IN a ruling expected to bring about a more rational rule of law, the
European Court of Justice has held that Spain's piracy levy, placed on the
purchase of blank media, like CDs and DVDs was "indiscriminate", “unacceptable”
and “not compatible with European Union law”, especially when it taxed certain
groups like non-profit organizations, other than private individuals.
In
Spain, it was perfectly legal for anyone to make private copies of copyrighted
discs. However, to protect and compensate the creators against economic loss, a
private copying levy was imposed on purchase of blank CDs and DVDs or even
digital media and devices like DVD burners or MP3 players.
Under
this law, a non-profit Spanish organization, Sociedad General de Autores y
Editores (SGAE), a body responsible for the collective management of
intellectual property rights in Spain, claimed payment of the ‘private copying
levy' from a digital media company called Padawan, that marketed digital media
and devices, on the sale of its blank CDs and DVDs over the last few years.
However, Padawan refused and went to court arguing that European law did not
allow a levy in cases where there would be no private copying. But, the court
directed PADAWAN to pay more than € 16,000.
However, on appeal, the Audiencia Provincial de Barcelona (Provincial
Court, Barcelona), referred the case to the European Court of Justice, querying
the criteria to be taken into consideration in order to determine the question
of ‘fair compensation'.
The
Court ruled that a ‘private copying levy' was compatible with the requirement of
‘fair balance' only where the reproduction equipment, devices and media were
liable to be used for private copying and, therefore, were likely to cause harm
to the author of the protected work. The Court considered that there had to be a
necessary link between the application of the private copying levy and use for
private copying.
Consequently, the indiscriminate application of the private copying levy
to all types of digital reproduction equipment, devices and media, including
cases in which such equipment was acquired by persons other than natural persons
for purposes clearly unrelated to private copying, was incompatible with the
directive. For instance, when a government agency bought some computers with
built in DVD burners or a business that wanted to burn its own promotional CDs.
However, when the equipment had been made available to natural persons
for private purposes it was unnecessary to show that they had in fact made
private copies and actually caused harm to the author of the protected work.
These persons were presumed to take full advantage of the functions associated
with that equipment. Thus the fact that the equipment or devices were enabled to
make copies was sufficient in itself to justify the application of the private
copying levy provided that these devices had been made available to natural
persons as private users. The Court ruled that in the light of these answers, it
was for the national court to determine whether the Spanish ‘private copying
levy' was compatible with the directive.
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