On 22 September 2016, the Court of Justice of the European Union (“CJEU”) issued a landmark decision in case C-110/15, regarding the Italian private copy exception and the related copyright levies system.

This decision uncovered longstanding failings of the Italian rules on copyright levies, which were found to be contrary to EU principles of fairness, equal treatment and legal certainty. As a result, the Italian legislator is expected to materially revise the relevant provisions while the national collecting society (the SIAE) may be called to answer for unduly cashed copyright levies running into millions of Euros.

Background

The request for a preliminary ruling by the CJEU was made by the Italian Higher Administrative Court (Consiglio di Stato) in light of Article 5(2)(b) of the InfoSoc Directive (Directive 2001/29/EC). Under the InfoSoc Directive, Member States may provide for a so called “private copying exception” (an exception to the exclusive reproduction right in respect of reproductions, on any medium, made by a natural person for private use and for ends that are neither directly nor indirectly commercial, on condition that right holders receive a fair compensation).

According to the CJEU’s case law, any system for financing said “fair compensation” to right holders is compatible with the requirements of the InfoSoc Directive but only if copyright levies are charged only on media and devices destined to be supplied to natural persons who may use them for private copying. The Italian copyright levies system was brought to the attention of the CJEU due to measures aimed at ensuring that copyright levies are not collected for devices that are not used by natural persons for private copying.

With this aim, Italian law currently provides for:

  • Individually negotiated agreements (“application protocols”) by which SIAE may grant objective and subjective exemptions to manufacturers and importers of certain media and devices – or their trade and professional associations – (ex-ante exemptions);
  • A reimbursement procedure for copyright levies unduly paid by final purchasers of the relevant media and devices, who are not natural persons (ex-post reimbursement).

The decision of the CJEU

According to the CJEU: a national copyright levies system featuring such ex-ante exemption and ex-post reimbursement procedures is at odds with Article 5(2)(b) of the InfoSoc Directive.

In particular, the Italian “application protocols” regime fails to effectively prevent levies from being charged on media or devices that are purchased for purposes clearly unrelated to private copying. This is mainly because the SIAE does not go further than “promoting” the conclusion of such application protocols without establishing a mechanism involving all relevant parties and treating them equally.

Aside from clear-cut ex ante exemptions for manufacturers and importers who sell media and devices clearly not destined to private copying, the CJEU noted that the Italian reimbursement procedure is also inadequate. Mainly because it is only accessible to final purchasers and not to natural persons, even where they acquire devices and media for purposes clearly unrelated to private copying.

Food for thought

While creating serious concerns for the Italian government and the SIAE, this decision also raises some interesting questions for users, manufacturers and importers of media and devices, including: Whether and to what extent they may obtain a refund for copyright levies collected by SIAE in the past? and What they should do now to avoid paying undue levies?