Reproducing copyright works in the cloud - do we need a new copyright levy?

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in a technologically neutral way in order to ensure that copyright protection in the EU does not become obsolete and out of date with technological progress and the emergence of new forms of exploitation of works.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.

EP against increasing sharing platforms obligations regarding copyright protection

The European Parliament rejected today the Legal Affairs Committee's proposal regarding new European copyright laws - Copyright Directive (Parliament to review copyright rules in September), which aimed at adjusting the current legislation to the digital market. The next vote will occur in September, likely after some amendments are introduced. 

The rejected proposal was a result of heavy lobbying by artists and journalists, as it aimed to ensure they receive fair pay for their work, by strengthening content protection against sharing platforms and news aggregators. For example, in order to motivate sharing platforms to block internet users from uploading and sharing copyright-protected content, such platforms would be required to pay fees to rightholders whose content would be found to be uploaded and shared on their platforms. This means that platforms would need to apply more sophisticated content-screening software, especially since the measures adopted by them would need to allow for uploading of non-infringing copyright content, as well as provide an opportunity to internet users for an appeal from a decision to block a particular upload. This way the freedom of expression could be preserved, but of course this further complicates online platforms' obligations and makes them more expensive (see more: MEPs update rules for the digital age).

EP votes on the geo-blocking regulation

After a political agreement on the proposed regulation prohibiting unjustified geo-blocking had been reached in November last year, there was a general expectation that new rules will formally be adopted in early 2018. The first step was made today by the European Parliament, which approved the proposal in a plenary vote.

The new rules define three specific situations in which a different treatment of customers (consumers and businesses as end-users) from different Member States is considered unjustified and is therefore prohibited. These include:

• The sale of goods without a request to deliver them to a territory in which the trader does not operate (the customer orders a product and collects it at the trader's premises or organises delivery himself);
• The provision of (some) electronically supplied services, such as cloud, data warehousing, website hosting;
• The provision of services which are received by the customer in the country where the trader operates (e.g. hotel accommodation, car rental).

In the abovementioned circumstances customers across the EU should be able not only to access online interfaces directed to customers from other Member States and compare a wider range of offers, but also finalise transactions on conditions offered in those territories.

Contentious issues

An element which caused controversy from the very beginning related to the interface of the geo-blocking proposal with the provisions of private international law. In particular, concerns were raised that traders who decided to serve a consumer from another Member State, in compliance with new rules, would be considered to "direct their activities" to the country of that consumer, within the meaning of Article 6 of  Rome I and Article 17 of Brussels I regulation (recast). The text adopted today includes additional wording which aims to mitigate this risk (recital 13).

An even more controversial topic referred to the material scope of the proposal, especially the treatment of electronically supplied services providing access to copyright-protected content. Should, for example, Belgian customers be allowed to buy their Netflix or Spotify subscription for the price offered in the Polish market? This raised concerns not only about price arbitrage, but, more importantly, about the impact of such a solution on the territorial licensing schemes. And these points of criticism were even stronger than in the previous discussions on cross-border portability.

At this point it is worth recalling that audio-visual services were kept out of the scope of the Commission's proposal from the very beginning, even if, at the internal level, this choice was not entirely unanimous. The decision was explained by the need to establish consistency between the scope of the new measure and Article 20 of the Services Directive. Besides, the issue of digitally distributed AV content was to be addressed by the copyright package. 

Limitations of the scope of the act adopted today do not stop here, however. No dramatic change of the status quo is also expected with respect to services providing access to other copyright-protected content such as music (e.g. streaming services), literary works (e.g. e-books) or video games. Services of this kind have technically been kept within the remit of the act (thus falling under the provisions on automatic re-routing or payment methods), but have been excluded from its core access provision (Article 4). 

Concluding thought

The compromise reached in November and, consequently, the final draft must come as a relief to the creative industry. What is left for those hoping for a border-free access to copyrighted works - at least to the extent allowed by existing licensing arrangements - is a "review clause" requiring the Commission to assess, after two years, if the scope of the act should be extended. Until this happens, one can be advised to rather focus on the impact of the geo-blocking regulation - as it currently stands - on the e-commerce market (e.g. Rome&Brussels I litigation, developments in package delivery) as well as the on-going copyright reform, particularly the proposal on online transmissions.

