The EU court of Justice has ruled that the Spanish method of
compensation for private copying, funded by the general budget, is contrary to
EU law because it is not capable of guaranteeing that the cost of fair
compensation is borne by the users of the copies.
Jose A. Suarez, senior partner in LAWorld’s Madrid member firm of Suarez
de la Dehesa,was recently lead counsel
for the plaintiffs in a very significant case concerning the harmonization of
Spanish copyright law with European Union copyright law. The case, No. C-470/14,
styled Entidad de Gestion de Derechos de
los Productores Audiovisuales v Administración del Estado in the EU Court
of Justice (“EUCJ”) is a significant upheaval to Spain and potentially to other
EU members that are struggling with the issue of how to provide for fair
compensation for non-commercial, private use of copyrighted materials.
Most EU member states have implemented a system based
on a private copying levy, which is, in broad terms, a charge on media and/or
devices that enable the person who acquires them to make private copies. The
amount collected by this way is usually distributed later among the right
holders by the copyright collecting societies.
That system was in force in Spain from 1987 to 2011.
Manufacturers, suppliers, importers, exporters and distributors of the devices
and recording media paid the private copying levy, and afterwards were allowed
to pass on the payment to consumers, who were the true debtors of the private
In December 2011 the Spanish Government approved a new
compensation scheme by which the private copy compensation would be funded from
the state budget and according to an allocation previously made, provided
funding was available. This meant not
only that everyone in Spain, individuals and corporations alike, had to pay the
compensation, but also that it would be the State who would determine the
quantum of its own debt to the right holders.
How does that scheme mesh with EU Article 5.2.b)? Not very well, it appears.
Article 5.2b) allows Member States to establish an
exception to the exclusive reproduction right that the article 2 grants to
authors and producers in case of reproduction made by a natural person, by any
means, and only for private and non-commercial use. Article 5.2.b) conditions
the establishment of such exception by mandating that right holders receive
fair compensation for those type of reproductions. The applicable directive
further provides that moral persons are excluded from such benefit and,
therefore, should not pay it.
On January 2013, several Intellectual Property Rights
Management Societies requested the Spanish Supreme Court to repeal the aforementioned
rule. The legal ground for that claim was that the plaintiffs considered the
new Spanish system to be in conflict with article 5.2.b) of the Directive, as
interpreted by the EUCJ.
On September 2014 the Spanish Supreme Court sent to
the EUCJ two preliminary questions:
“1.- Is a scheme for fair compensation for
private copying compatible with Article 5.2.b of Directive 2001/29 where
the scheme, while taking as a basis an estimate of the harm actually caused, is
financed from the General State Budget, it thus not being possible to ensure
that the cost of that compensation is borne by the users of private copies?
2.- If the first question is answered in the
affirmative, is the scheme compatible with Article 5.2.b of Directive
2001/29 where the total amount allocated by the General State Budget to fair
compensation for private copying, although it is calculated on the basis of the
harm actually caused, has to be set within the budgetary limits established for
each financial year?”
On 9th June 2016, the EUCJ answered the first question in the negative by
holding that the current Spanish private copy
exception system is contrary to article 5.2.b) of Directive 2001/29/EC. The
“article 5.2.b) must be interpreted as
precluding a scheme for fair compensation for private copying which, like the
one at issue in the main proceedings, is financed from the General State Budget
in such a way that it is not possible to ensure that the cost of that
compensation is borne by the users of private copies.”
The EUCJ ruling did
not state that compensation cannot be paid from public funds, what it found
objectionable was that moral persons (as, i.e., businesses) which cannot
benefit from the exception must also pay for it. And to that extent, in obiter dictum, the court suggest that per
person tax might be acceptable. But would it be workable? A special tax to collect an
average of €1 to €2 per citizen is an extremely inefficient means of paying for
private, non-commercial copyright usage.
You still must determine how you calculate actual harm from such
copying, and who gets to do so?
The majority of EU countries have payment systems that use a levy paid
by commercial intermediaries. Those
remain compliant. But not all do
so. The effect of the Court ruling is
unsettling to nation states that desire to solve this problem in alternative
ways, whether for political, cultural or historical reasons. For them, as in Spain, it is back to the
López de la Osa.
Suarez de la Dehesa Abogados
firstname.lastname@example.org T: +(34) 91 559 59 99