The EGEDA opinion on fair compensation

 What stance did Advocate General (AG) Maciej Szpunar take on whether fair compensation, payable in respect of the private copying exception, could be financed from state resources and not from the users of the private copies in C-470/14:Entidad de Gestión de Derechos de los Productores Audiovisuales (EGEDA) and Others v Administración del Estado and Others?

What were the questions referred to the CJEU?

The two questions referred to the Court of Justice of the European Union (CJEU) for a preliminary ruling related to the interpretation of article 5(2) (b) of Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society (InfoSoc Directive).

The two questions were:

  1. Is a scheme for fair compensation for private copying compatible with InfoSoc Directive, art 5(2)(b) where the scheme, taking as a basis an estimate of the harm actually caused, is financed from state resources, and the cost of compensation is therefore not borne by the users of those private copies?
  2. If yes, is the scheme compatible with that provision where the total amount allocated via state resources to fair compensation for private copying has to be set within budgetary limits established for each financial year?

What did the AG opine?

The AG’s opinion was not translated into English, therefore a very brief summary follows based on an unofficial translation.

A scheme for fair compensation, taking as a basis an estimate of the harm actually caused to the rightholders, financed from state resources would be compatible with InfoSoc Directive, art 5 (2)(b). However, such a scheme would not be compatible if set within predetermined budgetary limits as this would not reflect the actual harm suffered by the rightsholders.

What does this mean for UK lawyers?

There is currently no personal copying for private use exception in force in the UK. The personal copying for private use exception (known also as the format shifting exception) came into force on 1 October 2014. However, in July 2015 the Copyright and Rights in Performances (Personal Copies for Private Use) Regulations 2014, SI 2014/2361were quashed in their entirety with prospective effect. This followed a judicial review hearing brought by the Musicians’ Union (MU), the British Academy of Songwriters, Composers and Authors (BASCA) and UK Music.

Following the quashing of the private copying regulations the Secretary of State considered the options available for the private copying exception. In November 2015, Michael Prior, head of the copyright legal framework at the Intellectual Property Office (IPO), said that the government has no plans to take legislative action to reintroduce the private copying exception. He said the IPO was taking advice from the Office of the Parliamentary Counsel on the issue of removing section 28B of the Copyright Designs and Patents Act 1988 and the Copyright Regulations from the statute book.

However, UK IP lawyers who work across Europe and internationally will be interested in EGEDA as yet another fair compensation referral to the CJEU that focusses, when determining the nature and level of fair compensation, on the harm which is suffered by the right holder by the copying in question.

If the CJEU judgment follows the AG’s opinion and if the UK government decides to ‘unquash’ the private copying exception, then EGEDA may provide useful guidance on how to deal with the issue of fair compensation, including a possible move away from a levy system to another system or systems that reflect the current technological state of play. In this opinion the AG seems to suggest that the AG would be open to suggestions regarding such a system.

Joshy Thomas, solicitor in the Lexis®PSL IP & IT team.

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