Ruling From EU's Top Court Confirms Copyright Levies Are A Ridiculous, Unworkable Mess

from the big-fat-nothing dept

In the last year, Techdirt has posted a couple of stories about court decisions that underline the fact that the EU system of copyright levies is an unworkable mess. A new ruling from the EU's highest court, the Court of Justice of the European Union (CJEU) has confirmed this once more, but for different reasons. The levies are supposed to compensate copyright holders for an alleged "loss" arising from copies made for personal use. The case concerns Spain's implementation of the system, which pays money directly from the state's budget. That's obviously much simpler than the complicated approach that involves collecting a levy placed on storage devices that varies according to their size -- a system used in other European countries. However, the CJEU has found a problem with Spain's method (pdf):

the Court notes that the [EU's] private copying exception is intended exclusively for natural persons who make, or have the capacity to make, reproductions of protected works or subject matter for private use and for non-commercial ends. It is those persons who cause harm to the rightholders and who are, in principle, required to finance, in return, the fair compensation payable to those rightholders. For their part, legal persons are excluded from benefiting from that exception.

The issue here is that under the 2001 EU Copyright Directive, only "natural persons" -- people -- are allowed to make personal copies, whereas "legal persons" -- companies -- are not. But in Spain, the private copying exception is funded from the general government budget, and therefore inevitably includes monies gathered as taxes from companies. The CJEU says that's not allowed, because it's the ones doing the private copying -- the "natural persons" -- who must pay, and no one else. The court pointed out:

it has not been established that there is a particular measure in Spain allowing legal persons to request to be exempted from contributing to the financing of that compensation or, at least, to seek reimbursement.

It's really not clear how that could be done in practice. Maybe by allocating a tiny tax rebate to companies by way of "reimbursement" for the copyright levy payment made from the state budget. But that would add yet another layer of complexity to the tax system, hardly a welcome outcome. It would be far simpler just to get rid of the unwieldy and anachronistic copyright levy system altogether. It's time to recognize that everybody has a fundamental right to make copies of stuff they own, and that the "fair compensation" for doing that is a big, fat nothing.

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Filed Under: cjeu, copyright, copyright levies, eu, payments

Austrian Ruling Likely To Have Big implications For Copyright Levies Across EU

from the game-on-for-GEMA? dept

Techdirt has been following for a while the copyright levy system in the European Union as it slowly descends into complete chaos, unable to reconcile its analog origins with a digital world where it just makes no sense. A post on the IPKat blog offers something very interesting in this context : a court case that not only quashes Austrian law on private levies, but one that is likely to have important knock-on effects in other EU countries. As the blog post explains, the decision by the Commercial Court in Vienna is just the latest chapter in a long-running saga involving the Austrian collection society, Austro Mechana, and Amazon:

Austro Mechana initiated the proceedings against a number of Amazon entities in October 2007. The main request of Austro Mechana was to oblige Amazon to pay copyright levies for all storage devices sold to customers in Austria. Austro Mechana also filed an information request regarding the quantity and type of storage devices sold to customers in Austria.

Amazon lost at both first instance and in appeal. After that, as suggested by Amazon, the Austrian Supreme Court submitted a request for a preliminary ruling to the CJEU [Court of Justice of the European Union] (September 2011). Amazon had argued that the Austrian law on copyright levies and the procedures implemented by Austro Mechana for the collection of copyright levies complied with neither the [EU's] InfoSoc Directive nor the jurisprudence of the CJEU.

Europe's highest court, the CJEU, handed down its opinion back in 2013. It was largely in favor of Amazon, so the Austrian Supreme Court cancelled all the previous rulings, and sent the case back to the Vienna Commercial Court to consider in the light of the CJEU guidance. The Court of Justice of the European Union does not rule on particular cases, but considers the larger questions of law that are involved, leaving it to local courts to use its published guidance in their subsequent judgments.

There were three main grounds why the Austrian Commercial Court ruled that the entire Austrian copyright levy system had to go. First, it did not provide a proper re-imbursement right: if storage devices are not used for private copying, there must be an "effective" mechanism that allows for re-imbursement of the levy. Austria's system didn't. Secondly, there was no distinction between lawful and unlawful sources for private copying, something else that was required by the InfoSoc Directive. Finally, half of the monies raised by copyright levies were distributed to "social and cultural institutions", rather than to the artists, and that fell foul of the CJEU ruling too.

