As part of the legislative changes to make copyright ‘fit for the digital age’, the UK government introduced a series of changes to copyright law in October 2014 which included the introduction of the so-called ‘private copying exception’. That has now been thrown into disarray following a successful judicial review application as a result of which the statutory instrument introducing the private copying exception into English law has been quashed.

What is the private copying exception?

EU Directive 2001/29 (the Information Society Directive) gives rights holders certain exclusive rights (e.g. copying, communicating to the public), but also provides certain permitted acts (or exceptions) in relation to a copyright work which do not require the rights holder’s permission. In particular, Article 5(2)(b) permits Member States to introduce an exception allowing for a natural person to make a copy of the lawfully acquired work for private (non-commercial) use on the condition that the rights holder receives “fair compensation”, which is “recompense for the harm suffered by the author” (Case C-467/08 Padawan).

However, where the prejudice to the rights holder arising from such private copying is “minimal”, it is not necessary to provide such fair compensation to rights holders (see Recital 35 of the Directive).
The majority of Member States provide for “fair compensation” through a system of levies to compensate rights holders for the “harm” caused by private copying – i.e. via a private copying levy.

Until last autumn, the UK was one of the few Member States which had not implemented the (optional) private copying exception into national law. This position changed with a statutory instrument, effective from 1 October 2014, which introduced a new section 28B to the Copyright Designs and Patents Act 1988 (SI 2014/2361 – the “Regulations”). However, the private copying exception was introduced on the basis that it would cause no more than minimal or zero harm to rights holders, as a result of which it made no provision for any compensation system.

Judicial Review

Bodies representing the interests of the music industry applied for judicial review of the government’s decision to introduce section 28B on five substantive grounds. In its lengthy decision of 19 June 2015 (see here), the High Court found in principle that the application for judicial review succeeded (although it found in favour of the UK government on four of the five grounds).

The High Court held that the process by which evidence was collected and evaluated during the consultation process leading up to the adoption of the Regulations was defective, as a result of which the government’s decision to adopt the Regulations was unlawful.

Quashing order

In its decision of 17 July 2015 (see here), the High Court ordered that the Regulations be quashed with prospective effect only. The court declined to rule that the Regulations be quashed with retrospective effect on the basis that this would raise potentially complex and far reaching issues that were more appropriate to be addressed in private law litigation between a specific rights holder and an alleged infringer. The High Court also declined to make a preliminary reference to the Court of Justice of the European Union for clarification on the concept of “harm” given that the Regulation had been quashed, as a result of which there was no need for the preliminary reference. However, the possibility of a preliminary reference to the CJEU was left open by the court, who gave the parties liberty to apply for a reference in the future.

What next?

The future of the private copying exception in the UK is unclear and it is for the UK government to consider next steps. - See more at: http://www.bristows.com/articles/uk-governments-implementation-of-the-private-copying-exception-ruled-unlawful#sthash.b7WqgARs.dpuf