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Thursday, 12 November 2015

Reprobel and fair compensation: CJEU rules on what the InfoSoc Directive does not allow

The Court of Justice of the European Union (CJEU) gave its ruling this morning in Case C‑572/13, Hewlett-Packard Belgium SPRL v Reprobel SCRL, intervener Epson Europe BV, a request for a preliminary ruling under from the Cour d’appel de Bruxelles (Court of Appeal, Brussels, Belgium). Since Eleonora Rosati is preparing a commentary for the IPKat, readers are referred to that weblog for her thoughts on the ruling once they are published [Eleonora's post is now up and running here]. Below we offer a simple account of the facts, the questions posed and the answers that the CJEU gave to them.

In short, Hewlett-Packard (HP) imported reprographic devices into Belgium for business and household use, including ‘multifunction’ devices, the main function of which was the printing of documents at different speeds depending on the print quality.  Reprobel, a rights management company, collected and distributed sums corresponding to fair compensation under Directive 2001/29, the InfoSoc Directive's reprography exception in Article 5(2).

In August 2004, Reprobel told HP that its sale of ‘multifunction’ printers should entail, in principle, the payment of a levy of EUR 49.20 per printer. Following six years of inconclusive meetings and correspondence, HP sought a declaration that no remuneration was owed for the printers which it had offered for sale or that, if such remuneration was owed, the remuneration which it had already paid corresponded to the fair compensation owed under the Belgian legislation, interpreted in the light of Directive 2001/29. HP also claimed that Reprobel should be ordered to carry out within the year, on pain of a periodic penalty payment of EUR 10 million, a study consistent with that referred to in Article 26 of the Royal Decree of 30 October 1997 concerning the remuneration of authors and publishers for copies made for private or didactic purposes of works fixed on a graphic or similar medium and also concerning the number of printers in dispute and their actual use as copiers of protected works for the purpose of comparing that use with the actual use of all other devices for the reproduction of protected works.

In separate but subequently joined proceedings Reprobel summoned HP and sought an order that HP pay it the provisional sum of EUR 1 towards the remunerative payments which Reprobel considered were owed under the Royal Decree.

In November 2012 the Tribunal de première instance de Bruxelles (Court of First Instance, Brussels) ruled that the Royal Decree was incompatible with European law.  This sparked of appeals by both HP and Reprobel to the Cour d’appel de Bruxelles (Court of Appeal, Brussels). That court decided to stay the proceedings and to refer the following questions to the CJEU for a preliminary ruling:
‘1. Must the term “fair compensation” contained in Article 5(2)(a) and Article 5(2)(b) of Directive 2001/29 be interpreted differently depending on whether the reproduction on paper or a similar medium effected by the use of any kind of photographic technique or by some other process having similar effects is carried out by any user or by a natural person for private use and for ends that are neither directly nor indirectly commercial? If the answer is in the affirmative, on what criteria must that difference of interpretation be based?

2. Must Article 5(2)(a) and Article 5(2)(b) of Directive 2001/29 be interpreted as authorising the Member States to fix the fair compensation payable to rightholders in the form of:
(a) lump-sum remuneration paid by the manufacturer, importer or intra-Community acquirer of devices enabling protected works to be copied, at the time when such devices are put into circulation on national territory, the amount of which is calculated solely by reference to the speed at which the copier is capable of producing a number of copies per minute, without being otherwise linked to any harm suffered by rightholders; and

(b) proportional remuneration, determined solely by means of a unit price multiplied by the number of copies produced, which varies depending on whether or not the person liable for payment has cooperated in the collection of that remuneration, which is payable by natural or legal persons making copies of works or, as the case may be, in lieu of those persons, by those who, for consideration or free of charge, make a reproduction device available to others?

If the reply to this question is in the negative, what are the relevant and consistent criteria that the Member States must apply in order to ensure that, in accordance with European Union law, the compensation may be regarded as fair and that a fair balance is maintained between the persons concerned?
3. Must Article 5(2)(a) and Article 5(2)(b) of Directive 2001/29 be interpreted as authorising the Member States to allocate half of the fair compensation due to rightholders to the publishers of works created by authors, the publishers being under no obligation whatsoever to ensure that the authors benefit, even indirectly, from some of the compensation of which they have been deprived?

4. Must Article 5(2)(a) and Article 5(2)(b) of Directive 2001/29 be interpreted as authorising the Member States to introduce an undifferentiated system for recovering the fair compensation due to rightholders in the form of a lump-sum and an amount for each copy made, which, implicitly but indisputably, covers in part the copying of sheet music and counterfeit reproductions?’
In February 2014 the Cour d’appel de Bruxelles allowed Epson Europe BV - - another manufacturer of multifunctional devices -- to intervene in the dispute in the main proceedings.

Today the CJEU ruled as follows, the bits that refer to national Belgian law being emphsized in bold.:
1. Article 5(2)(a) and Article 5(2)(b) of Directive 2001/29 ...must be interpreted as meaning that, with regard to the phrase ‘fair compensation’ contained in those provisions, it is necessary to draw a distinction according to whether the reproduction on paper or a similar medium effected by the use of any kind of photographic technique or by some other process having similar effects is carried out by any user or by a natural person for private use and for ends that are neither directly nor indirectly commercial.

2. Article 5(2)(a) and Article 5(2)(b) of Directive 2001/29 preclude national legislation, such as that at issue in the main proceedings, which authorises the Member State in question to allocate a part of the fair compensation payable to rightholders to the publishers of works created by authors, those publishers being under no obligation to ensure that the authors benefit, even indirectly, from some of the compensation of which they have been deprived.

3. Article 5(2)(a) and Article 5(2)(b) of Directive 2001/29 preclude, in principle, national legislation, such as that at issue in the main proceedings, which introduces an undifferentiated system for recovering fair compensation which also covers the copying of sheet music, and preclude such legislation which introduces an undifferentiated system for recovering fair compensation which also covers counterfeit reproductions made from unlawful sources.

4. Article 5(2)(a) and Article 5(2)(b) of Directive 2001/29 preclude national legislation, such as that at issue in the main proceedings, which introduces a system that combines, in order to finance the fair compensation payable to rightholders, two forms of remuneration, namely, first, lump-sum remuneration paid prior to the reproduction operation by the manufacturer, importer or intra-Community acquirer of devices enabling protected works to be copied, at the time when such devices are put into circulation on national territory, and, second, proportional remuneration paid after that reproduction operation and determined solely by means of a unit price multiplied by the number of copies produced, which is payable by the natural or legal persons who make those copies, in so far as:

– the lump-sum remuneration paid in advance is calculated solely by reference to the speed at which the device concerned is capable of producing copies;

– the proportional remuneration recovered after the fact varies according to whether or not the person liable for payment has cooperated in the recovery of that remuneration;

– the combined system, taken as a whole, does not include mechanisms, in particular for reimbursement, which allow the complementary application of the criterion of actual harm suffered and the criterion of harm established as a lump sum in respect of different categories of users.
Now it's all up to the Cour d’appel de Bruxelles!

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