Who is entitled to fair compensation for private copying? And what happens when a Member State has failed to transpose correctly EU law? AG Collins answers both in Seven.One Opinion

Seven.One vs
the seven lives
(and one great love)
of a Kat 

Ahead of the August break, last week was a busy one for copyright at the Court of Justice of the European Union (CJEU). On 13 July last, in fact, Advocate General (AG) Collins issued his Opinion in Seven.One, C-260/22, and the Court published its judgment in Ocilion, C-426/21.

What those references have in common is that both were made in the field of broadcasting and concern issues of private copying under Article 5(2)(b) of the InfoSoc Directive.

Let’s start with Seven.One.

A reference from Germany, the key issues in Seven.One are: (i) who is entitled to compensation for private copying, and (ii) what happens if a Member State has failed to transpose the InfoSoc Directive correctly.

(i) Entitlement to compensation for private copying

As readers who follow all things private copying know, this basic question has turned out to be a thorny one which, in turn, has generated a number of CJEU referrals (see further below).

In this specific case, the question is whether broadcasters are entitled to fair compensation for private copying of fixations of their broadcasts.

Under German law, the law provides for a private copying limitation in relation to fixations of broadcasts (see Article 2(e) of the InfoSoc Directive) but excludes any entitlement of broadcasters to fair compensation. Compensation may be nevertheless sought by broadcasters in their capacity as producers of TV programmes (in accordance with Article 2(d) of the InfoSoc Directive).

In his Opinion, AG Collins recalled the distinction – or, as he called it – the ‘dichotomy’ between copyright and related rights and noted that, under Article 2(e) of the InfoSoc Directive, what is protected is indeed the fixation of a broadcast, not the broadcast itself.

This said, the rationale of the fair compensation requirement is to compensate for the harm caused by the unauthorized making of copies. Accordingly, the exclusion of an entire category of reproduction rightholders from the right to fair compensation under national law is not justified “if those rightholders suffer harm”. Furthermore, “the fact that broadcasting organisations may receive fair compensation in respect of private copying of films they produce is also irrelevant.”

(ii) Consequences of incorrect transpositions of the InfoSoc Directive

In his Opinion, the AG also considered the consequences of incorrect transpositions of EU directives. He noted that a national court is required to disapply the national provision in question if the relevant provision of EU law is suitably clear, precise and unconditional and the disapplication by the concerned national court does not result in an additional obligation being imposed upon an individual. The latter condition serves to comply with the mandate of Article 288 TFEU and the lack of horizontal direct effect of directives (on the notion of direct effect of EU law, see here).

Comment

Despite its admittedly technical background, Seven.One is an important referral that could help clarify even further what Member States can and cannot do when transposing EU directives into their own laws.

Entitlement to compensation for private copying

Insofar as private copying specifically is concerned, I have already mentioned that the question of who should be entitled to claim compensation remains, quite surprisingly, elusive.

Beside it being an autonomous concept of EU law that requires uniform interpretation across the EU, the notion of fair compensation and its level are linked to the presence of a harm caused to the reproduction rightholder.

As stated, Seven.One is not the first CJEU referral on who is entitled to receive compensation. The CJEU has had the opportunity to address all this specifically on two occasions already: Luksan, C-277/10 [IPKat here] and Reprobel, C-572/13 [IPKat here and here]:

• Luksan asked whether the right to fair compensation for private copying would vest by operation of law, directly and originally, in the principal director of a cinematographic work, in their capacity as author or co-author thereof. To answer this question, the CJEU deemed it necessary to determine, first, whom the InfoSoc Directive would regard as the holders of the right of reproduction within Article 2 therein, of which private copying represents a limitation. It highlighted that, among other things, such right belongs to authors in respect of their works and producers in respect of the first fixation of films. Hence, the director of a cinematographic work is entitled to receive fair compensation because of Article 1(5) of the Sat-Cab I Directive.
• This approach was (correctly) followed in the subsequent judgment in Reprobel, in which the CJEU held that a national law cannot (could not: read on) reserve ab initio (that is, irrespective of any copyright assignment to them on the side of authors) part of the compensation due to authors to publishers, as the latter are not reproduction rightholders under the InfoSoc Directive. The outcome of the reference in Reprobel was however seen as undermining the activity of publishers, with the result that legislation was proposed to remedy such a situation and – substantially – ‘delete’ that CJEU decision. The result of all this is Article 16 of the DSM Directive, also known as the "Reprobel provision". Incidentally, the whole story is far from over, as a new Reprobel referral is pending before the CJEU: it is Reprobel, C-230/23.

Consequences of incorrect transpositions of EU directives

Turning to the broader issue of the relationship between the EU and its Member States, what happens in the event that a Member State has incorrectly transposed or failed to transpose a directive tout court into its national law is a key one (see further the discussion in Chapter 3 of Copyright and the Court of Justice of the European Union, 2nd edition).

If we for example look at how badly even the most recently copyright directive – the DSM Directive – has been transposed across the EU, it should not come as a shock that this issue will need to be addressed very soon and once again by national courts and the CJEU alike.

Surely compensated, but also fairly so?

As stated, under EU law, directives do not produce any horizontal direct effect. This means that they cannot be relied upon in private-party proceedings and do not impose obligations on individuals. Nevertheless, EU directives may produce – at certain conditions – a vertical direct effect.

That is so when a provision of a EU directive imposes on EU Member States, in unequivocal terms, well-defined obligations as to the result to be achieved that is not coupled with any condition regarding application of the rule laid down in them, then that provision may be directly relied upon before the courts of a Member State that has failed to implement it correctly or even altogether.

The issue of direct effect of EU directives was specifically tackled in a copyright context in OSA, C-351/12. That reference for a preliminary ruling from the Czech Republic asked the CJEU, among other things, whether Articles 3(1) of the InfoSoc Directive is unconditional enough and sufficiently precise for a certain individual or organization (a copyright collecting society in that case) to rely on in a dispute between individuals before a national court in case of incorrect transposition of that directive by a certain EU Member State.

The CJEU answered in the negative due the already mentioned lack of direct horizontal effect of directives. It is true that a national court, when hearing a case between individuals, is required, when applying the provisions of domestic law, to consider the whole body of rules of national law and to interpret them, so far as possible, in the light of the wording and purpose of the directive in order to achieve an outcome consistent with the objective pursued by the directive. However, this cannot serve as the basis for an interpretation of national law contra legem.

In her Opinion in that case, AG Sharpston had taken the view that an interpretation of national law that would be inconsistent with the InfoSoc Directive would not be permissible. The AG did not state expressly what the legal consequences of incorrect implementations of the InfoSoc Directive would be. Nevertheless, she appeared to agree with OSA’s suggestion that this would be disapplication of incorrect national provisions.

The position advanced by AG Sharpston is correct if it is intended in accordance with the position advanced by AG Collins last week: to warrant disapplication, the provision at hand must be suitably clear, precise and unconditional and the disapplication by the concerned national court would not result in an additional obligation being imposed upon an individual. 

Vice versa, an obligation to disapply a provision of national law that is contrary to a directive does arise when someone relies on that directive against a Member State, the organs of its administration, or organizations or bodies which are subject to the authority or control of the State or which a Member State requires to perform a task in the public interest and, for that purpose, possesses special powers beyond those which result from the normal rules applicable to relations between individuals. This is so because directives may have vertical direct effect.