EGEDA and Others (Judgment) [2016] EUECJ C-470/14 (09 June 2016)

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(Reference for a preliminary ruling — Intellectual and industrial property — Copyright and related rights — Directive 2001/29/EC — Article 5(2)(b) — Reproduction right — Exceptions and limitations — Private copying — Fair compensation — Financing from the General State Budget — Whether permissible — Conditions)

REQUEST for a preliminary ruling under Article 267 TFEU from the Tribunal Supremo (Supreme Court, Spain), made by decision of 10 September 2014, received at the Court on 14 October 2014, in the proceedings

Asociación Multisectorial de Empresas de la Electrónica, las Tecnologías de la Información y la Comunicación, de las Telecomunicaciones y de los contenidos Digitales (Ametic),

Entidad de Gestión, Artistas, Intérpretes o Ejecutantes, Sociedad de Gestión de España (AIE),

composed of J. Malenovský (Rapporteur), acting as President of the Chamber, M. Safjan, A. Prechal, S. Rodin and K. Jürimäe, Judges,

having regard to the written procedure and further to the hearing on 1 October 2015,

– Entidad de Gestión de Derechos de los Productores Audiovisuales (EGEDA), Derechos de Autor de Medios Audiovisuales (DAMA) and Visual Entidad de Gestión de Artistas Plásticos (VEGAP), by J. Suárez Lozano, abogado,

– Asociación Multisectorial de Empresas de la Electrónica, las Tecnologías de la Información y la Comunicación, de las Telecomunicaciones y de los contenidos Digitales (Ametic), by A. González García and D. Sarmiento Ramirez-Escudero, abogados,

– Artistas Intérpretes, Sociedad de Gestión (AISGE), by J. Montes Relazón, abogado,

– Centro Español de Derechos Reprográficos (CEDRO), by S. Vázquez Senin, procuradora, and by I. Aramburu Muñoz and J. de Fuentes Bardají, abogados,

– Asociación de Gestión de Derechos Intelectuales (AGEDI), Entidad de Gestión, Artistas, Intérpretes o Ejecutantes, Sociedad de Gestión de España (AIE) and Sociedad General de Autores y Editores (SGAE), by J. Marín López and R. Blanco Martínez, abogados,

– the Finnish Government, by J. Heliskoski, acting as Agent, and L. Holopainen and M. Grönroos, experts,

– the European Commission, by É. Gippini Fournier and J. Samnadda, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 19 January 2016,

1 This request for a preliminary ruling concerns the interpretation of Article 5(2)(b) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ 2001 L 167, p. 10).

2 The request has been made in proceedings between, on the one hand, Entidad de Gestión de Derechos de los Productores Audiovisuales (EGEDA), Derechos de Autor de Medios Audiovisuales (DAMA) and Visual Entidad de Gestión de Artistas Plásticos (VEGAP), and, on the other hand, the Administración del Estado (State Administration, Spain) and the Asociación Multisectorial de Empresas de la Electrónica, las Tecnologías de la Información y la Comunicación, de las Telecomunicaciones y de los contenidos Digitales (Ametic) in connection with national legislation relating to a scheme for fair compensation for private copying financed from the General State Budget.

‘(4) A harmonised legal framework on copyright and related rights, through increased legal certainty and while providing for a high level of protection of intellectual property, will foster substantial investment in creativity and innovation, including network infrastructure, and lead in turn to growth and increased competitiveness of European industry, both in the area of content provision and information technology and more generally across a wide range of industrial and cultural sectors. This will safeguard employment and encourage new job creation.

(9) Any harmonisation of copyright and related rights must take as a basis a high level of protection, since such rights are crucial to intellectual creation. Their protection helps to ensure the maintenance and development of creativity in the interests of authors, performers, producers, consumers, culture, industry and the public at large. Intellectual property has therefore been recognised as an integral part of property.

(31) A fair balance of rights and interests between the different categories of rightholders, as well as between the different categories of rightholders and users of protected subject matter must be safeguarded. The existing exceptions and limitations to the rights as set out by the Member States have to be reassessed in the light of the new electronic environment. Existing differences in the exceptions and limitations to certain restricted acts have direct negative effects on the functioning of the internal market of copyright and related rights. Such differences could well become more pronounced in view of the further development of transborder exploitation of works and cross-border activities. In order to ensure the proper functioning of the internal market, such exceptions and limitations should be defined more harmoniously. The degree of their harmonisation should be based on their impact on the smooth functioning of the internal market.

