EU Member States whose copyright laws include an exception permitting the making of copies of copyright works for private, non-commercial use are under an obligation to provide “fair compensation” to copyright owners. A common mechanism is to apply a levy to the cost of devices which can be used to make copies, which is then paid to the copyright holders. But the exact application of these levies has been the subject of a string of challenges, several of which have been reviewed by the Court of Justice of the European Union (CJEU).
A recent Belgian case addresses several key questions on the validity of the Belgian system, which will have an impact across other Member States.
What was the case about?
On 12 November 2015 CJEU issued its preliminary ruling in Hewlett-Packard Belgium SPRL (HP) v Reprobel SCRL (Reprobel) (Case C‑572/13), regarding the legality of the Belgian reprography system.
Reprobel is the Belgian copyright management company responsible for collecting and distributing sums corresponding to fair compensation under the reprography copyright exception. It sought to recover from HP sums corresponding to the fair compensation that it claimed was owed under the exceptions to the reproduction right.
HP imports reprographic devices for both household and business use into Belgium. This includes multifunctional devices, which (importantly for this case) allow the printing of documents at different speeds, depending on the print quality required.
Reprobel attempted to impose a levy of €49.20 per printer on HP. HP disputed the size of the levy and initiated legal proceedings before the Brussels Court of First Instance. It sought confirmation that no remuneration was owed, or alternatively, that a lower amount of remuneration it had already paid had discharged the fair compensation obligation under the Belgian legislation. Reprobel countersued for the levy it claimed was owed, resulting in the joining of the two sets of proceedings, which were ultimately referred to the CJEU for a preliminary ruling.
What did the CJEU decide?
The CJEU ruled on a number of preliminary questions:
1. The meaning of “fair compensation” (in article 5(2)(a) and article 5(2)(b) of Directive 2001/29 (the Information Society Directive)): “will the interpretation differ depending on whether the reproduction is carried out by any user or by a natural person for private use and for ends that are neither directly nor indirectly commercial?”
YES. The CJEU first stressed that the concept of “fair compensation” is an “autonomous concept of EU law which must therefore be interpreted uniformly in all the Member States that have introduced a private copying exception”.
The CJEU confirmed that a distinction must be made according to the user of the multifunctional device. After all, the amount of fair compensation owed must be calculated based on the criterion of actual harm suffered by the author from the reproduction of his protected work without his authorisation.
In this respect, the harm suffered by an author in cases where reproductions are made by natural persons, for private use and ends which are neither directly nor indirectly commercial, will differ from the harm inflicted by reproductions by other types of users.
2. Fair compensation for publishers: “Can Member States allocate part of the fair compensation – owed to rightholders – to the publishers of works created by authors, whereby the publishers are not obligated to ensure that the authors benefit, even indirectly, from some of the compensation of which they have been deprived?”
NO. The CJEU notes that publishers are not listed as reproduction rightholders in Article 2 of the Information Society Directive. From this, as well as from the above criterion of actual harm suffered by rightholders as a result of the reproduction of their protected work without their authorisation, the CJEU inferred that publishers do not suffer harm for the purposes of the reprography and the private copying exceptions.
As a result “they cannot therefore receive compensation under those exceptions when such receipt would have the result of depriving reproduction rightholders of all or part of the fair compensation to which they are entitled”.
3. Fair compensation for copying sheet music and for counterfeit reproductions: “Does the Information Society Directive preclude national legislation, which introduces an undifferentiated system for recovering fair compensation, which also covers the copying of sheet music and counterfeit reproductions made from an unlawful source?”
YES. The CJEU confirmed that a special regime exists for sheet music, “prohibiting in principle the reproduction thereof without rightholders’ authorisation”. Sheet music is excluded from the scope of the reprography exception and can therefore not be taken into account when calculating “fair compensation”.
The CJEU referred to previous case law (ACI Adam and Others v Stichting de Thuiskopie ) in which it decided that the private copying exception does not cover private copies made from an unlawful source. To decide otherwise, would,according to the CJEU, “encourage the circulation of counterfeited or pirated works, thus inevitably reducing the volume of sales or of other lawful transactions relating to the protected works, with the result that a normal exploitation of those works would be adversely affected.”
The CJEU concluded that these arguments, used in the context of the private copying exception, were fully transposable to the reprography exception.
4. Combined remuneration system: “Does the Information Society Directive preclude national legislation which combines, in order to finance the fair compensation granted to rightholders, two forms of remuneration, namely, first, lump-sum remuneration paid prior to the reproduction operation by the manufacturer, importer or intra-Community acquirer of devices enabling protected works to be copied, at the time when such devices are put into circulation on national territory, the amount of which is calculated solely by reference to the speed at which such devices are capable of producing copies, and, second, proportional remuneration, recovered after the reproduction operation, determined solely by means of a unit price multiplied by the number of copies produced, which also varies depending on whether or not the person liable for payment has cooperated in the recovery of that payment, which, in principle, is to be made by natural or legal persons who make copies of works?”
YES. The CJEU ruled that the Information Society Directive precludes combined remuneration systems in the form existing in Belgium.
That is, a system which combines both:
- a lump-sum remuneration, paid prior to the reproduction operation by the manufacturer, importer or intra-Community acquirer of devices; and
- a proportional remuneration, paid after that reproduction operation and determined solely by means of a unit price multiplied by the number of copies produced, payable by the person(s) who make those copies.
The CJEU ruled that such a system is precluded insofar as:
- the lump-sum remuneration paid in advance is calculated solely by reference to the speed at which the device concerned is capable of producing copies;
- the proportional remuneration recovered after the fact varies according to whether or not the person liable for payment has cooperated in the recovery of that remuneration;
- the combined system, taken as a whole, does not include mechanisms, in particular for reimbursement, which allow the complementary application of the criterion of actual harm suffered and the criterion of harm established as a lump sum in respect of different categories of users.
In other words, the Belgian reprography system, in its current form, could lead to overcompensation, without the possibility to obtain a reimbursement.
What are the implications for businesses?
The decision provides guidance as to how Member States must go about setting up a fair compensation system in compliance with EU law. However, it remains to be seen how the Brussels Court of Appeal will capture this in its decision in the proceedings between HP and Reprobel, not to mention what action the Belgian authorities (such as Reprobel and the Belgian government) will take as a result of the CJEU’s ruling.
It would be premature and unwise to cease reprography payments in Belgium altogether. After all, the CJEU confirmed the need for fair compensation for rightholders, but determined that the Belgian reprography system does not live up to European standards. Belgium must re-do its homework and come up with a system that provides fair compensation to rightholders, without double-dipping in the pockets of companies such as HP and end consumers making use of multifunctional devices.
With the issue of fair and equitable compensation proving controversial in several other EU Member States, the legal ramifications of this case will extend well beyond Belgium. Businesses in other Member States with similar systems may wish to take advice on whether this might affect them.