ECJ Judgment: Private Copying Levy Cannot Include Copies Made from Unlawful Sources


The European Court of Justice has been pretty busy the past weeks. On Tuesday, April 8th 2014, the Court has declared the Data Retention Directive invalid from the date on which the directive entered into force (see also Peace Palace Library blog: Exit Data Retention Directive: a Victory for Privacy in Europe!). On Thursday, April 10th 2014, the Court has given its verdict on a complicated Dutch case involving the home-copying exception of European copyright legislation, and the associated use of copyright levies on blank media (Case C-435/12, ACI Adam BV v. Stichting de Thuiskopie, E.C.J. Apr. 10, 2014).

Fair compensation

The case was brought by a number of electronics manufacturers and retailers against the Home Copying Foundation (Stichting de Thuiskopie), a non-profit organization established to collect the Dutch “piracy levies. The ECJ answered the preliminary questions from the Dutch Supreme Court (Hoge Raad der Nederlanden). Several manufacturers and importers of sound and/or data carriers disputed the amount of the levy on these carriers, mainly since the levies also included ‘fair’ compensation for illegal downloads. The main question was whether it was lawfully possible to compensate for these downloads via the fair compensation of Article 5(2)b of the EU Copyright Directive (Directive 2001/29/EC) on the basis of which copyright holders can get compensated for copies made by consumers for private use.

The answer of the European Court of Justice was basically a simple: no, the fair compensation can not compensate illegal activities. The Court ruled that there are no legal grounds for the Dutch government tolerating downloads from illegal sources, regardless of its defence that there are no legal means to prevent these downloads from happening. In addition, the ECJ also decided that the personal copy tax is in fact illegal itself, because this system means that people who don’t download copyright-infringing material and buy storage media nonetheless are indirectly punished, because they are forced to pay compensation for something they didn’t do. In a statement released after the ruling, the ECJ said: "The levy system must ensure that a fair balance is maintained between the rights and interests of authors (as the recipients of the fair compensation) and those of users of protected subject matter. A private copying levy system, which does not, as regards the calculation of the fair compensation payable to its recipients, distinguish between the lawful or unlawful nature of the source from which a private reproduction has been made, does not respect that fair balance."

In its statement, the ECJ acknowledges that the existence of the compensation fee in itself is not in violation of EU law; however, the way it is configured in the Netherlands is unlawful: "The Copyright Directive permits Member States to lay down an exception to the exclusive reproduction right of holders of copyright and related rights so that private copies may be made (the private copying exception). It also provides that Member States which decide to introduce such an exception into their national law are required to provide for the payment of 'fair compensation' to copyright holders in order to compensate them adequately for the use of their protected works or other subject matter."

Private copies from unlawful sources

The European Court of Justice goes even further by stating that a national law or legal system of a Member State that does not differentiate between private use copies from lawful and unlawful sources is not allowed according to their (strict) interpretation of the Copyright Directive. The ECJ decided that the Dutch legislation, “which makes no distinction between private copies made from lawful sources and those made from counterfeited or pirated sources", cannot be tolerated.

In contrast to many other countries, downloading copyright protected works from unlawful sources was permitted under the Dutch Copyright Act. The Dutch government allowed such downloading for personal use because it believed that such a policy was consistent with European Union copyright law. As soon as the ECJ's decision was made public it caused a lot of commotion in the Netherlands. From all areas of expertise as well as from the public in general voice was given to what was thought to be the consequence of this decision for firstly the Dutch Copyright Act, but mostly for the enforcement in regard to illegal downloads.
Immediately after the ECJ's decision, the Dutch parliament released a statement, saying that downloading copyrighted material for personal use would no longer be allowed. The ban was effective immediately. The Dutch parliament also stated to come up with a new system to compensate authors affected by illegal downloads. The parliament has asked the Dutch Stichting onderhandelingen thuiskopievergoeding (Foundation for negotiations on the private copy tax) to issue advice on what this new system should look like. BREIN, the Dutch anti-piracy foundation, stated that they will continue on focusing on websites and services that upload and facilitate access to illegal material. The ban is civil in nature, and infringers will likely not face criminal charges.