(35) In certain cases of exceptions or limitations, rightholders should receive fair compensation to compensate them adequately for the use made of their protected works or other subject matter. When determining the form, detailed arrangements and possible level of such fair compensation, account should be taken of the particular circumstances of each case. …

(38) Member States should be allowed to provide for an exception or limitation to the reproduction right for certain types of reproduction of audio, visual and audio-visual material for private use, accompanied by fair compensation. This may include the introduction or continuation of remuneration schemes to compensate for the prejudice to rightholders. … ’

4 Article 2 of that directive, entitled ‘Reproduction right’, provides, inter alia:

‘Member States shall provide for the exclusive right to authorise or prohibit direct or indirect, temporary or permanent reproduction by any means and in any form, in whole or in part:

5 Article 5 of that directive, entitled ‘Exceptions and limitations’, provides, inter alia, in paragraph 2:

‘Member States may provide for exceptions or limitations to the reproduction right provided for in Article 2 in the following cases:

(b) in respect of reproductions on any medium made by a natural person for private use and for ends that are neither directly nor indirectly commercial, on condition that the rightholders receive fair compensation which takes account of the application or non-application of technological measures referred to in Article 6 to the work or subject matter concerned;

6 The Real Decreto-Ley 20/2011 sobre medidas urgentes en materia presupuestaria, tributaria y financiera para la corrección del déficit público (Royal Decree-Law 20/2011 concerning urgent budgetary, taxation and financial measures for correcting the public deficit) of 31 December 2011 (BOE No 315 of 31 December 2011, p. 146 574) contains a Tenth Additional Provision, entitled ‘Modification of the fair compensation scheme for private copying’ (‘the Tenth Additional Provision’), which provides, inter alia:

‘1. The fair compensation for private copying, provided for under Article 25 of the [Texto Refundido de la Ley de Propiedad Intelectual (consolidated text of the Intellectual Property Law)], approved by the [Real Decreto Legislativo 1/1996 (Royal Legislative Decree 1/1996)] of 12 April 1996, and the limits of which are defined in Article 31(2) of that law, is abolished.

2. The government shall establish, by legislative act, the procedure for payment to tax collectors of the fair compensation financed by the General State Budget.

7 The Real Decreto 1657/2012 que regula el procedimiento para el pago de la compensación por copia privada con cargo a los Presupuestos Generales del Estado (Royal Decree 1657/2012 regulating the procedure for paying fair compensation in respect of private copying from the General State Budget) of 7 December 2012 (BOE No 295 of 8 December 2012, p. 84 141) seeks to implement the Tenth Additional Provision.

(a) the procedure and objective criteria for determining the annual amount of fair compensation for private copying based on the harm caused;

(b) the procedure for the calculation and payment to the beneficiaries of fair compensation for private copying financed by the General State Budget.’

9 Article 3 of that royal decree, entitled ‘Amount of Compensation’, provides, inter alia, in paragraph 1:

‘The appropriate amount to compensate for the harm to copyright holders resulting from the introduction of the private copying exception defined in Article 31 of the consolidated text of the Intellectual Property Law, approved by Royal Legislative Decree 1/1996 of 12 April 1996, is to be determined, within the budgetary limits established for each financial year, by order of the Minister for Education, Culture and Sport, in accordance with the procedure laid down in Article 4.’

The dispute in the main proceedings and the questions referred for a preliminary ruling

10 The applicants in the main proceedings are intellectual property rights collecting societies which are entitled to collect the fair compensation due to copyright holders in situations of private copying of their protected works or subject matter.

11 On 7 February 2013 they brought an action for annulment of Royal Decree 1657/2012 before the Tribunal Supremo (Supreme Court, Spain) sitting as a court with jurisdiction in administrative disputes.

12 That court subsequently authorised Artistas Intérpretes, Sociedad de Gestión (AISGE), Centro Español de Derechos Reprográficos (CEDRO), Asociación de Gestión de Derechos Intelectuales (AGEDI), Entidad de Gestión, Artistas, Intérpretes o Ejecutantes, Sociedad de Gestión de España (AIE) and Sociedad General de Autores y Editores (SGAE) to intervene in the proceedings. A number of those other intellectual property rights collecting societies brought their own actions against Royal Decree 1657/2012.

