ECJ decides private copying levies are not allowed for business use

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Deutsch: [‘Abgabe für Privatkopien’ laut EuGH auf gewerbliche Nutzer nicht anwendbar | http://www.unwatched.org/node/2324]

On 21 October 2010, the European Court of Justice (ECJ) decided that private
copying levies on blank CDs, MP3 players and other digital media are allowed
under EU copyright law only when charged on goods sold to individuals but
not to companies.

ECJ ruled that “the application of the ‘private copying levy’ to
reproduction media acquired by undertakings and professionals for purposes
other than private copying is not compatible with European Union law. Such a
levy may be applied to such media when they are liable to be used by natural
persons for their private use”.

In some European countries the unauthorised copying of works that a person
legitimately owns is allowed, on the condition that it is for private use.
The European Copyright Directive permits this, provided there is fair
compensation to the copyright holders. The compensation can be ensured by
charging a levy on the media (such as discs or media players used for
copying material) which is then distributed to rights holders through
collection societies.

ECJ thus ruled against the Spanish collective rights management agency SGAE
(Sociedad General de Autores y Editores) which had won a case filed against
Padawan, a store distributing discs and other devices, for unpaid copyright
levies. Padawan had claimed that the indiscriminate application of the levy
was not compatible with EU law and appealed the decision. The appeals court
asked the ECJ to rule on this case in relation to European law.

“The purpose of fair compensation is to compensate authors adequately for
the use made of their protected works without their authorisation. In order
to determine the level of that compensation, account must be taken as a
‘valuable criterion’ – of the ‘possible harm’ suffered by the author as a
result of the act of reproduction concerned, although prejudice which is
‘minimal’ does not give rise to a payment obligation. The private copying
exception must therefore include a system ‘to compensate for the prejudice
to rightholders’,” said the ruling.

ECJ considered the level of fair compensation was linked to “the harm
resulting for the author from the reproduction for private use of his
protected work without his authorisation.” And therefore “fair compensation
must be regarded as recompense for the harm suffered by the author.”

A levy was a reasonable mechanism for private individuals who were likely to
use material to copy and who should pay for the harm caused to authors, but
this should not be applied to other sales because the levy could not be
applied indiscriminately.

“The indiscriminate application of the private copying levy to all types of
digital reproduction equipment, devices and media, including cases in which
such equipment is acquired by persons other than natural persons for
purposes clearly unrelated to private copying, is incompatible with the
directive.”

Press Release no.106/10 of the EU Court of Justice (21.10.2010)
http://curia.europa.eu/jcms/upload/docs/application/pdf/2010-10/cp100106en.pdf

Judgment of the Court – case 467/08 Padawan SL vs SGAE (Third Chamber)
(21.10.2010)
http://curia.europa.eu/jurisp/cgi-bin/form.pl?lang=EN&Submit=rechercher&numaff=C-467/08

ECJ outlaws private copying levy on sales to businesses (21.10.2010)
http://www.out-law.com//default.aspx?page=11471

Brussels smackdown for Spanish media’n’kit copy levy (22.10.2010)
http://www.theregister.co.uk/2010/10/22/court_rules_on_spain_cd_copying_levy/