since merged), the two entities responsible for collecting the private copy levy, negligent. The court ordered them to pay 1 million euros to Rue de Commerce.
The issue arose with respect to the so-called “grey market” i.e., the market in which French consumers purchase, via foreign EU-based websites (states that do not apply a levy or apply a lower one than that which is applied under French law), media subject to the levy. Unhappy about the uneven playing field this creates, Rue de commerce filed an action in unfair competition against certain such foreign operators. After several years of litigation, the French Supreme Court (Cour de cassation) dismissed the action holding that these foreign vendors were neither manufacturers nor importers of the media (nor consumers) and were therefore not liable for payment of the levy. The Court added that they did however have the duty to inform the French consumer of his obligation to pay the levy.
Following this decision, Rue de commerce decided to sue Copie France and Sorecop. It argued, first, that they were not ensuring payment of the levy from the consumers who were purchasing media on the grey market and, secondly, that they were not doing enough to harmonize the levy rates applied across Europe (given that their representatives formed a majority on the private copying commission). The Paris High Court referred to the recent Opus ruling by the Court of Justice of the European Union (June 16, 2011) where the CJEU held :
“Directive 2001/29 ..., in particular Article 5(2)(b) and (5) thereof, must be interpreted as meaning that the final user who carries out, on a private basis, the reproduction of a protected work must, in principle, be regarded as the person responsible for paying the fair compensation provided for in Article 5(2)(b).
However, it is open to the Member States to establish a private copying levy chargeable to the persons who make reproduction equipment, devices and media available to that final user, since they are able to pass on the amount of that levy in the price paid by the final user for that service.
Directive 2001/29, in particular Article 5(2)(b) and (5) thereof, must be interpreted as meaning that it is for the Member State which has introduced a system of private copying levies chargeable to the manufacturer or importer of media for reproduction of protected works, and on the territory of which the harm caused to authors by the use for private purposes of their work by purchasers who reside there occurs, to ensure that those authors actually receive the fair compensation intended to compensate them for that harm. In that regard, the mere fact that the commercial seller of reproduction equipment, devices and media is established in a Member State other than that in which the purchasers reside has no bearing on that obligation to achieve a certain result. It is for the national court, where it is impossible to ensure recovery of the fair compensation from the purchasers, to interpret national law in order to allow recovery of that compensation from the person responsible for payment who is acting on a commercial basis.”
The Court held that, as direct collection from consumers was materially and financially unfeasible, the collection bodies ought to have taken action against the foreign sites. The Court pointed out that they should have brought proceedings for failure to inform French consumers
adequately of their liability to pay the levy. The Court states that
“tasked by the French State to collect this remuneration in favour of authors and bound to fulfil this mission in compliance with Community law, Sorecop and Copie France, once they determined that there was a distortion of competition and loss of remuneration for authors due to the foreign vendors, should have, by taking collection action, if necessary judicial, for the private copying remuneration against these foreign distributors, sought the necessary interpretation of French law on the quality of the person liable for payment of this remuneration”.
The Court also agreed with Rue de commerce that the two collection bodies could have done more to encourage harmonization of the levy rates across Europe in order to fight the grey market in light of their dominant position within the private copying commission.There's a link to the Paris High Court decision here
The Court concluded that the two collection bodies had been negligent (within the meaning of the general tort in the Civil Code) and that their negligence had caused Rue de Commerce a loss of chance to limit or eliminate the grey market and awarded it 1 million euros by way of damages".