The proposed geo-blocking regulation is now awaiting a vote in the Council and is expected to come into force later this year.

Modernising copyright: watching Netflix while abroad

Yesterday, the Council and the Parliament have informally agreed on new rules that will allow subscribers to paid online content (online music, games, films and TV shows) in any Member State to access this content in another Member State - while they are temporarily visiting it (also when they travel for business, so this protection would be applicable not only to consumers). Readers of this blog who travel abroad have probably been frustrated by geo-blocking rules (set up to protect exclusive licensing) that often prevented accessing online content when abroad. Free of charge services would still be excluded from the scope of these new rules, which means that such service providers will have a choice whether to enable their customers to access their services cross-border (Accessing online films and TV while abroad: deal with Council). The intention is for these rules to start applying as of the beginning of 2018 (DSM: EU negotiators agree on new rules allowing Euorpeans to travel and enjoy online content services across borders).

First data on geo-blocking practices in the e-commerce sector published

On 18.3.2016 the European Commission (DG COMP) published an issues paper presenting its initial findings on geo-blocking practices in the e-commerce sector. The sector inquiry conducted by Directorate-General for Competition is a part of a wider initiative on geo-blocking, which was already announced in the last year's communication on Digital Single Market. 

The recently published document is based on responses of more than 1400 companies involved in online sales of consumer goods and in the supply of digital content. Nearly three quarters of replies come from online retailers. Questionnaires were also sent to operators of online marketplaces, price comparison tools and payment systems. Data obtained from digital content providers (broadcasters, electronic communications companies) were analysed separately. 

For purposes of the study, geo-blocking is interpreted broadly and refers to "commercial practices whereby online providers prevent users from accessing and purchasing consumer goods/digital content services offered on their website based on the location of the user in a Member State different from that of the provider". It can take a variety of forms such as "(i) preventing the user from accessing the website, (ii) automatically re-routing the user to another website, (iii) refusing payment or (iv) refusing delivery". However, it does not include geo-filtering, which consists in "offering different terms and/or conditions depending on the location of the user".

Initial findings reveal significant differences with regard to consumer goods and online digital content. In online sales of tangible goods geo-blocking appears to be less widespread and usually stems from a unilateral business decision. According to respondents, geo-blocking in this field is mostly manifested by a refusal to deliver abroad. Conversely, complete denial of access to digital content based on IP verification is by no means unheard of, and is often required contractually. However, it is important to note that most restrictions in this field are imposed in licensing agreements with right holders and therefore cannot be regarded as illegitimate per se.

The discussed issues paper only gives a partial picture of the ongoing sector inquiry and we still have to wait at least a couple of months for a more detailed analysis in the preliminary (mid-2016) and final report (early 2017). It goes without saying that the current wording warrants further elaboration. The part on digital content only deals with audio-visual and music content, while computer games, software and books (including e-books) are analysed in the chapter on consumer goods. Reasons for such a differentiation are not explained, though. The interface between competition law and intellectual property also deserves a more in-depth evaluation. Judging by the cautious wording of the present document, spectacular antitrust interventions in the field of digital content do not seem very likely. At the same time, it is to be expected that the e-commerce inquiry will constitute a source of information for other Directorates-General, which are currently working on a legislative proposal on geo-blocking (scheduled for mid-2016). There seem to be a common understanding that the principle of non-discrimination laid down in Article 20 of the Services Directive does not offer consumers an effective tool of protection and is barely enforced in practice (see e.g. BEUC response to public consultations). Be it as it may, developing an adequate policy solution is a challenging task, which requires a careful examination of numerous subtle interconnections with existing and upcoming legislation. It remains to be seen if the broad approach, apparently favoured by the Commission, will allow to strike a fair balance between the competing interests involved. How the subject of copyrighted digital content will be addressed in the geo-blocking proposal is one of many interesting questions to follow.

On books and e-books - AG Jääskinen's opinion in Case C-117/13 Technische Universität Darmstadt

To what extent are public libraries free to offer digitised versions of their books to their users? In his Opinion in case C-117/13 Technische Universität Darmstadt v Eugen Ulmer KG, Advocate General Jääskinen provides the CJEU with some suggestions as to how to answer this question in light of EU law.