13 In support of their claims, the applicants in the main proceedings submit that Royal Decree 1657/2012 is incompatible with Article 5(2)(b) of Directive 2001/29 in two respects. First, they submit, in essence, that Article 5(2)(b) of Directive 2001/29 requires that the fair compensation granted to rightholders in situations of private copying is to be borne, at least ultimately, by the natural persons at the origin of the harm to their exclusive right of reproduction caused by such copying, whereas the scheme established by Tenth Additional Provision and by Royal Decree 1657/2012 places the burden of that compensation on the General State Budget, and therefore on all taxpayers. Second, they argue that that scheme does not guarantee the fairness of that compensation.

14 For their part, the defendants in the main proceedings contend that Article 5(2)(b) of Directive 2001/29 does not preclude a Member State from establishing a scheme such as that established by the Tenth Additional Provision and by Royal Decree 1657/2012.

15 After recalling the background which led the Spanish authorities to replace the digital levy scheme in place until 2011 with a scheme for fair compensation for private copying financed from the General State Budget, the referring court notes first of all that, in conformity with the principle that budgetary revenue is not to be assigned to a specific purpose, the new scheme is, unlike that which preceded it, funded by all Spanish taxpayers regardless of whether they may make private copies or not. The referring court then asks in essence whether Directive 2001/29 must be interpreted as meaning that it requires Member States who opt for such a scheme to ensure, in the same way as when they favour implementing a levy, that its cost is borne, either directly or indirectly, solely by the persons deemed to have caused harm to the rightholders on the grounds that they make, or have the capacity to make, private copies. If not, the referring court wishes to know whether the fact that the sum allocated for payment of fair compensation to rightholders is predetermined for each financial year is such as to guarantee the fairness of that compensation.

16 In those circumstances, the Tribunal Supremo (Supreme Court) decided to stay the proceedings and refer the following questions to the Court of Justice for a preliminary ruling:

‘(1) Is a scheme for fair compensation for private copying compatible with Article 5(2)(b) of Directive 2001/29 where the scheme, while taking as a basis an estimate of the harm actually caused, is financed from the General State Budget, it thus not being possible to ensure that the cost of that compensation is borne by the users of private copies?

(2) If the first question is answered in the affirmative, is the scheme compatible with Article 5(2)(b) of Directive 2001/29 where the total amount allocated by the General State Budget to fair compensation for private copying, although it is calculated on the basis of the harm actually caused, has to be set within the budgetary limits established for each financial year?’

17 By its first question the referring court asks in essence whether Article 5(2)(b) of Directive 2001/29 must be interpreted as precluding a scheme for fair compensation for private copying which, as in the main proceedings, is financed from the General State Budget, and under which it is not possible to guarantee that the cost of that fair compensation is borne by the users of private copies.

18 In the first place, it must be observed in that respect that, in accordance with Article 5(2)(b) of Directive 2001/29, Member States may provide for an exception or limitation to the exclusive reproduction right provided for under Article 2 of that directive in the case of reproductions on any medium made by a natural person for private use and for ends that are neither directly nor indirectly commercial, on the condition that the exclusive rightholders receive fair compensation, taking account of the technological measures referred to in Article 6 of that directive (‘the private copying exception’).

19 As is apparent from recitals 35 and 38 of Directive 2001/29, that provision reflects the EU legislature’s intention to establish a specific compensation scheme which is triggered by the existence of harm caused to rightholders, which gives rise, in principle, to the obligation to ‘compensate’ them (see, to that effect, judgment of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraph 41).

20 It follows that, when the Member States decide to implement the private copying exception provided for under that provision in their national law, they are required, in particular, to provide for the payment of fair compensation to rightholders (see, to that effect, judgments of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraph 30, and 5 March 2015 in Copydan Båndkopi, C‑463/12, EU:C:2015:144, paragraph 19).

21 Furthermore, the Court has already held that, if Article 5(2)(b) of Directive 2001/29 is not to be devoid of all practical effect, that provision must be regarded as imposing an obligation to achieve a certain result upon the Member States which have implemented the private copying exception, in the sense that they must guarantee, within the framework of their competences, the actual recovery of the fair compensation intended to compensate the rightholders (see, to that effect, judgments of 16 June 2011 in Stichting de Thuiskopie, C‑462/09, EU:C:2011:397, paragraph 34, and 11 July 2013 in Amazon.com International Sales and Others, C‑521/11, EU:C:2013:515, paragraph 57).

