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 2001/29. The 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 recommendations. Whilst 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 (23^rd ed.) here.