The case concerns a dilemma that is of interest to many public libraries, in particular those attached to universities, such as in casu the library of the Technical University of Darmstadt (Germany): how to make accessible to a large public its resources, both on paper and in digital format. As many publishers nowadays offer their products both as printed books and as 'e-books', a library's choice in individual cases can be between a) buying a physical copy of a book and possibly digitising is, b) acquiring access to the digital version (e-book) of the work, and c) a combination of both. If a library already has a physical copy of a book in its collection, it will usually prefer the first option over the other two, for rather obvious economic reasons. 

In the present case, the university library in Darmstadt had digitised a textbook on contemporary history ('Einführung in die neuere Geschichte') published by Eugen Ulmer KG. The publishing house seeks to prevent the library from this type of digitisation of the book and from making available the digital copy to library users via electronic reading points. Earlier, it offered the library the possibility to buy e-books of the textbook concerned, but the library did not make use of this offer.

AG Jääskinen considers that, as long as no licensing contract on the use of e-books has been concluded, the Copyright Directive does not prevent Member States from allowing a library to digitise books that are part of its collection. Neither does EU law stand in the way of having libraries make available digitised books through dedicated terminals. This particularly regards copyrighted works that are either old, fragile or rare, or that might suffer disproportionate wear because of a large number of students photocopying them.

However, according to the AG, the relevant provisions of EU law do not provide space to allow a library to digitise its entire collection, but regard individual works. Moreover, users of dedicated terminals should not be given the possibility to save digitised books on a USB device; they may print a paper copy. 

The AG's Opinion is not yet available in English. A summary can, however, be found in the CJEU's press release regarding the case.

BEUC on EU Copyright Rules

Recently, the European Consumer Organisation (BEUC) published the position paper it submitted to the Commission's Public Consultation on the Review of EU Copyright Rules. The consultation is part of the Commission's on-going efforts to review and modernise EU copyright rules.

BEUC invites the Comission to take the consumer perspective when revising the Copyright Directive (2001/29/EC). At the moment, there is an exhaustive list of optional exceptions and limitations to right holders' exclusive rights. In the future, users should be granted a clear set of (mandatory) rights instead, including the right to a private copy and rights reflecting fundamental rights and freedoms, such as the rights of quotation and criticism, e.g.. As regards the right to a private copy, BEUC calls for immediate EU action in order to reform the current system of copyright levies (they should be clearly indicated to consumers, see answer to question 67 of the consultation) and launch a reflection as to alternative systems of fair compensation.

Buying digital content is nowadays often effectuated through digital transmission. While re-selling a used CD is undisputedly legal, the same is not clear for the same album purchased via iTunes, e.g.. This is why BEUC calls upon the European Commission to carefully assess the consumer detriment from the existing discrimination between purchases of immaterial copies and of copies on physical media (see answer to question 13). BEUC doesn't propose a solution to the problem; this is as far as the position paper goes. 

Consumers are not only users of digital content but also create it themselves, which is referred to as user-generated content (UGC). They thereby often re-use pre-existing works (e.g. reuse of a song for a familiy video) and upload the result on the internet at little to no financial cost. This raises questions as to the right to property and the freedom of expression. BEUC calls for permitting the use of pre-existing works for UGC and refers to the Canadian rules on UGC as an example (see answers to questions 23 and 58 ff).

BEUC is realistic in only demanding more and not full harmonisation for the revised Copyright Directive (see answer to question 7). Let's wait and see how the Commission proceeds!

Of course, the position paper tackles many more questions, only the most relevant ones for consumers are pointed at here. If you are interested in the topic and read German you can also have a look at the position paper of the Verbraucherzentrale Bundesverband e.V. for the same consultation.

No more illegal downloading - CJEU judgment in Case C-435/12 ACI Adam v Stichting de Thuiskopie

The CJEU's power to affect national laws should not be underestimated. The impact of the Court's judgment in the case of ACI Adam BV v Stichting de Thuiskopie illustrates this well: the CJEU's ruling of yesterday morning was followed by a prohibition on illegal downloading in the Netherlands taking immediate effect.

