Does the private copy levy include remuneration for illicit copies?

03 December 2008

Julie Ruelle

The French supreme administrative court has issued a decision on whether a distinction should be made under the French private copy levy between legally copied and illegally copied files.

On 11 July 2008, the French Conseil d’Etat (supreme administrative court) issued a decision overruling the French Private Copy Commission’s decision of 20 July 2006 that private copy remuneration had to be paid with respect to personal stereos and personal recording devices.  Additionally, this decision changed the remuneration that had to be paid for recordable DVDs by ruling, as a principle, that “private copy remuneration must only take into account legal copies”.

This decision is significant as it is the first time that a decision of the French Private Copy Commission has been overruled.  It clarifies the legal issue concerning the source of private copy (whether legal or illegal) and is also significant as it occurs at a time when the French government is thinking about a potential revision of the Commission’s functions.

1. The French scope of the private copy remuneration

The private copy remuneration principle was introduced in France on 3 July 1985 in an attempt to mitigate the financial loss that authors suffer because of the increase in private copying of works and the difficulty with controlling such a practice.

Initially Article L. 311-1 of the French Intellectual Property Code granted authors and performers a right to remuneration if their works were on analogue recordings and videos. Since 2001, this principle has been implemented at a European Level and applies also to digital recording media:

“The authors and performers of works fixed on phonograms or videograms and the producers of such phonograms or videograms shall be entitled to remuneration for the reproduction of those works (…).

The authors and publishers of works fixed on any other medium are also entitled to remuneration for the reproduction of those works (…), on a digital recording medium.” (Article L. 311-1)

However, although this legislation sets out the principle, it does not specify the media to which the principle applies, nor the amount of the remuneration. It is the role of the French Private Copy Commission (instituted by Article L. 311-5 of the French Intellectual Property Code) to determine the level of remuneration and how it is to be paid.  The remuneration will depend on the type of support and the duration of the recording.  The fee shall also take into account how widely the technological measures are used and their impact on the private copy exception. However in practice, the Commission takes into consideration factors other than those required by the law, such as the nominal recording capacity of the media or users’ practices concerning the private copy. The Commission applies a “copy rate” in order to assess the level of payment due.

From the ten decisions given so far by the French Private Copy Commission, it is clear that the Commission interprets the law broadly and applies the private copy remuneration to a wide range of media (analogue and digital media, internal or external media, with small or big storage capacity, irrespective of whether the media is dedicated to copying works). In some cases also the calculation of the remuneration lacks transparency.

All the Commission’s decisions have been challenged by media manufacturers’ associations but until the Conseil d’Etat’s decision of 11 July none had been overruled.

2. The Conseil d’Etat decision of 11 July 2008

In its decision of 20 July 2006, the French Copy Commission applied private copy remuneration to hard disks embedded in personal stereos or personal recording devices dedicated to the digital recording of recordings and videos. One manufacturing association, SIMAVELEC (the Syndicat des Industries de Matériels Audiovisuels Electroniques), disputed the validity of the decision by putting forward several arguments, mainly concerning the nature and purpose of the private copy remunerations.

2.1 The nature of the private copy remuneration

First, SIMAVELEC claimed that the private copy remuneration was a tax and therefore only legislation (not the Commission) could have established such a levy.  However, despite the fact that this argument had been raised by academic authors, this theory is generally not accepted. Therefore, the court did not accept this argument.

Secondly, SIMAVELEC considered that the Commission’s decision violated the European Copyright Directive since their decision as to suitable payments was not based on the damage suffered by beneficiaries (i.e. the authors of the works). The Conseil d’Etat dismissed this argument.  It considered that the sole purpose of the private copy remuneration was to compensate authors, performers and producers, for the loss of revenue caused by the legal use of works fixed on recordings and videos for private purposes without their authorisation.

2.2 The purpose of the private copy remuneration

SIMAVELEC argued that, by taking into account the negative consequences of illegal copies/downloading videos and recordings, when calculating the private copy remuneration the Private Copy Commission violated Article L. 311-1 of the French Intellectual Property Code.  SIMAVELEC claimed that private copy remuneration should only compensate for loss of rights due to legal use of private copy, not illegal use.

The question of whether the private copy exception assumes that the source must be legal has been discussed several times before the French courts. This argument was also raised by several French consumer associations in claims against the French Private Copy Commission’s decision of 9 July 2007, which applied the private copy remuneration to USB keys, external hard disks and memory cards (a decision on this is still pending). The associations’ argument is that although peer-to-peer practices are not legalised in France, taking an opposite position would amount to a “double-penalty” for French consumers who would be liable for both piracy and infringement and would pay the private copy remuneration.

However, until this Conseil d’Etat decision, no Supreme French Court had come to a clear decision on this issue (although the Grenoble Court of Appeal had applied a similar conclusion.)

The Commissaire du Gouvernement (a member of the Conseil d’Etat who advises on cases before the court) considered that applying the private copy remuneration to illegal downloading would create a “global licence”, an idea which has been rejected during parliamentary debates on authors' rights. The Commissaire du Gouvernement considered that “reintroducing the global licence through the private copy exception would not comply with the government and legislator’s intent”.

As a result, and in compliance with the opinion of the Commissaire du Gouvernement, the Conseil d’Etat held that private copy remuneration should only take legal copies made in compliance with the law into account, and especially those copies made from a legally purchased source.

The Conseil d’Etat considered that the decision of the French Private Copy Commission violated French intellectual property law.  This is because the Commission had taken into account the recording capacity and the purpose of these media.  These media could be used for both legal and illegal copying, however the Commission had not determined for every media how much use was legal use, and had therefore taken into account damages resulting from illegal copies.

The Conseil d’Etat overruled the decision of 20 July 2006. It refused to give retroactive effect to its decision. Instead, the Conseil d’Etat decided that the cancellation of the charge will take effect six months after the decision is notified to the Cultural Affairs Secretary.