On 12 November 2015, the Court of Justice in the Hewlett-Packard Belgium v. Reprobel case (C-572/13) eviscerated the system of fair compensation provided for by articles 59 to 61 of the Belgian Law on Copyright and Related Rights ("LCRR") and articles 2, 4, 8, 9 and 26 of the Royal Decree of 30 October 1997, for not conforming with the copyright directive. In so doing, it nevertheless provided some useful tools for the establishment of a valid “fair compensation” system.

Central to the reasoning of the Court is the principle mentioned in recitals 35 and 38 of the preamble to the copyright directive, according to which “the notion and level of fair compensation are linked to the harm resulting for the author from the reproduction of his protected work without his authorisation”, and “fair compensation must be regarded as recompense for the harm suffered by that author (see, to that effect, judgment in Padawan, C 467/08, EU:C:2010:620, paragraphs 40 and 42)”.

Departing from the aforementioned principle, it established that:

  • By not making a distinction with regard to the ‘fair compensation’ “according to whether the reproduction on paper or a similar medium effected by the use of any kind of photographic technique or by some other process having similar effects is carried out by any user or by a natural person for private use and for ends that are neither directly nor indirectly commercial”, the LCRR and Royal Decree are not in conformity with articles 5, (2)(a) (reprography limitation) and (b) (private use limitation) of the copyright directive. The damage suffered by rights holders resulting from use falling under both limitations is different. A system of fair compensation should therefore allow for this distinction.  
  • In addition, the limitations provided for by those articles do not allow for national legislation “[…] to allocate a part of the fair compensation payable to rights holders to the publishers of works created by authors, those publishers being under no obligation to ensure that the authors benefit, even indirectly, from some of the compensation of which they have been deprived […]”. Publishers are not considered as rights holders under article 2 of the copyright directive. Therefore, they should not receive compensation for damages incurred as a result of reproductions falling under the private use and reprography limitations.  
  • Moreover, articles 5, (2)(a) and (b) oppose national legislation which does not preclude the recovering of a fair compensation relating to the copying of sheet music and counterfeit reproductions made from unlawful sources. The express exclusion of sheet music under the reprography was extended to the private use exception, for consistency purposes.

Notwithstanding the former, it is important to mention that the Court did not rule out that in certain cases the unauthorized reproduction of sheet music made under the private copying exception could be allowed, provided “the harm which that reproduction is likely to cause to rights holders is minimal”.

  • Lastly, a system of “fair compensation” which consists of a combination of: 
    • a lump-sum remuneration paid prior to the reproduction operation by the manufacturer, importer or intra-Community acquirer of devices enabling protected works to be copied, at the time when such devices are put into circulation on national territory calculated solely by reference to the speed at which the device concerned is capable of producing copies; and
    • a proportional remuneration paid after that reproduction operation and determined solely by means of a unit price multiplied by the number of copies produced, which is payable by the natural or legal persons who make those copies varying according to whether or not the person liable for payment has cooperated in the recovery of that remuneration

cannot be considered as a system of fair compensation in the sense of articles 5, (2)(a) and (b) if that combined system does not comprise mechanisms that adjust the reimbursement of the damages incurred by rights holders to the damages actually incurred. It nevertheless stated that a combined system cannot a priori be regarded as incompatible with articles 5, (2)(a) and (b).

With this decision, the Court added another chapter in the quest for a valid fair compensation system in relation to the exceptions provided for in the copyright directive. In the absence of a uniform Community-wide compensation system, Member States a priori can themselves decide on an adequate system. Although this decision might seem welcome in terms of legal certainty, limiting the freedom of Member States once again, the quest for legal certainty is far from over, as a lot of issues remain unanswered.