As the IPKat points out, it is likely that all of these issues affect Germany's copyright levy system, too, so we can probably expect a legal challenge there to be successful. And there's a delightful sting in the tail of the blog post:

The ruling of the Commercial Court of course also raises the question whether dealers, manufacturers or importers may have a claim for repayment of the levies on the principles of unfair enrichment. If such requests would to be made, they might well jeopardise the very existence of Austro Mechana.

Presumably the same would be true in Germany, which would leave the central collecting organization there, the ZPÜ (the Zentralstelle für private Überspielungsrechte) exposed as well. One of the founders of the ZPÜ, and presumably still one of its most important members, is GEMA, well known to Techdirt readers. The possibility that a future court case might force GEMA to pay back a good chunk of all the copyright levies it has received is, of course, a tantalizing prospect.

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Filed Under: austria, cjeu, copyright, copyright levies, eu, eucj, european court of justice

Important Judgment From Top EU Court Confirms Copyright Levies Are An Unworkable Mess

from the time-to-put-it-out-of-its-misery dept

Europe's use of the copyright levy system, effectively a tax on blank media that is supposed to compensate copyright holders for an alleged "loss" from copies made for personal use, has produced a whole string of messy situations -- for example, in the Netherlands, Portugal, Spain and the UK. These have come about as governments have tried reconcile an antiquated system originally designed for cassette tapes with modern digital technologies. The EU's highest court, the Court of Justice of the European Union (CJEU), has just handed down an important judgment in this area. The IP Kat blog explains the background:

Finland-based Nokia sold mobile phones to business customers in Denmark, who resold them to both individuals and business customers.

Whilst all Nokia phones have an internal memory (i.e. the storage device is non-detachable), certain models have an additional memory card (i.e. which is detachable).

On these detachable memory cards, users could store data (e.g. contact details, photographs) as well as files containing audiovisual works (e.g. music, films which may have been downloaded from the web or from DVDs, CDs, MP3 players etc).

In this regard, these memory cards are "multifunctional media" with the capacity to be used for private copying (in relation to the audiovisual files), as well as for uses unrelated to private copying (e.g. storing personal data).

Nokia disputed its liability to pay a private copying levy to the Danish collecting society, Copydan Båndkopi, in relation to the detachable memory cards that were imported into Denmark for use in its mobile phones between 2004 and 2009.

That gives an idea of just how complicated the issues raised by copyright levies have become. The IP Kat blog goes on to analyze the CJEU's reply to six questions that were referred to it by a court in Denmark, seeking clarification. The answers are as complicated as the issues, so you may prefer this alternative summary from Hogan Lovells's Global Media and Communications Watch blog:

The CJEU takes the view that, in principle, it is irrelevant whether a medium is unifunctional or multifunctional. Copyright levies may be imposed, if at least one function allows for private copying, even if this function is of ancillary nature. However, the primary function of the carrier is to be taken into account whilst assessing what might be a fair compensation. Member States may further distinguish between storage media which is detachable (like in Nokia's case) and media which is non-detachably integrated in a device. However, the differentiation must be reasonably justified.

Actually, it's not as simple as that, because there's another issue that needs to be addressed:

A particular problem exists where storage media is sold to business customers without a clear picture of whether those are sold on to private individuals only or also to business customers. The latter do not fall under the private copying exemption and hence the compensation requirement does not apply (see: CJEU, Case Ref.: C-467/08). Manufacturers and importers may also be required to pay copyright levies. However, this is only justified if practical difficulties ask for such regulation. Those may arise from, for instance, the impossibility of or at least practical severity associated with identifying the final users of the relevant medium. Further, adequate exemption schemes must be in place allowing manufacturers and importers to prove that Article 5(2)(b) of Directive 2001/29 and thereby the private copying exception does not apply to their sales.

Even that is not the end of it: the blog post goes on to discuss some of the other detailed issues raised by the CJEU's ruling. However, it is relatively simple to summarize the entire judgment in a single sentence: that the EU's copyright levies are a complex, unworkable mess, and should be abolished completely across the whole of Europe, as has already happened in some of the more sensible EU Member States.

