What are copyright levies?
Copyright levies are systems that impose fees on the manufacture, import and/or sale of devices and media which can be used to reproduce and/or store third party copyright works, aiming to compensate rightholders for the licence revenues they lose due to the fact that end users are allowed to undertake certain defined permitted acts of copying without the right holders' consent. In the digital area, only private end-users are usually entitled to carry out the statutory permitted acts.
At present, 21 out of the 27 Member States of the European Union ("EU") provide for private copying and similar end-user copying exceptions accompanied by levy schemes. The scope of the exceptions, the level of the levies and the products to which levies will pertain vary materially from Member State to Member State (please click here to see our November 2011 Copyright Levy Newsletter).
However, due to the lack of harmonisation and the major changes caused by digitisation of copyright works, copyright levy schemes have come under increasing attack, and copyright levies have become a major legal, economical and political issue. In particular, the ground breaking "Padawan" judgment of the European Court of Justice ("ECJ") on 21 October 2010 is currently having a major impact on many pending cases and has triggered discussions as to whether fundamental changes to the present copyright levy regimes in Europe are needed. For more detailed information on the "Padawan" judgment, please click here to see the Bird & Bird Newsletter "European Court of Justice questions legitimacy of existing copyright levy regimes" dated 22 October 2010.
The first Member States to react to this changing situation was Spain, which has abolished its copyright levy scheme. Further changes to copyright levy schemes all over Europe are likely to follow. In this Newsflash, we summarise the development in Spain as well as the status quo of copyright levy systems in Belgium, Czech Republic, Finland, France, Germany, Hungary, Italy, The Netherlands, Poland, Slovakia, Sweden and United Kingdom.
Abolition of levies in Spain
1. The Spanish private copying levy
Article 25 of the Spanish Copyright Act1 provided for fair compensation for rightholders on the grounds of lost profit derived arising the private copying exception ("private copying levy" or "compensación equitativa por copia privada").
Because permitted copies are made in private, it was difficult (and that especially in the digital era) to ascertain the amount of this compensation. Therefore, traditionally it was considered that the best way to impose and collect levies was to impose them on certain equipment and media, whether analogue or digital, and to collect the levies from the manufacturers (insofar as they distribute their products in Spain) or importers of such equipment and media. In addition, in accordance with the Spanish legislation, the subsequent distributors, wholesalers, retailers, and all other individuals (or entities) participating in the sales chain were all jointly and severally liable for payment of the levies. Collecting societies were given the role of creditors on behalf of the copyright owners.
2. The Padawan case: is the private copying levy fair in each and any instance?
On 21 October 2010 the ECJ (case C-467/08) declared that the indiscriminate app
lication of the private copying levy, in particular with respect to digital reproduction equipment and media not made available to private users and clearly reserved for uses other than private copying, was incompatible with Directive 2001/29. The judgment followed a prejudicial question of a the Barcelona Court of Appeals which dismissed on 2 March 2011 the claim of a collecting entity (SGAE) against a retailer named Padawan, S.L. The Judge, in view of the ECJ ruling, considered that the private copying could not be assumed in respect to products sold to entities and individuals for business use. According to the Court of Appeals, "the imposition of the levy is only justified on digital media sold or made available to private persons, and not for business purposes" (N°89/2011, 2 March 2011).
For more detailed information on the Padawan judgment, please see the Bird & Bird's Newsflash "European Court of Justice questions legitimacy of existing copyright levy regimes" dated 22 October 2010 and our Copyright Levy Newsletter of November 2011.
3. The abolition of the current private copying levy and the new system
On 1 January 2012 the Royal Decree-act 20/2011 regarding "urgent measures on budget, tax and finance issues to overcome the public deficit" (passed by the new Government on 30 December 2011) came into force. The 10th Additional Disposition abolishes private copying levies, although the right to receive equitable remuneration for private copying remains in force.
In the coming months, the Government will pass a Regulation specifying the procedure to follow for the copyright owners to obtain an equitable compensation in view of the estimated damages they suffer due to the private copies privilege. The amount to apply will be determined by the Government and deducted from the National State Budget.
At present, it is unclear how the Spanish state will finance the equitable compensation, e.g. whether it will introduce a new tax. However, in light of the recent decisions of the Spanish Courts and ECJ in the Padawan case, it is assumed that the damage is not caused by equipment, media and supporting material purchased for business purposes so that no equitable compensation should be generated from the sale or use of such products.
European Overview
[1] passed by Royal Legislative Decree 1/1996 (as amended by Act 23/2006 and harmonized with EU Directives and approximated to other members' legislation).
Contact Us
Dr. Fabian Niemann
Tel: + 49 (0) 69 74222 6000
fabian.niemann@twobirds.com
Fidel Porcuna
Tel: +34 91 790 6000
fidel.porcuna@twobirds.com
Alternatively, you may contact any other member of our Copyright Levy Task Force.