The case was brought by ACI Adam and others, who were importers and manufacturers of blank CDs and CD-Rs on which digital data could be copied. They argued that the amount of private copying levies charged on these blank data carriers in the Netherlands was too high, as it incorrectly took into account the harm suffered by copyright holders as a result of copies made from unlawful sources.

In its judgment, the Court holds that the Dutch law indeed was non-compliant with EU law insofar as it did not distinguish the situation in which the source from which a reproduction for private use is made is lawful from that in which the source is unlawful.

While the Dutch film industry has welcomed the prohibition on illegal downloading that followed the CJEU's ruling, consumer organisations are more sceptical. They emphasise the problems that enforcement of the prohibition may entail, such as infringement of consumers' privacy online. A well-balanced levy system would be the better option, in their opinion (for those of you who read Dutch, background information on the discussion may be found in newspaper articles here and here and here).

Please refer to the Court's press release for a more elaborate summary of the judgment.

A fair balance? - CJEU judgment in Case C-314/12 UPC Telekabel Wien

While the authors of this blog were enjoying the consumer law conference in Oxford (more on this in a later post), the CJEU handed down its judgment in the intriguing case of UPC Telekabel Wien v Constantin and Wega last Thursday. For a summary of the facts of the case and Advocate-General Cruz's opinion, please refer to an earlier post on this blog ('Ius est ars aequi et boni').

The UPC case concerned the topical and difficult question of how to strike a balance between the rights of copyright holders (on films, in this case), consumers / internet users and internet service providers. Can providers be assigned the responsibility to take action to prevent the infringement of copyright by internet users to which they offer their services, considering that they do not have any direct contractual relationship to the copyright holders and it might be very burdensome (if not impossible) to take adequate measures to prevent users from illegally accessing copyright-protected material?

The CJEU's judgment in general seems to be in the affirmative, or at least not in the negative, though the Court takes great care to outline the conditions under which internet service providers are to be held to this responsibility.

In a first step, the Court considers that internet services providers fall within the scope of Article 8(3) of the Copyright Directive, which states that ‘Member States shall ensure that rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right’ (para. 30 of the judgment). The lack of a contractual relationship does not affect this conclusion:

'Neither the wording of Article 8(3) nor any other provision of Directive 2001/29 indicates that a specific relationship between the person infringing copyright or a related right and the intermediary is required. Furthermore, that requirement cannot be inferred from the objectives pursued by that directive, given that to admit such a requirement would reduce the legal protection afforded to the rightholders at issue, whereas the objective of that directive, as is apparent inter alia from Recital 9 in its preamble, is precisely to guarantee them a high level of protection.' (para. 35)

In a second step, then, the Court establishes that it remains mostly a matter for national laws to regulate court injunctions prohibiting internet service providers from allowing their customers to illegally access copyright-protected material. EU law does not (!) preclude an injunction that 'does not specify the measures which that access provider must take and when that access provider can avoid incurring coercive penalties for breach of that injunction by showing that it has taken all reasonable measures, provided that (i) the measures taken do not unnecessarily deprive internet users of the possibility of lawfully accessing the information available and (ii) that those measures have the effect of preventing unauthorised access to the protected subject-matter or, at least, of making it difficult to achieve and of seriously discouraging internet users who are using the services of the addressee of that injunction from accessing the subject-matter that has been made available to them in breach of the intellectual property right, that being a matter for the national authorities and courts to establish.' (para. 64)

The CJEU supports this conclusion by pointing out that an injunction restricts the service provider's freedom to conduct a business (protected under Article 16 of the EU Charter of Fundamental Rights), but does not touch upon its essence - the internet provider can choose the means to prevent users from illegally accessing copyright-protected works and may avoid liability by proving to have taken all reasonable measures. Regarding the measures to be taken, the Court observes:

'In that regard, in accordance with the principle of legal certainty, it must be possible for the addressee of an injunction such as that at issue in the main proceedings to maintain before the court, once the implementing measures which he has taken are known and before any decision imposing a penalty on him is adopted, that the measures taken were indeed those which could be expected of him in order to prevent the proscribed result.'

'None the less, when the addressee of an injunction such as that at issue in the main proceedings chooses the measures to be adopted in order to comply with that injunction, he must ensure compliance with the fundamental right of internet users to freedom of information.'

