Dutch get new copyright levies for electronics/storage devices


On October 25 2012 the Dutch government officially announced that it will impose private copyright levies on certain digital/electronic devices and storage media for a temporary period until January 1 2014.

The list contains a broad variety of products. Hence, this is relevant to a vast number of companies internationally. It is of particular interest since the Netherlands is considered a gateway to Europe with important import hubs such as the port of Rotterdam and Schiphol Airport Amsterdam. Many manufacturers of electronics/IT devices and storage media import via and/or stock in the Netherlands for marketing in Europe and beyond. The new regulation is not clear regarding the handling of products imported into the Netherlands for use in other countries.

This regulation for private copying levies applies to:

Cd-R € 0.03
DVD € 0.03
External Hard Drive € 1.00
Audi-/Video player < 2 Gb € 1.00
> 2 Gb € 2.00
HDD Recorder/Set-top-box < 160 Gb € 2.50
> 160 Gb € 5.00
Phone with Mp3-player/Smartphone < 16 Gb € 2.50
> 16 Gb € 5.00
Tablet < 8 Gb € 2.50
> 8 Gb € 5.00
PC/Laptop € 5.00

According to Fred Teeven, State Secretary for the Ministry of Security and Justice, e-readers are excluded because the Dutch organization SONT, which advised the ministry on the levies, said private copying on e-readers was "still marginal" for the time being.

The background

In the explanatory memorandum, the Dutch government points out that under EU legislation (Directive 2001/29/EC, copyright in the information society), member states that allow for private copying, need to provide for a system that ensures fair compensation of authors. The government stated that, to keep compliant with the requirement of fair compensation, it was necessary to add new products to the levy list for the period of one year, pending further decisions on a better system.

Instead of these new rules, the Dutch government would prefer a restriction on the broad private copying provisions in the Dutch Copyright Act covering downloads from illegal sources. With restriction of this system, levies would become obsolete. So far, however, the government could not find sufficient support for this proposal in parliament.

The new administrative regulation concerning private copying levies is based on Article 16c(6) of the Dutch Copyright Act. According to this provision, the Dutch government is entitled to establish specific rules about the products and the amount of levies. Against the background of this entitlement in the Copyright Act, no further parliamentary approval is necessary.
However, in Article 17d of the Dutch Copyright Act it is stipulated that a regulation based on Article 16c(6) can only enter into force after 8 weeks have passed since publication, i.e. 8 weeks counted from the publication date on October 25 2012. This period may provide room for lobbying, although it seems that the chances for lobbying are limited.

The effective date of the regulation

The new regulation will only enter into force after a royal decree to this effect. The issuance of this decree is a formal act. In this decree, the date of entry into force will be fixed. It is possible that this date will be after January 1 2013. The new regulation provides, however, that the royal decree can provide for entry into force with retroactive effect to January 1 2013. The Dutch government is not unlikely to use the possibility of retroactive effect.

The regulation is only temporary because the government believes that new devices and storage media will emerge and technological developments are rapid. In addition, the copyright levies are heavily under debate after the SGAE/Padawan case of the CJEU (according to which an undifferentiated application of the privacy copying levy to devices for professional use is not in conformity with Directive 2001/29/EC). The findings in SGAE/Padawan triggered further prejudicial questions to the CJEU, for instance by the German Federal Court of Justice (VG Wort/Kyocera Mita; Hewlett Packard, Fujitsu Siemens and others), the Austrian Supreme Court (Amazon.com), the Danish Supreme Court (Copydan/Nokia), and the Dutch Supreme Court (ACI Adams/Stichting De Thuiskopie). These prejudicial questions raise a wide variety of issues, such as the question whether a reimbursement system for professional users is sufficient to avoid an illegal burdening of professional users, whether the use of DRM and consent by copyright owners must be factored into the equation, and whether levies must be paid for downloading from illegal sources.

When is the levy legally due: the relevant legal act?

In the Dutch Copyright Act, it is explicitly stated in Article 16c(3) that the obligation to pay levies arises for producers the moment copying devices/storage media can be offered on the market (this provision is understood in the sense that it is sufficient for the payment duty that the relevant devices are ready to enter the market) and for importers the moment copying devices are imported.

In the Netherlands, private copying levies are collected by Stichting De Thuiskopie Foundation who have been appointed in accordance with the Dutch Copyright Act (Article 16d). Payment has to be provided to Stichting De Thuiskopie immediately (or within the term agreed with Stichting De Thuiskopie) and there is a statutory obligation to manufacturers and importers to provide this to them upon request. Stichting De Thuiskopie can also direct this request to retailers, for instance, in order to check whether the payment provided by manufacturers and importers is correct.

Many unresolved issues

Many issues are unresolved under this regulation. For instance, can a duty to pay be postponed when civil proceedings are initiated? Also, what are the chances of challenging this regulation in view of Directive 2001/29/EC and the retrospective effect in legal proceedings and is there possibility of a refund for professional use? Last but not least, how will the export of devices from the Netherlands (which happens frequently since the Netherlands is an import hub for further distribution to other EU member states) impact on the duty to pay and how will this be arranged? Article 16c(4) of the Dutch Copyright Act makes it clear that the payment obligation lapses the moment devices are exported. Does this imply a first pay then reclaim policy?

We are happy to discuss with you any issues you may have as a consequence of this regulation.

For further information on the topic, please contact the following members of our Dutch IP team, Armand Killan and Manon Rieger-Jansen