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.
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:
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.
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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