ECJ confirms legality of private copying levies, but their application raises practical concerns

In order to adjust copyright legislation to modern times, many countries have developed a so-called private copying levy. This type of levy is common in, for example, The Netherlands and Spain. The fee is meant to compensate copyright-holders for lost revenues due to private copying (in accordance with Directive 2001/29/EC).

In practice the levy can mean a blank CD will cost a few cents extra to compensate the creative sector for the possibility of private copying by the person that buys the CD.

The European Court of Justice (ECJ) has now limited the scope of these private copying levies by prohibiting the indiscriminate application of these fees to every possible device that can store copyrighted works, regardless of the intended use.

The ECJ ruled that the Spanish private copying levy is disproportionate, because is does not take into account the intended use of the device that is subject to the extra charge. The fee does not meet with the criteria of the EU Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society either.

The indiscriminate application of a levy on all types of equipment, including carriers that will be used for purposes clearly unrelated to private copying (e.g. when acquired by a company, a professional or a public administration that will not use them for private copying purposes), is disproportionate. The ECJ established the need for a direct correspondence between the fair compensation of right-holders and the limiting effect of the home-copying exception on copyright protection.

The ruling has confirmed the validity of private copy compensation. A subsequent ruling by the ECJ has even established that the levy also applies to foreign traders that export devices to a country with a private copying levy.

Despite its validity, the private copying levy is under scrutiny by the current Dutch government. Justice Minister Teeven has hinted he would like to see the levy disappear. The fee is sometimes seen as a barrier to innovation and new online business development in the entertainment sector.

An interesting point raised by Pedro Letai is that the recent ECJ-ruling may open the door for possible claims for repayment of the amounts paid to the collecting societies in monthly fees, concerning equipment or devices that were clearly used for professional purposes.

Meanwhile, the Spanish Government is forced to restyle their regulatory framework regarding the private copying levy after the above mentioned decision of the ECJ. So, legally speaking the levy is life and kicking, however politicians struggle converting it into practice.

Sources: Kluwer Copyright Blog, Pedro Letai; IE University of Segovia, Spain; European Court of Justice, case C-467/08 Padawan v SGAE; Webwereld