Case C-463/12 Copydan Båndkopi v. Nokia Danmark A/S

By Nikolaos Theodorakis

On March 5, 2015 the Court of Justice of the European Union (“the Court”, “CJEU”) ruled in Case C-463/12 Copydan Båndkopi v. Nokia Danmark A/S (‘Copydan’). The predominant issue was the private copying exception found in Article 5(2)(b) of Directive 2001/29/EC. Relevant case law includes the decisions on Padawan, Stichting de Thuiskopie,Luksan, VG Wort, Amazon.com and, ACI Adam. Other pending decisions include C-572/13 Hewlett-Packard and C-470/14 Egeda.

Factual background

Nokia Corporation sold mobile phones to business customers in Denmark, who then resold them to individuals and business customers. Nokia phones have, by default, a non-detachable storage device, widely known as internal memory. Certain models also have a detachable memory card; on these cards users can, inter alia, store files that might be subject to copyright issues (e.g. films, music, pictures). Detachable memory cards are, therefore, multifunctional media since they can equally be used for private copying and issues unrelated to private copying (e.g. storing personal data). For that purpose, the Danish collecting society,[1] Copydan Båndkopi, claimed that Nokia had to pay a private copying levy from 2004 to 2009, when detachable memory cards that were imported into Denmark were used for mobile phones.

Nokia appealed on multiple grounds and, subsequently, the Danish Eastern Court (Østre Landsret) submitted the case before the CJEU. The topics included in the reference are (i) the admissibility of levies on multifunctional media and on media components, (ii) the detailed arrangements for the charging of the levy, (iii) the possibility of de minimis harm, (iv) the impact of rights holders’ authorisation on the limitation, (v) the impact of technical protection measures (TPMs), (vi) the unlawful nature of the source of the copy, and (vii) the impact of the use of third party devices for private copying.

Advocate General Villalón issued his opinion in mid-2014, prior to the Court’s decision. When addressing the questions, the Court defined the objectives of the 2001/29/EC Directive as found in recitals 9, 10, 31, 32, 35, 38 and 39 in the preamble to the Directive.

Findings

(i) Levies on multifunctional media

The first question related to the admissibility of levies on multifunctional media, and the Court followed the AG’s view in that the capacity for media to be used for private copying suffices for it to be considered a legitimate levy target. The underlying rationale is that users are in principle taking full advantage of the functions that the medium provides. Yet, the function might affect the compensation since this pertains to the relative importance of the medium’s capacity to reproduce works for private use, and in case of negligible copying, the de minimis provision might apply.

The next question related to whether only certain detachable memory cards are admissible for levies and not internal memory components of other devices, where both are used for private copying. The Court emphasized the need to address limitations pursuant to the equal treatment principle, noting that different treatment of comparable levy targets must be justified. In other words, a national system cannot differentiate between similar categories of media, except where justified.

(ii) Arrangements for the charging of the levy

The Danish system imposed the levy on producers and importers of mobile phone cards to business customers who then resold them to end users. The Court recognized an exemption for producers/ importers if they can establish that a media was sold to professional entities and for purposes other than private copying.

(iii) De minimis harm

On the issue of de minimis harm, the Court recognized that the enjoy discretion when setting the benchmark for what is minimal. This definition must, however, be in concordance with, among other things, the principle of equal treatment (Article 30 of the Charter).

(iv) Rights holders’ authorisation and remuneration

With regard to the impact of rights holders’ approval, the Court addressed in VG Wort that, if an exception covers an end-user, any authorisation by rights holders is irrelevant as for the purposes of fair compensation since they are permissible regardless of authorisation. The Court furthered this doctrine in Copydan, stating that it also applies where a work is made available subject to payment.

(v) Impact of TPMs

The impact that TPMs have on devices on the condition of fair compensation vis-à-vis private copies was analysed in accordance with VG Wort and ACI Adam. TPMs allow rights holders to restrict unauthorised acts and help define the scope of the limitation. Because of their voluntary nature, the condition of fair compensation remains applicable, yet Member States may decide that TPM application has an impact on the level of fair compensation.

(vi) Unlawful sources

The court limited its interpretation of unlawful sources to those made available to the public without the consent of the rights holders. The Court found the Østre Landsret reference inadmissible since it did not provide sufficient information regarding the nature of the reproductions.

(vii) Third party device used for copying

The final question relates to whether national law that places levies on copies made by an individual through a third party device is compatible with the Directive (e.g. DVDs and CDs made by an individual). The Court, after defining the exception’s scope, notes that Article 5(2)(b) makes no reference to such connections and does not relate to the use of third party devices for copies. Overall, national legislation imposing a levy on third party devices used for private copying is compatible with the Directive since the choice to levy these devices is outside the scope of the Directive and thus within the margin of discretion of Member States.

Conclusions

The judgment in Copydan overall tackles a breadth of issues related to private copying and levies. It does not depart from previous decisions such as VG Wort and ACI Adam. Yet, time will tell whether the Court will follow the same train of thought in pending cases, or whether it will redefine the nebulous concepts of unlawful sources and third party devices used for copying, which were not adequately addressed in Copydan.

[1] A copyright collecting society is created through copyright law or a private agreement, and focuses on collective rights management. In doing so, it licenses copyrighted works, negotiates future licenses, collects, and distributes royalties.

 

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