, and deemed necessary to re-write organise them. Accordingly, he thought that there are three main sets of questions at stake here:

(1) May private copying levies be imposed on memory cards for mobile phones, that are devices that perform a number of different functions?

(2) Does the presence of technological protection measures affect the level of the levies?

(3) How are the levies to be paid?

Levies on memory cards? Why not ...

As regards the first question, the AG responded that in principle Article 5(2)(b) does not prevent national legislation that imposes a balanced levy on memory cards for mobile phones. However, this provision precludes national legislation that, while imposing levies on memory cards for mobile phones, excludes non-removable media for integrated devices or equipment specifically designed and used primarily as carriers of reproduction for private purposes, when this exclusion is not objectively justified.

In line with what the CJEU held in ACI Adam, the AG confirmed that the private copying exception - and thus private copying levies - only applies to reproductions from licensed sources.

Technological protection measures don't matter

As to the question whether the presence of technological protection measures may affect the level of levies, according to the AG this should not be the case.

Payment of levies

Finally, according to the AG, in principle the InfoSoc Directive does not preclude national legislation such as that at issue in the main proceedings which provides for the collection of private copying levies from producers and importers of media devices, provided that these can then pass it on users. 

Very cute,
but sadly the sole wearing of
a French beret does not transform
a Kat into a fluent French-speaking being 

According to the French version, this is how the CJEU should respond:

"Eu égard aux développements qui précèdent, je propose à la Cour de répondre aux questions de l’Østre Landsret dans les termes suivants:

1.    L’article 5, paragraphe 2, sous b), de la directive 2001/29/CE du Parlement européen et du Conseil, du 22 mai 2001, sur l’harmonisation de certains aspects du droit d’auteur et des droits voisins dans la société de l’information, doit être interprété en ce sens qu’il ne s’oppose pas, en principe, à la réglementation d’un État membre qui prévoit la perception de la redevance pour copie privée destinée à financer la compensation équitable sur les cartes à mémoire des téléphones mobiles, pour autant que soit garanti le juste équilibre qui doit être maintenu entre les différentes catégories de titulaires de droits et les utilisateurs d’objets protégés et que, partant, il existe un lien entre cette perception et l’usage présumé desdites cartes à des fins de reproduction à titre privé, la fonction première ou principale desdites cartes étant dénuée d’incidence à cet égard.

Toutefois, la directive 2001/29 doit être interprétée en ce sens qu’elle s’oppose à la réglementation d’un État membre qui prévoit la perception de la redevance pour copie privée destinée à financer la compensation équitable sur les supports de reproduction amovibles, tels que les cartes à mémoire des téléphones mobiles, tout en l’excluant pour les supports non amovibles intégrés à des appareils ou à des équipements spécifiquement conçus et principalement utilisés comme supports de reproduction à des fins privées, sans que cette exclusion soit objectivement justifiée.

C’est à la juridiction de renvoi qu’il appartient d’apprécier les justifications objectives éventuelles de cette exclusion et d’en tirer les conséquences.

2. La directive 2001/29 doit être interprétée en sens qu’elle s’oppose à la réglementation d’un État membre qui prévoit la perception de la redevance pour copie privée destinée à financer la compensation équitable prévue à son article 5, paragraphe 2, sous b), sur les reproductions à usage privé réalisées à partir d’une source illicite ainsi que sur les reproductions à usage privé qui ont été spécifiquement autorisées par les titulaires de droits et ont donné lieu, à ce titre, au versement d’une rémunération ou à toute autre forme de compensation équitable. 

3.  La directive 2001/29 doit être interprétée en ce sens que ni l’utilisation ni la non-utilisation de mesures techniques de protection efficaces des fichiers d’œuvres protégées n’ont d’incidence sur la perception de la redevance pour copie privée destinée à financer la compensation équitable visée à l’article 5, paragraphe 2, sous b), de cette directive.

4.  La directive 2001/29 doit être interprétée en ce sens qu’elle ne s’oppose pas à la réglementation d’un État membre qui prévoit la perception de la redevance pour copie privée destinée à financer la compensation équitable sur les reproductions à titre privé qui ne causent qu’un préjudice minime aux titulaires de droits.

5.  La directive 2001/29 doit être interprétée en ce sens qu’elle ne s’oppose pas, en principe, à une réglementation nationale, telle celle en cause dans le litige au principal, qui prévoit la perception de la redevance pour copie privée destinée à financer la compensation équitable sur les supports de reproduction auprès des producteurs et des importateurs de ces derniers, pour autant que lesdits producteurs et importateurs puissent effectivement répercuter celle-ci sur les utilisateurs faisant l’acquisition desdits supports à des fins de copie privée ou en obtenir le remboursement, lorsque lesdits supports sont acquis à des fins manifestement étrangères à celles de copie privée.

C’est à la juridiction de renvoi qu’il appartient d’apprécier ces circonstances et d’en tirer les conséquences."

***

If any readers who are familiar with any of the languages in which the Opinion is currently available wished to provide a detailed analysis, this would very welcome and much appreciated!