Should private copying levies apply to the cloud?

A European Commission Cloud Computing Strategy document leaked on Monday says that "questions arise on the possible collection of private copy levies for any private copying of content to, from or within the cloud."



Things were simpler back in the day

Under the InfoSoc Directive, EU member states may introduce an exception to the reproduction right for private copying accompanied by "fair compensation" for rightsholders. Currently most EU member states (notably not the UK) permit such private copying. Legislation does not provide a method for the calculation of fair compensation. The approach adopted in the EU so far has been to impose private copying levies on sales of storage media such as blank CDs, memory sticks, hard disks and smartphones. The levies typically vary with the capacity of the medium.

It makes some sense that, in countries where the levy system is in place, the cloud should also be subject to such a levy, given that one use of the cloud is to store content. However arguably the cloud is primarily a storage place for legitimately acquired content. In that sense it is the original CD that is purchased, rather than being the blank CD onto which a copy is made.



Some cloud storage services that allow users to synch their content for different devices, such as iTunes Match, Spotify's Local Music Files and Kindle already directly remunerate the rights holders.

A further consideration is that  there is no limit to the memory capacity available in the cloud to a user. It is therefore difficult to work out the value of the levies that should be applied.

The Commission has said that it will "assess whether there is a need to clarify the scope of the private copying exception and the applicability of levies, in particular the extent to which cloud computing services allowing for the direct remuneration of right holders are excluded from the private copy levy regime."

The levy system is a controversial one. One the one hand the creative industry trade bodies have just signed a declaration calling on European politicians to ensure that private copying levies remain part of the copyright system in European countries where a private copying right exists. And just yesterday IMPALA, the European independent music companies trade body joined forces with international copyright representatives to argue in favour of remuneration related to private copying.

On the other hand Joe McNamee, of European digital rights group EDRi has said that "It's really quite amazing that the Commission put levies in the strategy in the first place as levies as they stand are an insult to the single market, and for the Commission to add another level of bureaucracy is incomprehensible", and Christian Engstrom, Pirate Party member of the European Parliament is of the view that "It's yet another example of how copyright legislation is completely out of touch with the reality and the times we live in."

Former European Commissioner for Justice and Home Affairs, Antonio Vitorino, is currently leading a. The aim is to lay the groundwork for legislative action on private copying levies at the E.U. level in 2013. His findings are expected by the end of the year.

 

Perhaps we will find clarity in the CJEU's responses to the questions on private copying referred by the Austrian courts in Kino.to in June and the Dutch courts in ACI Adam B.V. v Stichting de Thuiskopie last week on how the private copying exception applies to illegal content, and in the findings of the working group on private copying levies that was set up in November 2011 with a view to more harmonization across the EU.

More on this on CIO and PC Advisor's websites.

No appeal for Optus - the time-shifting exception does not extend beyond private individuals

Back in February, Ben blogged about Optus v Telstra, an Australian case in which concerned an app developed by Optus enabling users to record free-to-air TV broadcasts and to save them to Optus' cloud in order to view them later. Last week, the High Court of Australia decided not to hear Optus' appeal of the Full Federal Court ruling that the app infringes copyright, and this week Telstra has said that it welcomes the High Court's "positive" decision, saying that it "provides welcome clarity for cloud operators, while at the same time recognises the delicate balance of interests which copyright law seeks to protect."

Background

The National Rugby League (NRL) and the Australian Football League (AFL) had granted Australia's leading service provider, Telstra, exclusive multi-million dollar licences in respect of mobile broadcasting rights of their games.

In July 2011, Optus launched its TV Now service, which enabled users to record TV programs, including  NRL and AFL games, and to play them back at a time convenient to the user on any PC, Apple, Android or 3G device.

When a user clicked record on TV Now's electronic program guide, Optus made four copies of the relevant program, one for each of the possible viewing platforms. These copies were stored by Optus, and could then be streamed as convenient by the user on any one of the four types of devices.

NLR and AFL were of course concerned about the effect that the app could have on their exclusive licensing deal with Telstra. They claimed that the TV Now service infringed their copyright in broadcasts in a number of AFL and NRL games and said that they would seek an injunction against Optus. Optus therefore made a claim in the Federal Court of Australia that AFL and NRL had made unjustified threats of infringement under s.202 of the Copyright Act 1968 . The Court later added Telstra as a party to assert similar claims to AFL and NRL as exclusive licensee.

The Federal Court's decision

In February of this year the Full Federal Court held that Optus's TV Now service did not infringe copyright in the broadcasts of the AFL and NRL game, in the particular ways that the rightsholders alleged.

Rares J held that it was the users of the Optus service, rather than Optus itself, who made the copies of the broadcasts, when they selected a program from an electronic program guide and clicked 'record'. Further he held that when recordings were streamed to the user there was no communication to the public.

The Court went on to say however that other issues still needed to be resolved, including whether Optus infringed copyright because of temporary copies made during the streaming process.

The Full Federal Court's decision

AFL, NRL and Telstra subsequently appealed the decision to the Full Federal Court. The appeal was heard in March and judgment was handed down at the end of April 2012.

The Full Federal Court found that it was not the user alone who made a copy of the games recorded, rather it was either Optus who made the copy (on the basis that it provided the service enabling users to make recordings) or alternatively both Optus and the user made the copy (acting together: the user initiating the process by requesting the copy and Optus providing the means for making it). The Court's preferred view was that both Optus and the user were jointly and severally responsible for making the copy.

The Full Federal Court then went on to consider whether "what we would inaccurately, but conveniently, call the "private and domestic use" defence of s 111 of the Act" applied. The Federal Court had not had to consider this, given its answer to the first question. The Full Federal Court found that the exception did not apply because there was nothing in the language, or the provenance, of s.111 to suggest that it was intended to cover commercial copying on behalf of individuals.

Further Appeal

Last week, the High Court rejected a special leave application from Optus, seeking to overturn the Full Federal Court's decision. The Full Federal Court's decision therefore still stands and Optus remains liable for copies made as part of its TV Now service.

This case puts a platform operator firmly on the hook for providing a time-shifting service. The Full Federal Court found that while the s.111 (the time-shifting exception) was intended to allow private copying by individuals, it wasn't the place of the Courts to extend that exception beyond those confines. This is quite a turnaround from the pre-internet position where in the UK the provision of a tape recorder was not found to be authorising infringement (CBS v Amstrad), and in the US making copies of TV shows using Betamax videos was not infringing because it was fair use (SonyCorp v Universal City Studios).

Since the internet has facilitated copying courts seem more ready to find that platform providers participate in copying. The position in the US looks similar to that in Australia. In the UK, UKNova recently backed down after a C&D from FACT, and we await the CJEU's decision in ITV v TV CatchUp.

Head in the Cloud, Nose in the Statute Book

According to Digital Music News and Bloomberg, Capitol Record's US suit against online digital music re-sale site Redigi will be hammered out in open court. Rejecting Capitol's request for a summary judgement, District Court Judge Richard J Sullivan, pronounced the scrap a "fascinating issue" and said the re-sale of digitally acquired music raises important statutory and technological questions including those relating to cloud-based computing. Richard Sullivan's drink of choice here Messages of support and/or sympathy cards to be sent here.