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Filed Under: cjeu, copyright, copyright levies, court of justice, denmark, eu, eucj, personal use, you must be a pirate
Companies: nokia

Finland Abolishes Copyright Levies On Digital Devices

from the but-not-dead-yet dept

As we've noted before, copyright levies -- effectively a tax on blank storage media -- are becoming ever-more anachronistic and unworkable. So it's good to hear about a country doing the sensible thing and getting rid of them entirely (pdf):

Finland is the latest EU member state to scrap levies on digital devices, following similar moves in Spain and the UK. The Finnish Parliament on Wednesday voted overwhelmingly to replace a levies system that has existed since 1984 with the creation of a government fund designed to compensate artists for private copying of content such as music and movies.

That's from a press release issued by the lobby group Digital Europe, which describes itself as follows:

Digital Europe represents the digital technology industry in Europe. Our members include some of the world's largest IT, telecoms and consumer electronics companies and national associations from every part of Europe. Digital Europe wants European businesses and citizens to benefit fully from digital technologies and for Europe to grow, attract and sustain the world's best digital technology companies.

Given its background, it's hardly surprising that Digital Europe hopes that Finland's decision is part of a wider move:

Pressure for EU reform is now greater than ever. The UK earlier this year passed a law that legalized private copying by individuals without any requirement for additional compensation to artists. Two years ago Spain replaced levies with a government compensation fund similar to the one adopted in Finland this week.

Although it's true that progress has been made, it's also worth noting that the usual copyright dinosaurs are fighting back, and that the final outcome is by no means clear. In the UK, the music industry has said that it may try to challenge the private copying exception in the courts. In Spain, legal action by collecting societies has resulted in two key questions about copyright levies being sent to the European Union Court of Justice, and its judgment on the case is likely to have important implications for such levies throughout the EU.

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Filed Under: copyright, copyright levies, digital devices, finland

French Report Says: Kill Hadopi, But Let Its Legacy Live On

from the some-good,-some-bad dept

When Francois Hollande was running for President of France, he said that he would repeal Hadopi, the three strikes law and agency that enforces it, rolling back this effort which the entertainment industry had celebrated (France was the first to propose and implement such a plan). After elected, his culture minister, Aurelie Filippetti made it clear that she was not impressed by Hadopi and ordered a study of the effectiveness of the effort, led by Pierre Lescure -- a former entertainment industry executive -- to look at possible proposals. His report came out Monday morning and it suggests killing off Hadopi, but is still chock full of other bad ideas. Hadopi the agency would be done away with, but another agency would pick up some of the responsibilities, it's just that they'd greatly decrease the "punishment" aspect. Rather than losing internet access and having to pay up to €1,500, you'd keep your access and fines would be topped at €60.

But, on top of that, there are other policies that Lescure suggests that seem pretty bad as well, including extending the copyright levy (the "you must be a criminal tax") to cover smartphones, tablets and any other connected device. He also suggested turning search engines and ad networks into copyright cops, asking them to cut off those deemed to be involved in large scale infringement. We've discussed in the past why this is an idea that won't work and will likely stifle innovation while locking in some of the more dominant players (like Google), but governments do seem to like it.

The report does have a few good things to it: including getting publishers to finally release their content as ebooks, allowing more non-commercial remixing and such. In the end, it's a mixed bag, or as the French publication Le Point noted: l'Hadopi est morte, vive L'Hadopi (Hadopi is dead, long live Hadopi).

Of course, this is also just a report, with no binding aspect to it. The government may choose to ignore the whole thing or to pick and choose some parts to implement. Either way, it does make the key point that, for all the money the French taxpayers have put towards Hadopi, it's been a near total waste: "While illicit file sharing has dropped, legal paid services have not benefited as was hoped." It all goes back to the same point we've argued for years. The industry keeps thinking their goal is to get rid of piracy, when we've been saying that the real goal is to figure out ways to make more revenue. They -- incorrectly -- seem to feel that the first leads to the second, even as there is almost no proof to support that conjecture in the long term.

