From Shawn Fanning setting up the peer-to-peer (P2P) file sharing service Napster in 1999 to the recent rise of online music streaming services such as Apple Music and Tidal from rapper Jay-Z, it appears that in the digital age, online music distribution copyright is never far from the headlines. Now, in a major decision the UK High Court has set aside the British government’s recently introduced legal exception for private, non-commercial copying of media as the government did not also introduce an appropriate mechanism to fairly compensate rights holders.

Infringing Copyright

Pursuant to copyright law in both the UK and Ireland, the creator of a work has a number of exclusive rights that they can exercise to restrict others from using their work. Copyright in a work is infringed by a person who, without the licence of the copyright owner, undertakes, or authorises another to undertake, any of the acts restricted by copyright such as copying the work, making the work available to the public or reproducing the work. By the letter of the law this means that in the UK and Ireland copying a song from a CD to a computer hard drive requires prior authorization from the rights holder.

Private Copy Exception

With this in mind, in 2014 the British government introduced a new Section 28B into the Copyright, Designs and Patents Act1988. This new ‘private copy exception’ created an exception to copyright restrictions. If a consumer legitimately acquires content in one form, the new regulation permitted them to copy that work onto different media or a different device for their own private use, without infringing copyright law.

In a practical example, this means that an individual can covert a music CD it has purchased into MP3 format (known as ‘format shifting’) which the individual can load onto their digital music device. Alternatively, they can back-up the MP3 format music by copying it onto a cloud based storage service such as Google Drive, provided it is storing the copied media for its own private, non-commercial use. Importantly, the new Section 28B did not allow the purchaser to give the copied media to friends or family or use it for any commercial use.

Media Levy in Other EU Countries

EU law recognises that the private copying exception can cause copyright owners to lose money. Article 5(2)(b) of the European Copyright Directive provides that where a Member State’s legislation includes a copyright exception, that legislation must also provide fair compensation for rights holders. Many EU Member States therefore levy a royalty or charge on blank media or digital devices that facilitate the copying or format shifting of content, such as MP3 players, blank CDs and DVDs, USB memory sticks and portable hard drives. This levy is then shared among rights holders such as authors, composers and artists to compensate them for lost sales.

UK Court Action Quashing the Regulation

Earlier this year, representatives from the music industry challenged the British government’s new private copy exception. They argued the new law would result in lost sales for rights holders and there was no appropriate alternative mechanism in the new legislation to fairly compensate rights holders (as is provided for in other EU Member States). The government counter-claimed that the private copy exception was drafted narrowly in a way that causes minimal damage to rights holders and that a compensation was already ‘built in’ to the pricing of content. Therefore no fair compensation payment is due.

The music industry’s case against the private copying exception succeeded. In his judgment, Mr Justice Green held that the government’s decision to introduce the private copying exception in the absence of a compensation mechanism for rights holders was “unlawful”. Last week, the UK High Court quashed the new law that introduced the private copying exception. The UK government is now considering the implications of the court rulings and its options.

Irish Perspective on the ‘Private Use Exception’ and Levies

In Ireland’s Submission to the European Commission’s Public Consultation on the Review of Copyright Rules, it argued that it would be “…useful to reexamine the personal use exception in light of technological change and common usage”. This illustrates that the government here may be open to following the UK and introducing a private copying exception in future.

However, Ireland is one of the few EU member states that does not currently impose levies on media. Copyright legislation here does not provide copying exceptions requiring the payment of ‘fair compensation’ and would therefore need to be updated if a levy was introduced. In addition, Ireland’s Submission to the European Commission made it clear that the government does not currently support the use of levies due, in part, to its view that the “…interpretation of ‘fair compensation’ by Member States who levy charges in relation to the private copying and reprography exceptions is fragmented and not uniformly applied throughout the EU”.

Nevertheless, the experience in the UK shows that courts will be reluctant to uphold laws that conflict with the European Copyright Directive and permit a private copying exception without also including an appropriate mechanism to fairly compensate rights holders.