UK: Copyright - private copying exception falls

17 July 2015

Phil Sherrell

Following the recent judicial review of the introduction of the private copying exception into English law in October 2014, the High Court ruled this morning that the exception should be quashed. The decision only has prospective effect, so that copies made under the exception to date have not (so far) been ruled to be infringements.

Background

Three music industry trade bodies (BASCA, the Musician's Union and UK Music) launched a judicial review late last year of the UK government's decision to introduce a private copying exception into English law.  Various grounds of challenge were raised, focussing primarily on the absence of any mechanism to compensate rightsholders. The Information Society Directive permits member states to introduce such exceptions, but requires them to be combined with a compensation mechanism for rightsholders, unless either no or de minimis harm is caused to their interests. 

In an initial decision on 19 June 2015, the High Court ruled that the exception had been introduced unlawfully. It found that none of the evidence relied on by the government actually supported its conclusion that no or de minimis harm would be caused, and, critically, at no point had the government even defined what de minimis meant. The Court left open, for further argument, questions as to whether (and if so how) it should revoke the exception and whether a reference to the CJEU was required. Those questions were answered in a ruling this morning.

No CJEU reference and the regulations quashed

On the question of a CJEU reference, the parties had proposed conflicting methodologies for how the government should have assessed harm. The government applied a 'lost sales' test, under which it only had to take account of sales which rightsholders would have made prior to October 2014, which would now be lost as a result of consumers now relying on the exception. The music industry Claimants, however, proposed a 'licensing test', under which every copy made in reliance on the exception should be accorded some value, on the basis that, prior to the exception, it would have required a licence (even if in practice there was little or no enforcement against private copying by consumers). 

In June, the High Court ruled that the government was within its margin of discretion to apply the lost sales test, but questioned whether a CJEU reference should nonetheless be made as to whether that means of assessment complied with the Information Society Directive. Today the Court has decided not to make a reference, primarily because it might prove to be unnecessary. The government has not yet announced whether or not it intends to reintroduce a private copying exception, and if it decided not to do so, for example, the question of how to define 'harm' would not require resolution. The parties have been granted permission to return to Court to seek a reference at a later point, depending on what the government does next.

The most significant part of the decision today is the quashing of the private copying exception. This means that, with immediate effect, the UK is returned to the position which applied before October 2014, namely that copies of copyright works made for personal use will be infringements (unless otherwise licensed). The Judge refused, however, requests to (1) quash the regulation with retrospective effect and (2) declare that copies made under the exception were infringing. He was concerned that such a decision would have an effect on private rights, and so should only be made in the context of litigation between a specific rightsholder and alleged infringer, rather than in the abstract.

Comments

Today's decision marks a significant reverse for the UK government. The introduction of a private copying exception had been under debate for many years, and was recommended by both the Gowers and Hargreaves reviews. The clock is now turned back to the unsatisfactory position where private copying will no doubt continue, but will again infringe. It seems unlikely that rightsholders will change their previous policy of not, in practice, seeking to enforce their rights in those circumstances, but either way copyright is brought further into disrepute.

The key questions which remain are:

  • Whether the government will seek to reintroduce the exception and, if so, whether it will now include a compensation mechanism. The Judge's criticisms of the government's reasoning in introducing the exception were trenchant; if the government does wish to try again then it will likely have to conduct a new impact assessment and evidence-gathering exercise before deciding whether or not a new version of the exception would require a compensation mechanism or instead meets the 'no or de minimis harm' test. It is very unlikely that a new exception will be introduced in the near future.

  • Whether rightsholders will now seek compensation from the government for copies made under the exception to date.

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