'In this respect, the measures adopted by the internet service provider must be strictly targeted, in the sense that they must serve to bring an end to a third party’s infringement of copyright or of a related right but without thereby affecting internet users who are using the provider’s services in order to lawfully access information. Failing that, the provider’s interference in the freedom of information of those users would be unjustified in the light of the objective pursued.' (paras. 54-56)

In this respect, the role of national judges is underlined:

'It must be possible for national courts to check that that is the case. In the case of an injunction such as that at issue in the main proceedings, the Court notes that, if the internet service provider adopts measures which enable it to achieve the required prohibition, the national courts will not be able to carry out such a review at the stage of the enforcement proceedings if there is no challenge in that regard. Accordingly, in order to prevent the fundamental rights recognised by EU law from precluding the adoption of an injunction such as that at issue in the main proceedings, the national procedural rules must provide a possibility for internet users to assert their rights before the court once the implementing measures taken by the internet service provider are known.' (para. 57)

Finally, copyright holders might face continuing (minor) infringements of their copyright, insofar as measures to prevent access may be circumvented and copyright is not an absolute right. Still, 'the measures which are taken by the addressee of an injunction, such as that at issue in the main proceedings, when implementing that injunction must be sufficiently effective to ensure genuine protection of the fundamental right at issue, that is to say that they must have the effect of preventing unauthorised access to the protected subject-matter or, at least, of making it difficult to achieve and of seriously discouraging internet users who are using the services of the addressee of that injunction from accessing the subject-matter made available to them in breach of that fundamental right' (para. 62)

While one cannot but admire the Houdini-like turns the Court takes in order to avoid chaining itself to a fixed balancing of the rights of all stakeholders involved, this judgment leaves many questions unanswered. The judgment re-emphasises EU law's strong right-based approach to access to films and other works through the internet, which is debatable in light of ongoing developments in the digital world. Furthermore, the Court's detailed considerations on the various aspects national judges have to take into account when considering the responsibilities of a service provider in a specific case hardly give any guidance as to the actual measures that may meet all the criteria - neither to national judges nor to internet providers. True, this is to a large extent a technical matter. Yet, it seems that the main burden of finding adequate and reasonable measures to prevent illegal access to information is now put on the internet service providers (and, indirectly, on judges assessing their cases). It may be questioned whether that outcome reflects a 'fair balance' in light of the EU Charter…

For a summary of the judgment, see also the CJEU's press release.

Recent consumer law case law

All of the blog's contributors are currently attending the Image(s) of Consumer conference in Oxford, the UK. Therefore, we are not able to provide our readers with an immediate summary of the two interesting cases that the CJEU elaborated on yesterday. I mention here these two cases so that our readers may access the judgments' texts immediately, if they wish to. The summaries thereof will be published in the next few days.

 

On consumer credit: LCL Le Crédit Lyonnais (C-565/12)

 

On copyright infringements: UPC Telekabel Wien (C-314/12)

Spa patients as hotel guests - CJEU in case OSA (C-351/12) on copyright fees

27 February 2014: CJEU in case OSA (C-351/12)

In this case compliance of Czech law with the Copyright Directive 2001/29 was questioned, since Czech law allowed health establishments (which could include health spas) to transmit music in patients' rooms while they were being provided healthcare, without the need for the health establishments to pay copyright fees. AG Sharpston's opinion in this case (Silence is golden) was that this provision did not seem to fall under the exceptions provided for in the Copyright Directive and was rather covered by the general provision of art. 3(1). By transmitting protected works by means of television and radio sets located in the patients' rooms, a spa carries out a communication of these works to the public, taking into account that just like in any hotel the spa would provide services to many people throughout the year, even if spa patients occupy their rooms on average longer than hotel guests (par. 27-33). The CJEU agreed, therefore, with AG Sharpston that the exemption in Czech law did not comply with the Directive (par. 36, 41). The CJEU also mentions that while it is acceptable that a collecting society of copyright fees would have a monopoly within a given Member State to effectively manage IP rights' protection that does not entitle such a society to abuse its dominant position on the market. It should not, therefore, set copyright fees at a level that is much higher than in other Member States. It is for the national court to determine whether this situation took place in a given case (par. 86-90).

