On 12 November 2015, the Court of Justice of the European Union (the "ECJ") gave judgment in a dispute that had arisen between Hewlett-Packard Belgium ("HP") and Reprobel (Case C-572/13, Hewlett-Packard v. Reprobel). The judgment resulted from a request for a preliminary ruling formed by the Court of Appeal of Brussels concerning the interpretation of Articles 5(2)(a) and 5(2)(b) of Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society (the "Infosoc Directive"). For a comment on the Advocate General's opinion on the request for a preliminary ruling (See, VBB on Business Law, Volume 2015, No. 6, p. 13, available at www.vbb.com).

Background

The Brussels Court of Appeal (the "Court") referred four questions to the ECJ for a preliminary ruling on the interpretation of Articles 5(2)(a) and 5(2)(b) of the Infosoc Directive. These provided for limited exceptions to the copyright holder's reproduction right in respect of specific reproductions on paper (the reprography exception) and copies made for private and non-commercial use (the private copying exception). The right holders receive fair compensation for these statutory restrictions to their exclusive rights in the form of a levy determined by national law.

Reprobel, a Belgian copyright management society, had asked HP to pay a levy for the sale of multifunctional printers. Since Reprobel and HP did not reach an agreement on the amount due, HP brought an action against Reprobel.

ECJ Ruling

First, the ECJ assessed whether the Infosoc Directive allows the amount of the levy to vary according to the person who makes the reproduction and the commercial or non-commercial nature of the copies.

The ECJ started its analysis by recalling that the notion of 'fair compensation' is an autonomous concept of EU law that must be interpreted uniformly in all the Member States which introduced a private copying exception. The ECJ added that fair compensation must be calculated on the basis of the criterion of the harm caused to authors of protected works.

The ECJ then considered that reproductions made for private use and for ends that are neither directly nor indirectly commercial by natural persons and those made by other users and/or for other ends would cause right holders different degrees of harm. It held that it was reasonable for fair compensation under the reprography exception to depend on whether the reproduction is carried out by users generally or by a natural person for private use and for ends that are neither directly nor indirectly commercial.

Second, the ECJ had been asked whether the InfoSoc Directive allowed publishers to be beneficiaries of the fair compensation.

The ECJ noted that publishers are not among the reproduction right holders listed in Article 2 of the InfoSoc Directive. The ECJ further considered that fair compensation is intended to compensate right holders for the harm suffered as a result of the reproduction of their works without their prior authorisation. Publishers do not qualify as holders of the exclusive reproduction right under Article 2 of the InfoSoc Directive. As a result, publishers do not suffer harm due to reproductions made under the two exceptions contained in the Infosoc Directive. As a result, the ECJ ruled that publishers cannot receive compensation.

Third, the ECJ addressed the question whether the Infosoc Directive precludes national legislation which includes the copying of sheet music and counterfeit reproductions made from an unlawful source within the national system of fair compensation.

The ECJ indicated that sheet music is expressly excluded from the scope of the reprography exception under Article 5(2)(a). It underlined the necessity to also exclude sheet music from the scope of the private copying exception under Article 5(2)(b) as well.

Since such copies fall outside the scope of the exceptions and the fair compensation is intended to compensate for the copies permitted under these exceptions, the ECJ concluded that Articles 5(2)(a) and (b) preclude national legislations which introduce an undifferentiated system for recovering fair compensation that also covers the copying of sheet music.

Fourth, the ECJ then addressed the issue of reproductions from unlawful sources. The ECJ recalled how these are outside the scope of the private copying exception. According to the ECJ, allowing such an exception would conflict with the three-step test of Article 5(5) of the InfoSoc Directive. According to this provision, exceptions to and limitations of copyright should only be applied in special cases that do not conflict with a normal exploitation of the copyrighted work and do not unreasonably prejudice the legitimate interests of the rightholder.

As a final issue, the ECJ assessed whether the combined levy system in Belgium is compatible with the InfoSoc Directive. In particular, the Belgium system combines, on the one hand, a lump-sum levy due prior to the reproduction operation based on the speed at which the device in question technically produces copies (pages per minute) and, on the other hand, an amount recovered on a yearly basis that is proportional to the number of copies actually produced.

The ECJ held that Articles 5(2)(a) and 5(2)(b) preclude this type of national legislation in so far as:

  • the lump-sum remuneration paid in advance is calculated solely by reference to the speed at which the device concerned is capable of producing copies;
  • the proportional remuneration recovered after the fact varies according to whether or not the person liable for payment cooperated in the recovery of that remuneration;
  • the combined system, taken as a whole, does not include mechanisms, in particular for reimbursement, which allow the complementary application of the criterion of actual harm suffered and the criterion of harm established as a lump sum in respect of different categories of users.

In conclusion, the ECJ clearly established the link between harm and fair compensation. Nevertheless, the further guidance provided by the ECJ may not be easy to apply in practice. This will be a task for the referring court in the case at hand. In addition, the rule-maker must also take account of the ECJ guidance in its revision of the national system of fair compensation.

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