22 Nonetheless, in so far as that provision is merely optional and does not provide any further details concerning the various parameters of the fair compensation scheme that it requires to be established, the Member States must be considered to enjoy broad discretion in regard to the parameters of their national law (see, to that effect, judgments of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraph 37; 11 July 2013 in Amazon.com International Sales and Others, C‑521/11, EU:C:2013:515, paragraph 20; and 5 March 2015 in Copydan Båndkopi, C‑463/12, EU:C:2015:144, paragraph 20).

23 In particular, it falls to the Member States to determine the persons who have to pay that fair compensation, and to determine the form, detailed arrangements and level thereof, in compliance with Directive 2001/29 and, more generally, with EU law (see, to that effect, judgments of 16 June 2011 in Stichting de Thuiskopie, C‑462/09, EU:C:2011:397, paragraph 23; 11 July 2013 in Amazon.com International Sales and Others, C‑521/11, EU:C:2013:515, paragraph 21; and 5 March 2015 in Copydan Båndkopi, C‑463/12, EU:C:2015:144, paragraph 20).

24 Taking account of that broad discretion, and even though the case-law cited at paragraphs 19 to 23 above has been developed in the context of fair compensation schemes financed by a levy, Article 5(2)(b) of Directive 2001/29 cannot be regarded as precluding, in principle, Member States which have decided to introduce the private copying exception from choosing to establish, in that context, a fair compensation scheme financed not by such a levy, but by their General State Budget.

25 Indeed, provided that such an alternative scheme guarantees the payment of fair compensation to rightholders on the one hand, and that its detailed arrangements guarantee actual recovery on the other, it must be regarded as being, in principle, compatible with the essential objective of Directive 2001/29, namely, as is apparent from recitals 4 and 9, to ensure a high level of intellectual property and copyright protection.

26 In the second place, it is clear from recitals 35 and 38 of Directive 2001/29 that the fair compensation provided for in Article 5(2)(b) of that directive is intended to adequately compensate rightholders for the non-authorised use of their protected works or subject matter. In order to determine the level of that compensation, account must be taken, as a useful criterion, of the harm suffered by the rightholder concerned as a result of the act of reproduction at issue (see, to that effect, judgment of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraph 39).

27 It follows that it is for the persons who reproduce the protected works or subject matter without the prior authorisation of the rightholder concerned, and who therefore cause harm to them, to make good that harm by financing the fair compensation provided for that purpose (see, to that effect, judgments of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraph 45, and 12 November 2015 in Hewlett-Packard Belgium, C‑572/13, EU:C:2015:750, paragraph 69).

28 In that regard, the Court has made clear that it is not at all necessary for such persons to have actually made private copies. Indeed, where the appliances or reproduction media are made available to them, that availability is sufficient to justify their contribution to the financing of the fair compensation provided to rightholders (see, to that effect, judgments of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraphs 54 to 56, and 5 March 2015 in Copydan Båndkopi, C‑463/12, EU:C:2015:144, paragraphs 24, 25 and 64).

29 It follows from the clear terms of Article 5(2)(b) of Directive 2001/29 that the private copying exception is intended exclusively for natural persons making, or having the capacity to make, reproductions of protected works or subject matter for private use and for purposes neither directly nor indirectly commercial (see, to that effect, judgments of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraphs 43 to 45 and 54 to 56, and 5 March 2015 in Copydan Båndkopi, C‑463/12, EU:C:2015:144, paragraphs 22 to 25 and 64).

30 It follows that, unlike natural persons who fall within the private copying exception under the conditions specified by Directive 2001/29, legal persons are in any case excluded from benefiting from that exception and thus they are not entitled to make private copies without receiving prior authorisation from the rightholders of the protected works or subject matter concerned.

31 In that regard the Court has already ruled that it is inconsistent with Article 5(2) of Directive 2001/29 to apply a private copying levy, in particular with regard to digital reproduction equipment, devices and media which are acquired by persons other than natural persons for purposes clearly unrelated to such private copying (see, to that effect, judgments of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraph 53, and 11 July 2013 in Amazon.com International Sales and Others, C‑521/11, EU:C:2013:515, paragraph 28).

32 However, such an interpretation of Article 5(2)(b) of Directive 2001/29 does not preclude legal persons being, where appropriate, under an obligation for the financing of the fair compensation intended for rightholders as compensation for that private copying.