Music makes the EU come together

Last week, 4 February, the European Parliament also approved the new Directive on collective management of copyright and related rights and multi-territorial licensing - that are supposed to allow for easier streaming of music across the EU, exempting online music providers from having to apply for a license in every country they play music. Since only one of 500 licensed digital music services is available in all EU member states, these new rules may make this market more attractive for smaller competitors. (Licence to thrill...) This provided the online music provider will obtain a license from a collective management organisation representing authors' rights across borders. To facilitate this process national collective management organisations will be able to request other organisations to represent their repertoire (under the same conditions as applicable to their own repertoires) in countries for which they were not authorised to issue such licenses. The artists will need to be guaranteed their royalties not later than nine months from the end of the financial year in which the rights revenue was collected. Since the Directive was already informally agreed with the Council, the following Council's vote should just be a formality. (Copyright: cross-border licences for online music services)

Online music services

On Tuesday the Legal Affairs MEPs endorsed the new rules on copyrights that make it easier for online providers to obtain copyright licenses to stream music cross-border. This could be achieved by allowing online providers to obtain these licenses from a small number of authors’ collective management organizations  that operate across EU borders, instead of forcing them to obtain separate licenses from national organizations in every Member State they provide services to. The aim is that EU-wide online music services are made available to consumers, while at the same time music authors rights and their royalties are protected. 

Ius est ars boni et aequi - Opinion of AG Cruz Villalón in Case C-314/12 UPC Telekabel Wien

What responsibilities do digital service providers have towards copyright holders? Can an internet provider be required to block access to a website on which movies are made available without the consent of the film industry?

Case C-314/12 UPC Telekabel Wien v Constantin Film Verleih & Wega Filmproduktionsgesellschaft, which is currently pending before the Court of Justice of the EU, gives a clear illustration of the problem. The case concerns the access to a website on which more than 130,000 (!) movies were made available for streaming and downloading without permission of copyright holders. The owners of the website, which was taken offline after criminal investigation, were prosecuted in Germany. The present case regards the legal responsibility of an internet service provider whose services allowed Austrian users to access the illegal website. The question at issue is whether the internet provider, who had no (contractual) relation at all to the makers of the website, was under a legal duty to prohibit users from accessing the website.

In a nuanced Opinion in this case, Advocate General Cruz Villalón submits that it is not compatible with EU law to impose a general prohibition on an internet provider to allow its users to view a website that violates copyright law, without giving any specific guidance as to concrete measures that should be taken so as to prevent access to the site. According to the AG, moreover, this is not different in case a provider may avoid sanctions by demonstrating to have taken all reasonable measures to uphold the prohibition.

Still, in AG Cruz's opinion, a national measure specifically requiring a certain provider to block access to a designated website is not as a matter of principle disproportionate for the sole fact that it requires the service provider to incur not inconsiderable costs, while users may easily circumvent the technical measures taken by the service provider. It remains the task of national judges to strike the delicate balance of parties' rights in specific cases.

The AG bases his conclusions on the balancing of fundamental rights within the ambit of what is 'fair and equitable' and 'proportionate' in the sense of Article 3 of Directive 2004/48 on the enforcement of intellectual property rights. The balance involves the right to protection of intellectual property (Article 17(2) of the EU Charter of Fundamental Rights) and, on the service provider's side, freedom of information (Article 11 of the Charter) and freedom to conduct a business (Article 16 of the Charter). As AG Cruz points out, imposing a general obligation de résultat on the service provider to prevent access to websites that violate copyright law does not reflect a fair balance of these rights. Giving a service provider the possibility to avoid sanctions by showing to have taken all reasonable measures does not restore the balance, as it pushes back the consideration of relevant fundamental rights argumentation to the second stage of the assessment. Moreover, while a copyright holder has strong claims in hand, a digital service provider who is not infringing copyright himself would hardly have any defence against the imposition of a burdensome general measure aimed at preventing the abuse of intellectual property rights by third parties to which the provider has no contractual relationship.

In sum, the complex task of balancing the interests and rights involved in cases of massive copyright infringements through the internet would remain a task of national judges in specific cases.

See also the CJEU's press release (which, interestingly, leaves out most of these nuances of its heading).

Silence is golden - AG Sharpston in OSA (C-351/12)

14 November 2013: AG Sharpston in case OSA (C-351/12)

This case may concern copyrights but its effects will impact consumers in some Member States that is why we will briefly mention here recent opinion of AG Sharpston in it. 

