The Court of Justice of the European Union (“CJEU”) has recently shed further light on the private copying exemption provided by article 5 (2) (b) of the Infosoc Directive 2001/29/EC in the Microsoft Mobile Sales Int. Oy. et al. v. SIAE et al. case (C-110/15). The CJEU has now held that national legislation cannot exempt producers and importers of devices intended “for use clearly unrelated to private copying” from payment of the private copying levy only on the basis of an agreement concluded between a collective management organization representing authors and those liable to pay compensation (or their trade associations) and that only the persons making copies with these devices can claim reimbursement of unduly paid levies.

Moreover, the Court has elaborated on the effects of its own preliminary rulings. It held that, in this case, on the basis of criteria established by settled CJEU case law, the effects of its judgment could not be limited to the future and must be applied retrospectively.

The case in question concerned a dispute between producers and sellers of devices and media (PCs, storage media, mobile phones, etc.) and the Italian Ministry of Culture and Tourism (“MIBAC”) and SIAE, an Italian collective rights management organization representing authors. The producers and sellers went before the Italian national courts to seek the annulment of a decree adopted by MIBAC, which set out the private copying levy rates and a primitive, if not discriminatory, reimbursement system for “use clearly unrelated to private copying”. The Italian Council of State decided to stay the proceedings and asked the CJEU for a preliminary ruling.

Having established that there was no generally applicable exemption provision with regard to “use clearly unrelated to private copying”, the Court determined that the Italian legislation was not consistent with the principle of equal treatment provided by article 20 of the Charter of Fundamental Rights. The Italian legislation only imposed a “best endeavours” obligation on SIAE to promote the conclusion of agreement protocols with persons required to pay the private copying levy. It did not, however, provide further objective and transparent criteria to be met by persons required to pay a fair compensation or by their trade associations wanting to conclude agreement protocols. The Court stated that, when the terms of such agreement are the result of negotiations, there is no guarantee of equal treatment of producers and importers in comparable situations.

The Court further more applied the same reasoning with respect to the reimbursement system, eventually holding that that system was not effective, as neither natural persons who acquired devices and media for purposes clearly unrelated to private copying (i.e. for commercial purposes) nor producers or importers (who establish that they have supplied the devices and media to persons other than natural persons for purposes clearly unrelated to private copying) could benefit from the reimbursement system.

Finally, the Court did not limit the effect of its judgment to the future, meaning that legal relationships established in good faith in the past are now also called into question. Essential to its reasoning was the fact that it had rendered several decisions on similar issues before and the fact that SIAE did not prove that it was not possible to recover undue payments from the authors that it represented.

We can now establish, taking into account the number of decisions rendered in the recent past by the CJEU to the detriment of Member States, that devising an adequate system for the private copying exemption is quite difficult. However, and perhaps more worrying, collective management organizations could be faced with much larger problems. It is possible that this case will help producers and importers in their efforts to recover parts of the (fixed) amounts unduly paid because they were paid for “use clearly unrelated to private copying”.