Every Friday a Cabinet meeting is held to decide on a variety of matters; its utterances are the last word on all such matters at an administrative level, although the legitimate interests of anyone who believes he is negatively affected can still be decided on the Courts.
One of the issues discussed at a recent Cabinet meeting was the Spanish State's potential liability following amendment of the private copying compensation which caused the annulment of the copyright levy system as a whole. That law was passed by the Royal Decree of 30 December 2011, in force as of 1 January 2012, the new system having been enacted by Royal Decree 1657/2012 in force as of 8 December 2012.
It was simple to calculate the effective harm caused to right holders by private copying over a period of 12 months, by applying a set of objective rules and subtracting the resulting sum from the State Budget. That sum was then given to the collecting societies along with strict rules for its distribution among right holders (phonograms, audiovisual works and books). It was established that, for 2012 the amount would be €5 million, the same for year 2013.
A controversial element of the law was its transitional provisions: there would be no refunds for levies paid under the old system (despite Case C‑467/08, Padawan SL v Sociedad General de Autores y Editores de España (SGAE)- see earlier Kat posts here and here), and the levies accrued up to 1 January would still be payable to the collecting societies. These issues were discussed in a previous entry in The 1709 Blog here. The situation became even more uncertain when the Supreme Court also annulled some minor legislative provisions (the implementing regulations concerning the amounts payable for each digital item) that were in force prior to the suppression of the copyright levy, on the grounds that the passing process was not correctly applied. In particular, said the Court, the Government passed it without the perceptive report of the Consejo de Estado, sitting as a State consultative board. That made definitive the fact that users of digital devices had paid copyright levies according to an invalid regulation from 2008 to 2011. The situation was then delicate, as the consequences were unpredictable (one dared to draft speculative scenarios). The only certain fact was that the collecting societies announced that they were taking legal action against the Government to recover unpaid levies as a consequence of the suppression of the digital levy, and to arm themselves vis-á-vis potential actions from they electronics sector. They indeed did launch proceedings, seeking damages of up to €105.2 million.
The recent Cabinet meeting maintained that the modification of the private copy compensation system created no liability for the Government (the Cabinet can decide on this according to the procedural rules of the State's liability claims, where these are examined by the corresponding Ministry or, as the case here, by the Cabinet). The reasons for dismissing the collecting societies' claims are twofold: the Government believes the new system is in accordance with EU law and with the CJEU's doctrine by which the Member Estates are entitled to modify their copyright levy system (in particular, the structure, financial models, gathering and quantity), as long as that is based on the effective harm. On the other hand, there is not real so much as hypothetical harm to authors -- which is therefore not subject to damages according to the particulars of the law on the State's liability. Should eventually the effective harm's value turn out to be more than €5 million, the State Budget has resources to increase the provisional compensation set as €5 million".