Many European countries allow citizens to make private copies of copyrighted works but charge a levy on blank CDs, digital media players and DVDs and use the money generated to compensate copyright holders for the unlicensed use of their work.
An Advocate General of the Court of Justice of the European Union (CJEU) has said, though, that this levy should not be charged unless it can reasonably be presumed that that material will be used for private copying.
Advocates General advise the CJEU, whose judges do not have to follow their opinions.
Under European Union copyright law a country can ban the making of copies of copyrighted material for private use or it can allow it and ensure that there is "fair compensation" for the copyright holder.
Spanish law allows for private copying and for a levy to compensate rights holders. The amount of that levy is calculated by rights management companies and trade bodies in a process overseen by Spain's Ministry of Culture and Ministry of Industry, Tourism and Trade.
Rights management company Sociedad General de Autores y Editores (SGAE) claimed almost €17,000 from Padawan, which sells digital media, in compensation for private copying.
A lower court ordered that the sum be paid, but the appeal court, the Audiencia Provincial de Barcelona, asked the CJEU if a blanket application of a levy could be counted as "fair compensation" under EU copyright law if not all the media were necessarily used to duplicate copyrighted material.
Advocate General Verica Trstenjak has said that the levy can only be charged if there is a link between the sale of the media and private copying.
"There is certainly a linkage between the making of a private copy and the payment which is owed. That applies regardless of how the respective Member State’s system of collection for compensation for private copying is organised in detail and whether it is financed, for instance, by means of a levy," she said in her opinion. "Logically, from the viewpoint of Community law it must also be required that in any case there be a sufficiently close link between the relevant levy and the use of the abovementioned devices and storage media."
Trstenjak said, though, that the burden of proof that a link existed should not be too severe. "The requirements in relation to that link should not be raised so high that ultimately the actual use of the relevant devices for the purposes of private copying would have to be required. Rather, even potential use would have to be regarded as sufficient," she said.
"Where a Member State opts for a system of charging or levying in respect of digital reproduction equipment, devices and media, such a charge can be based upon [the Copyright Directive] only where it may be presumed that those equipment, devices and media are to be used for making reproductions covered by the private copying exception," she said. "Indiscriminately charging a levy, without duly taking into account the fact that, owing to factors specific to a certain line of business, the devices in question could be acquired for purposes other than private copying, may not be based on [the Directive]. It is not ‘fair compensation’ within the meaning of that provision," she said.
Trstenjak said that in theory a Spanish levy system could be compatible with EU law if it created a connection between the levy and the use to which the media were put. "The national legislature must ensure that the correlation required by [the Copyright Directive] between the interference with the comprehensive reproduction right of the rightholder and the corresponding financial compensation is substantially maintained," she said.
This was not the case in practice in Spain, she said, because the levy was applied 'indiscriminately'.
"A national system which indiscriminately provides for a levy for compensation for private copying on all equipment, devices and media, infringes [the Copyright Directive], in so far as there is insufficient correlation between the fair compensation and the limitation of the private copying right justifying it, because it cannot be assumed that those equipment, devices and media will be used for private copying," she said.