IP Law Daily, COPYRIGHT—EUCJ: Austria’s private copying levy on first sale of recording media lawful when intended use is not private, (Jul 12, 2013)

By John W. Arden, J.D., LL.M.

Although European Union law generally allows copying for private purposes, Austria’s private copying levy—collected on the first sale of recording media suitable for reproduction—is not contrary to European Union law where the intended use of the media is not the making of private copies, the European Court of Justice has held (Amazon.com International Sales Inc. v. Austro-Mechana, July 11, 2013, Silva de Lapuerta, R.).

EU law does not allow a private copying levy to be collected in circumstances where the intended use is clearly the making of private copies, the court observed. However, EU law does not preclude a system of a general levy when the intended use is not the making of private copies.

The court held that there can be a rebuttable presumption that individuals use recording media (such as blank CDs, DVDs, memory cards, and M3P players) for private purposes where (1) practical difficulties in determining whether the use is private warrant the establishment of such a presumption and (2) the presumption does not result in the imposition of a private copying levy in cases where most media are clearly used for non-private purposes.

In this case, Austro-Mechana, an Austrian copyright collection society, brought an action against Amazon.com International Sales, Inc. for the payment of the “blank cassette levy” from 2002 through 2004. The Commercial Court of Vienna ordered Amazon to produce accounts but reserved its decision on the claim for payment. Amazon claimed that the blank cassette levy was contrary to EU law, on a number of grounds, and appealed to the Supreme Court of Austria. That court sought a ruling from the European Court of Justice on the interpretations of the relevant provisions of EU law.

The Court of Justice was asked whether Directive 2001/29 precludes a member state’s legislation that indiscriminately applies a private copying levy on the first sale in a national territory, for commercial purposes and consideration, of recording media suitable for reproduction, while at the same time providing for a right to reimburse the levies in the event that the final use of those media does not meet the criteria set out in the law.

The Court ruled that member states introducing the private copying exception from the copying law enjoy broad discretion when determining who must pay fair compensation for reproduction of copyrighted materials. It is open to the member states to establish a private copying levy for the purposes of financing fair compensation, chargeable not to private persons but to those who have the digital reproduction equipment, devices, and media, and make the equipment available to private users.

In the present case, the private copying levy was payable by those who make available, for commercial purposes and for consideration, recording media suitable for reproduction. The Court held that a system for financing fair compensation is compatible with the requirements of “fair balance” only if the digital reproduction equipment devices and media are liable to be used for private copying and, therefore, are likely to cause harm to the author of the protected work. If a member state has introduced a private copying exception to its national law, it must ensure the effective recovery of the fair compensation for the harm suffered by the copyright holders.

It is for the national court to verify whether the practical difficulties justify such a system of financing fair compensation and, if so, whether the right to reimbursement is effective and not excessively difficult, the Court stated.

Thus, the answer to the first question was that EU law does not preclude legislation that indiscriminately applies a private copying levy on the first sale for commercial purposes and for consideration while at the same time providing a right of reimbursement where practical difficulties justify such a system.

The second question was essentially whether EU law precludes the establishment of a rebuttable presumption of private use of recording media suitable for reproduction by means of a copying levy as described above. The Court held that such a rebuttable presumption is lawful provided that the presumption does not result in the imposition of the private copying levy in cases where the final use of those media clearly are used for non-private purposes.

The third question asked whether a private copying levy can be excluded because half of the levy is paid, not directly to those entitled to fair compensation, but to social or cultural institutions set up for the benefit of those entitled. The Court said that such a system is not to be excluded provided that the institutions actually benefit those entitled.

Finally, the fourth question asked whether the payment of a private copying levy may be excluded by reason of the fact that a comparable levy has already been paid by the party in another member state. The Court held that the payment in another state is not a reason to exclude the payment under a private copying levy.

The case is C-521/11.

Companies: Amazon.com International Sales, Inc.

Cases: Copyright