Paying copyright levies for illegal copies?

01 July 2008

Martine Chin-Oldenziel

Various importers and producers of products that are subject to Dutch copyright levies have sued the Dutch collecting society (“Foundation of Home copying, “Stichting de Thuiskopie”) and the foundation that is in charge of determining the amount of copyright levies (“SONT”). Interestingly, the Court ruled that private reproductions of illegal copying are illegal (e.g. unauthorised downloading). Nevertheless; the court did not see any reason why private reproductions of illegal copies cannot be included in establishing the amount of copyright levies.

Introduction

In The Netherlands only blank media are currently subject to copyright levies.

SONT is the society that has to determine the amount of copyright levies. The board of SONT consists of representatives of the Dutch collecting society and representatives of the Vereniging van Fabrikanten, Importeurs en Agenten op Radiogebied (Foundation of Producers, Importers and Agents in the area of radio (“FIAR”) ).

The Dutch collecting society is the Foundation of Home copying (“Stichting de Thuiskopie”).

Because the board of SONT could not agree on the amount of the copyright levies, the chairman of SONT has, in accordance with the applicable legislation, determined them by decree.

Because of dissatisfaction with the determined amount, producers and importers of blank media have sued Stichting de Thuiskopie and the foundation that is in charge, to establish the amount of the copyright levies (“SONT”).

Legislative framework

At EU-level, a Copyright Directive (Directive 2001/29/EC) has been adopted which provides that a reasonable compensation has to be paid for copying. However, the products that are subject to copyright levies, as well as the amount, are not harmonised at EU-level.

The Dutch Copyright Act 1912 stipulates that a reasonable compensation has to be paid for reproducing works of literature, science or art, unless those works are destined to perform, display or reproduce a work, provided that this reproducing is without commercial purpose or is exclusively used for own practice, study or use by natural persons.

In The Netherlands, currently only blank media are subject to copyright levies.

Claims of producers and importers

The producers and importers requested the Court of The Hague (“Court”) to establish various circumstances that have to be taken into consideration for establishing the amount of copyright levies.

Furthermore, they requested the Court primarily to determine that the amount of copyright levies is subject to a tariff of 0%.

Alternatively, the producers and importers requested the Court to determine the amount of copyright levies in good fairness while taking into account the various described circumstances as being indicated by the producers and importers.

More alternatively, the producers and importers requested the Court to order SONT and the Dutch collecting society to enter into negotiations in order to establish the amount of copyright levies taking into account the circumstances mentioned by the producers and importers.

Amount of copyright levies for blank media zero?

The Court ruled it cannot determine the amount of copyright levies. The Copyright Act 1912 has stipulated that this is the exclusive competence of SONT. Therefore, the Court dismissed the claim of the producers and importers to establish the amount of copyright levies for blank media at 0%.

The producers and importers also requested the Court to declare that DVD+RWs are subject to a zero copyright levy, because of the technical protective services that are available in those media.

The Court dismissed this claim as well, stating that it has no competence to determine the amount of the copyright levies.

Obligation to enter into negotiations

The Court considered that there was no reason to assume that Stichting de Thuiskopie and SONT were not prepared to enter into negotiations in order to establish the amount of copyright levies taking into account the starting points as agreed between the parties involved.

Therefore, the Court also dismissed the claim of the producers and importers to order SONT and Stichting de Thuiskopie to enter into negotiations with the agreed principles.

Principles of establishing the amount of copyright levies

The importers and producers have requested the Court to declare establish 21 circumstances that have to be taken into account when determining the amount of copyright levies.

The Court ruled that parties have agreed on the majority of the circumstances with the exception of five circumstances. Therefore, the Court dismissed those claims related to circumstances on which the parties have already agreed upon.

Please find below, the circumstances discussed by the Court.

Objects that are destined to perform, display or reproduce a work

The producers and importers requested the Court to declare that for determining the amount of copyright levies, it has to be taken into account that only compensation has to be paid for objects that are destined to perform, display or reproduce a work.