Imagine you are in a health spa, trying to relax while bathing in medicinal springs and enjoying spending days in the provided by the spa accommodation, which includes TV and radio sets in your room. Obviously, in order to relax you may want to listen to your favourite bands on the radio or watch a nice movie, TV show, etc. What may stand in the way of that luxury are, however, high fees that the organisations who protect copyright in the given Member State claim from the health spa for transmitting their works. In Czech Republic OSA has a right to collect such fees and the health spa was obliged to obtain a licence from them. Czech law excludes from the need to pay such fees transmission that take place in patients' rooms when providing health care in health establishments, which could encompass a health spa. OSA claims that this exception is contrary to the Copyright Directive 2001/29 and AG Sharpston agrees therewith (classifying it as communication to the public - par.28). 

What may follow the judgement of the CJEU in this matter is either an increase in prices of health spa establishments or an increase of health spa meditation establishments, where silence is golden.

Who pays the bill for private copies? - CJEU judgment in Case C-521/11 Amazon v Austro-Mechana

Last Thursday, 11 July 2013, the Court of Justice of the EU handed down its judgment in Case C-521/11 Amazon v Austro-Mechana. The case concerned the 'fair compensation' to be paid to authors of copyrighted works (such as music, books and films) through a private copying levy on the first sale of recording media such as blank CDs and DVDs. For a summary of the case and of the Opinion of A-G Mengozzi, I refer to an earlier post on this blog ('Fair compensation for copying').

The CJEU holds that the indiscriminate collection of a private copying levy on the first sale of recording media may, under conditions, be compatible with EU law. Accordingly:

'34 It is for the national court to verify, in the light of the particular circumstances of each national system and the limits imposed by Directive 2001/29, whether the practical difficulties justify such a system of financing fair compensation and, if so, whether the right to reimbursement of any levies paid in cases other than that under Article 5(2)(b) of Directive 2001/29 is effective and does not make repayment of those levies excessively difficult.

35 In the present case, the referring court must verify, first of all, whether the indiscriminate application of a private copying levy on the placing on the market, for commercial purposes and for consideration, of recording media suitable for reproduction is warranted by sufficient practical difficulties in all cases. In that context, account must be taken of the scope, the effectiveness, the availability, the publicisation and the simplicity of use of the a priori exemption mentioned by Austro-Mechana in its written observations and at the hearing.

36 Secondly, the referring court must also verify that the scope, the effectiveness, the availability, the publicisation and the simplicity of use of the right to reimbursement allow the correction of any imbalances created by the system in order to respond to the practical difficulties observed.'

See also the Court's press release regarding this case. For a summary and comment on another recent CJEU judgment on private copying levies, i.e. Joined Cases C-457/11 to C-460/11, VG Wort v Kyocera, please consult the blog of our colleagues at the Amsterdam Centre for European Law and Governance.

Fair compensation for copying - A-G Mengozzi's opinion in case C-521/11 Amazon v Austro-Mechana

The implementation of EU Directive 2001/29 (Copyright Directive) in the laws of the Member States continues to raise many questions, in particular regarding the 'fair compensation' to authors of copyright-protected work for private or non-commercial copies made of their work. A case currently pending before the Court of Justice of the EU, Case C-521/11 Amazon, concerns legal proceedings against the international company by that name which sells, among other things, books, CDs and information storage devices online. Austro-Mechana, an Austrian copyright association, has sued Amazon to pay a 'fair compensation' for the data storage devices (i.e. empty CDs and DVDs, memory cards and MP3 players) that Amazon brought to the Austrian market between 2002 and 2004. The Austrian Supreme Court has raised a number of preliminary questions concerning the extent to which the Austrian implementation of Directive 2001/29 can be regarded as establishing 'fair compensation' in the sense of Article 5(2)(b) of the Directive. This provision determines the following:

'2. Member States may provide for exceptions or limitations to the reproduction right provided for in Article 2 in the following cases: (...)

