Should authors and artists receive appropriate compensation when we store their works on a virtual disk such as a cloud? This question will be tackled by the Court of Justice in case between Austrian copyright collecting society Austro-Mechana and German company Strato AG which provides cloud services to its users (case C-433/20). Meanwhile, Advocate General Gerard Hogan has already issued his opinion in the case.
Going into the details - the dispute mainly concerns the interpretation of Article 5(2)(b) of Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society. As a rule, the exclusive right to authorise reproduction of protected works is vested in the rightholders, e.g. authors, performers, etc. However, this right may be restricted when the reproduction is done by a natural person for private use and not for direct or indirect commercial purposes. There is one condition - the copyright holders should receive fair compensation for this. Such compensation consists in so-called copyright levies, popular and introduced in many member states, which are included in the price of devices and media enabling reproduction of works, e.g. smartphones, tablets, computers, but also printers or blank media, such as CDs.
Many people nowadays use cloud services, storing various files there, including copyright-protected materials. The question is whether the exception provided for in Article 5(2)(b) of Directive 2001/29 also covers private copying of copyright-protected content by individuals in the cloud? Since the provision uses the expression 'reproductions on any medium', does it concern only physical media or virtual as well? If so, should the rightholders receive appropriate compensation in such cases?
Replying to the first question, AG states that the provisions of Directive 2001/29 must be interpreted in a technologically neutral way in order to ensure that copyright protection in the EU does not become obsolete and out of date with technological progress and the emergence of new forms of exploitation of works. Nor does it appear that the EU lawmakers intended to limit the scope of the provision in question exclusively to physical media or carriers (para 35-36). Therefore, in the AG's view, the exception concerning reproduction on any medium also covers reproduction using cloud services.
On the other hand, answering the second question, he found that a copyright levy is not necessarily payable here. This is due to the fact that very often devices or carriers used for data transmission to the cloud are already subject to fees. AG emphasized that a fair compensation should be considered as a compensation that does not excessively or insufficiently compensate (para. 59). Thus, care must be taken not to disturb the balance between copyright holders and users by introducing new fees. After all, the purpose of setting copyright levies is to ensure that authors are not unduly harmed by the private reproduction of their works. Therefore, there is no need to introduce a separate fee for reproduction of a work by a natural person for private purposes using cloud services provided by a third party. The condition, however, is that the fees already charged for reprographic devices used to transmit files to the cloud must also reflect the harm caused to the rightholders by such reproduction (para 72). As he added, the rightholder may, nevertheless, try to show that the compensation obtained is inadequate in a given situation.