The producers and importers, as well as the Dutch collecting society and SONT, differ as to the understanding of “destination”. The producers and importers argue that devices such as MP3-players and hard disks do not fall within the scope of products subject to copyright levies, whereas the Dutch collecting society and SONT argue the opposite.

Because the claim concerns a different question than the question at stake between the parties, the Court ruled that the plaintiffs had no interest in the claim and therefore the Court did not decide on this point.

Paying copyright levies for illegal copies?

The producers and importers have requested the Court to declare that copyright levies should be imposed regardless of whether the damage to the producer’s and importer’s interests is a consequence of illegal copying from an illegal source.

In an earlier case, it has been left aside whether private copying of illegal copies is a copyright infringement.

The Court ruled that making a private copy of illegal material is an illegal action and is as such not covered by Article 16c of the Copyright Act 1912.

The Court, however, ruled that without further motivation by the producers and importers, it does not see why no account may be made for private copying of illegal material for establishing the amount of copyright levies. This means that for determining the tariff of copyright levies for private copies illegal copies (e.g. unauthorised downloading) can be taken into account.

Copying acts which are permitted by the right holder

The producers and importers argue that for determining the amount of copyright levies, no account has to be taken of copying acts which are permitted by the right holder.

The Court ruled that copyright levies have to be paid as a compensation for loss by the right holder caused by the copying act. Compensation is therefore not an issue if the right holder has explicitly or implicitly agreed on the copying act. The Court therefore allowed this claim.

Copying acts where the damage or the loss is minimal for the right holder, such as copying for “time-shifting-purposes” and “porting”

The producers and importers argue that for determining the amount of copyright levies no account has to be taken of copying acts where the damage or the loss is minimal for the right holder, such as copying for “time-shifting-purposes” and “porting”. Time-shifting making is copying a broadcast in order to be able to watch it at a later time. Porting is copying legal material for use on another device.

The Court, however, ruled that EU Member States are free to make use of the possibility to stipulate obligation for payment for “minimal” copying acts. The Dutch legislator distinguishes between “minimal” copying acts, for which no compensation is required and “other” copying acts. However the claim of the producers and importers relates to “other copying acts” as stipulated in Article 16c of the Copyright Act 1912 and for this Article the standpoint of the producers and importers does not apply.

Availability of protection in order to prevent private copying, availability of DRM-technologies

Article 5, paragraph 2, sub b of the Copyright Directive stipulates that for establishing the amount of copyright levies one has to take into account the application of technical facilities which prevent private copying. According to the importers and producers, what matters is not whether the facilities are actually used, but only whether those techniques are available.

The Court ruled that parties already agreed on this issue, because Stichting de Thuiskopie is of the opinion that for the question whether technical services are available the facilities must be economically available.

Imbalance of the average price of blank media and copyright levies and amount of copyright levies in other EU Member States

The producers and importers argue that in order to determine the amount of the copyright levies, one has to take into account the imbalance between the price of blank media and the copyright levy as well as the amount of copyright levies in other EU Member States.

The Court dismissed this claim, because the Copyright Directive did not foresee in harmonisation. Furthermore, the copyright levy is not based on the value of the media, but on the value of the copying works.

Conclusion

The judgment is interesting, because the Court ruled that private copying of illegal copies is illegal. However, this does not mean that for determining the amount of the copyright levies concerned private copies of illegal copies cannot be taken into account.

Furthermore, the importers and producers did not succeed in obtaining a zero-levy on blank media nor in obtaining a decision that equipment, as such, is not subject to copyright levies.

The Court has ruled that for determining the amount of copyright levies it has to be taken into account whether the right holder has implicitly or explicitly given permission for the copying act.

The producers and importers as well as the Dutch collecting society and SONT will have to sit down at the negotiation table again.

The fact remains that there are still huge differences as to the amount of copyright levies between the EU Members. However, this difference will not change the Dutch situation in so far as the EU does not harmonise the amounts and products concerned, which is for example the case for Value Added Tax.