(b) in respect of reproductions on any medium made by a natural person for private use and for ends that are neither directly nor indirectly commercial, on condition that the rightholders receive fair compensation which takes account of the application or non-application of technological measures referred to in Article 6 to the work or subject-matter concerned;'

Today, Advocate-General Mengozzi delivered his opinion in the case (which is not yet available in English, so I refer to the original Italian text). He concludes that 'fair compensation' in the sense of the Directive is given in case national legislation guarantees that:

(a) the legal subjects indicated in Article 2 of the Directive without distinction have a right to fair compensation, which can only be relied upon by a collective copyright organisation, representative of the various rightholders, against the one who is the first to bring to a national market, for commercial purposes and for consideration, data storage devices meant to reproduce their works;

(b) the national legislative scheme, on the one hand, provides the possibility of a preceding exemption to pay fair compensation for natural and legal persons who may reasonably be considered, on the basis of objective data, to obtain the information carriers for clearly different purposes than those for which fair compensation needs to be paid and, on the other hand, the possibility to retrospectively claim restitution of fair compensation in all cases in which it is demonstrated that the use of the carrier could not have disadvantaged the author of the work.

The Advocate-General, furthermore, holds that it cannot be derived from Directive 2001/29 that there is no right to fair compensation in case a national legislative scheme determines that all revenues are meant to be paid to the authors, half as direct compensation and the other half indirectly. However, the referring national court should assess whether the application of the national measure in fact entails indirect compensation and without discrimination among categories of authors.

Finally, A-G Mengozzi is of the opinion that in case the circumstances entailing a right to fair compensation arise within the territory of a Member State, the Directive does not preclude the payment of compensation in case a similar compensation for bringing the information carriers on the market has already been paid in another Member State. The Member State in which fair compensation has unduly been paid should, however, provide a possibility for restitution.

Collective copyrights management

The BEUC published also this week its response to a proposal for a Directive on collective management of copyright, related rights and the multi-territorial licensing for online musical works. In its response the BEUC explains consumers interests in this law (enjoying access to more diverse content, hopefully, under more competitive prices) as well as suggests ways to improve the proposal (esp. with regards to more effective enforcement mechanisms). For the document see here.

Copyright in the digital market

Secondly, the Commission adopted a communication on copyright today, which presents points of action to keep the EU's copyright framework fit for purpose in the digital environment. The Commission's plans comprise the following:

'A structured stakeholder dialogue, jointly led by Commissioners Michel Barnier (Internal Market and Services), Neelie Kroes (Digital Agenda) and Androulla Vassiliou (Education, Culture, Multilingualism and Youth), will be launched in 2013 to seek to deliver rapid progress in four areas through practical industry-led solutions.

These areas are cross-border access and the portability of services; user-generated content and licensing for small-scale users of protected material; facilitating the deposit and online accessibility of films in the EU; and promoting efficient text and data mining for scientific research purposes.

In parallel, the on-going review of the EU framework for copyright legal will be completed, based on market studies, impact assessment and legal drafting work, with a view to a decision in 2014 on whether to table legislative reform proposals.'

Please refer to the press release and website for more information.

Do you copy that? - BEUC's new copyright strategy

In particular in the digital environment, consumers are more and more often facing questions concerning copyright. As the European consumer organisation BEUC puts it in a letter to European Commission President Barroso:

'From the consumers’ point of view, the current copyright framework is far from balanced. In many Member States, copyright law makes the everyday activities of consumers, such as backing up and copying legally bought music, films and e-books in order to play on a different device, illegal. Under current laws, parodies and pastiches which have gained new cultural relevance in the digital ‘mash up’ culture are illegal.'

According to BEUC, the current legal framework regarding consumers' use of copyright protected material is outdated, since it does not sufficiently take into account consumer expectations and the public interest. For that reason, BEUC has now published a Copyright Strategy, which lists specific action points for specific problems on the intersection of consumer law and copyright law. 

As regards consumer rights, BEUC's main suggestions are to:

• Recognise consumers as a key stakeholder in debates and discussions surrounding copyright law on equal footing as creators and copyright users;
• Assess the effectiveness of the current copyright law from the consumers’ perspective;
• Strike a balance by recognising a set of clear, comprehensive and absolute consumers’ rights;
• Revise the Copyright Directive 2001/29 with the aim of establishing a flexible, future-proof and consumer-friendly copyright law;
• Replace the current system of copyright exceptions and limitations with a system of user’s rights.