Friday 10 January 2014

Private copying exception: not applicable to copies made from illegal sources

Yesterday, 9 January, Advocate General Pedro Cruz Villalón released his opinion in a case that once again requested further clarification on how to apply the exception laid down in Article 5.2.b) of Directive 2001/29, that is, the so-called private copying limitation (Case C-435/12) [in French].

The defendants in the main proceedings are Stichting de Thuiskopie, a Dutch entity in charge of collecting and distributing fair compensation for private copying as provided by the said Directive. The complainants are several companies that manufacture and import storage media and hence are obliged to pay compensation.

The main issue in the proceedings, which has been referred to the Court of Justice for a preliminary ruling, is whether Article 5.2.b) of the Directive is also applicable to copies of works obtained from illegal sources, and in that case whether such copies are to be included when calculating the compensation to be paid to rightholders. Unlike the legislation in other countries, like Spain, Dutch copyright law does not specify that the exception is applicable only to copies of works obtained legally. The text of the Directive does not make this distinction either.

The Dutch collecting society basically considers that since there are no effective technical means to prevent works from being copied, fair compensation payable to rightholders for private copying should also take into account copies made from illegal sources, particularly via the Internet. So doing would achieve effective compensation for the actual damage sustained by rightholders pursuant to the public availability of works on the web.

However, the Advocate General's opinion appears to take the opposite tack. Pedro Cruz Villalón maintains that, undeniably, while legislation along the lines proposed by the defendant collecting society could provide a lawful and suitable framework for addressing copyright infringement on the Internet, providing compensation for harm sustained by rightholders from this type of piracy is not the rationale for the private copying exception.

As an exception to copyright, private copying should be interpreted in accordance with the three-step test set forth in Article 5.5 of the Directive and hence should be strictly interpreted. Accordingly, this route, notwithstanding that it would allow rightholders to receive compensation, cannot be used to expand the scope of application of the exception to illegal copying, because so doing would entail making legal a practice that can only be regarded as wholly unlawful. It therefore inevitably follows that compensation for private copying should take into account only copies made from works accessed legally.

As concerns Spain, this opinion has interest because it once again calls into question the new system put into practice by Royal Decree no. 1657/2012 (in Spanish) of 7 December 2012 establishing a system of fair compensation charged against the federal budget. According to the Advocate General in Recital 43 of his opinion, compensation is to be funded by those responsible for causing harm, that is, by the physical persons making copies for private use. It seems clear that a system like Spain's is not in consonance with this interpretation.

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