Filed Under: aurelie filippetti, copyright, copyright levies, follow the money, france, francois hollande, hadopi, pierre lescure

Portuguese Government Capitulates On Copyright Levies, Despite Lack Of Support From Public And Artists

from the backbone,-what's-that? dept

Back in February last year, Techdirt wrote about the rather pathetic attempts of the Portuguese Society of Authors (SPA) to drum up some support among its members for a new copyright levy on storage devices in the face of a public outcry at the extra costs this would impose on consumer and professional products. This was a dismal failure, and so it's probably no surprise that the Portuguese government didn't move forward with the original plans.

Via Nelson Cruz, we learn that there have been some further developments in this area recently. On January 4, SPA suddenly announced that it was taking the Portuguese government to court for failing to bring in the new copyright levy (original in Portuguese.) And then, just as unexpectedly, the next day it said that it was suspending the legal action. The reason for this change of heart was the intervention of Portugal's Secretary of State for Culture, who got in touch with the president of SPA, and promised to place the copyright levy law before parliament by the end of the month.

It's hard to see why the Portuguese government is capitulating like this when there is so little support for the new law, both among the Portuguese electorate and even among artists, as our previous story reported. That lack of spine is particularly regrettable given the following statement from SPA (original in Portuguese):

the issue of private copying is resolved in all EU countries, except in Portugal, a situation that causes losses of millions of euros to the authors.

This gives the impression that "all" EU countries have copyright levies, but that's certainly not the case. As detailed research carried out in 2011 reported, five out of the 27 EU members states do not have copyright levies -- UK, Ireland, Malta, Cyprus and Luxembourg. Moreover, when the Hargreaves Review recommended that the UK government bring in a limited private copying exception without compensation, it explained its reasoning as follows:

As right holders are well aware of consumers' behaviour in this respect [of making private copies], our view is that the benefit of being able to do this is already factored into the price that right holders are charging. A limited private copying exception which corresponds to the expectations of buyers and sellers of copyright content, and is therefore already priced into the purchase, will by definition not entail a loss for right holders.

So not only are copyright levies not universal in Europe, but they are unnecessary, since they can be replaced by ordinary pricing mechanisms that are fairer to users and artists. It's a pity the Portuguese government doesn't seem to realize that rather than meekly acquiescing to the demands of SPA, a far better option would be to abolish copyright levies altogether.

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Filed Under: copyright, copyright levies, portugal

Booming Nigeria To Adopt One Of The West's Dying Ideas: 'You Must Be A Criminal' Copyright Levies

from the don't-follow-us,-we're-lost dept

Recently, we noted that copyright levies in Europe are looking more and more anachronistic for the high-tech world. It seems that Nigeria has not noticed this, since Afro-IP points out to us that the Copyright (Levy of Materials) Order 2012 has been approved there, which will bring them in for a very wide range of goods:

The Director-General who disclosed this in Abuja, indicated that the materials regulated by the levy imposed by the new Copyright Order include storage media like Audio Cassettes, Mini Discs, CDs, DVDs, Blu-ray, SD Memory Cards, Video Cassettes, USB Flash drives, I-Pods and Photocopying Paper. Others are equipment and devices like Photocopying Machines, MP3 Players, Digital Juke box, Mobile Phones, CD recorders, DVD Recorders, Blu Ray Recorders, Computer External Hard Drives, Analogue Audio Recorders, Analogue Video Recorders, Personal Computers, Printing Plates, Printers/Printing Machines, Radio/TV Sets enabling recording, Camcorders and Decoders/Signal Receivers.

The money is going to the usual places:

"The Commission is expected to disburse the funds to beneficiaries who are essentially approved collective management organisations (CMOs) subject to retaining 10 per cent of the collected levy for administrative purposes of agencies that would be involved in the implementation of the scheme", he stated, adding, "The Order also permits the Commission to retain 20 per cent of the fund for anti-piracy purposes; and 10 per cent for promotion of creativity", he stated.

It's particularly sad to see that exactly double the amount will be spent on "anti-piracy purposes" compared to the "promotion of creativity." That not only seems precisely the wrong way round but is regrettable in a country where it was piracy that helped build the hugely-successful local film industry.

It's obviously great to see African countries like Nigeria develop as an increasingly important player in the world of technology, but it's depressing to see its politicians repeating the mistakes of the West in this area. Imposing retrogressive levies do little to help local artists, but are likely to hinder the development of local hardware industries because of the extra costs they impose on purchasers.

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Filed Under: copyright levies, nigeria, piracy, taxes