33 The Court has thus accepted that, given the practical difficulties which might arise when implementing such financing, Member States were free to finance that fair compensation by means of a levy imposed, prior to the making of private copies, on persons who have reproduction equipment, devices and media and make them available to natural persons (see, to that effect, judgments of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraph 46; 16 June 2011 in Stichting de Thuiskopie, C‑462/09, EU:C:2011:397, paragraph 27; 11 July 2013 in Amazon.com International Sales and Others, C‑521/11, EU:C:2013:515, paragraph 24; and 5 March 2015 in Copydan Båndkopi, C‑463/12, EU:C:2015:144, paragraph 46).

34 Nothing prevents persons from passing on the private copying levy by including it in the price charged for making the reproduction equipment, devices and media available or in the price for the copying service supplied. Thus, the burden of the levy will ultimately be borne by the private user who pays that price. In those circumstances, the private user for whom the reproduction equipment, devices or media are made available or who benefits from a copying service must be regarded as being, in reality, the ‘person indirectly liable to pay’ fair compensation, that is to say the person actually liable for payment (see, to that effect, judgment of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraph 48).

35 Financing such as that referred to in paragraph 33 above must therefore be regarded as consistent with the fair balance that is to be struck, in accordance with recital 31 of Directive 2001/29, between the interests of rightholders and the interests of users (see, to that effect, judgments of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraph 49; 16 June 2011 in Stichting de Thuiskopie, C‑462/09, EU:C:2011:397, paragraphs 28 and 29; and 5 March 2015 in Copydan Båndkopi, C‑463/12, EU:C:2015:144, paragraph 53).

36 It follows from that line of case-law that, as EU law currently stands, although Member States are indeed free to establish a scheme under which legal persons are, under certain conditions, liable to pay the levy intended to finance the fair compensation referred to in Article 5(2)(b) of Directive 2001/29, such legal persons should not in any event be the persons ultimately actually liable for payment of that burden.

37 The considerations underlying that case-law apply in all situations in which a Member State has introduced the private copying exception, regardless of whether it has established a fair compensation scheme financed by a levy or, as is the case in the main proceedings, financed by its General State Budget.

38 It should be borne in mind that the concept of fair compensation is not defined by reference to national law, and it must thus be regarded as an autonomous concept of EU law and interpreted uniformly throughout the territory of the European Union (see, to that effect, judgments of 21 October 2010 in Padawan, C‑467/08, EU:C:2010:620, paragraphs 31 to 33 and 37, and 12 November 2015 in Hewlett-Packard Belgium, C‑572/13, EU:C:2015:750, paragraph 35).

39 In the present case, it is clear from the order for reference that, taking account of the fact that there is no definite allocation of revenue — such as revenue from a specific levy — to particular expenditure, the budgetary item intended for the payment of the fair compensation must be regarded as being financed from all the budget resources of the General State Budget and therefore also from all taxpayers, including legal persons.

40 Moreover, there is nothing in the file submitted to the Court to suggest that there is, in the present case, a particular measure allowing legal persons, which do not in any event fall within Article 5(2)(b) of Directive 2001/29, to request to be exempted from contributing to the financing of that compensation or, at least, to seek reimbursement (see, in that regard, judgments of 11 July 2013 in Amazon.com International Sales and Others, C‑521/11, EU:C:2013:515, paragraphs 25 to 31 and 37, and 5 March 2015 in Copydan Båndkopi, C‑463/12, EU:C:2015:144, paragraph 45) under the detailed rules that it is solely for the Member States to establish.

41 In those circumstances and as the referring court points out in the very question referred, such a scheme for financing the fair compensation from the General State Budget of the Member State concerned is not such as to guarantee that the cost of that compensation is ultimately borne solely by the users of private copies.

42 In the light of all those considerations, the answer to the first question is that Article 5(2)(b) of Directive 2001/29 must be interpreted as precluding a scheme for fair compensation for private copying which, like the one at issue in the main proceedings, is financed from the General State Budget in such a way that it is not possible to ensure that the cost of that compensation is borne by the users of private copies.

43 In the light of the answer given to the first question, there is no need to answer the second question referred to the Court.

44 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Article 5(2)(b) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as precluding a scheme for fair compensation for private copying which, like the one at issue in the main proceedings, is financed from the General State Budget in such a way that it is not possible to ensure that the cost of that compensation is borne by the users of private copies.

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> EGEDA and Others (Judgment) [2016] EUECJ C-470/14 (09 June 2016) URL: http://www.bailii.org/eu/cases/EUECJ/2016/C47014.html Cite as: ECLI:EU:C:2016:418, [2016] EUECJ C-470/14, EU:C:2016:418

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