The Government will introduce legislation permitting individuals to copy lawfully owned content (eg music on a CD) to another medium or device (eg an MP3 player) owned by that individual, for that individual’s own personal use. The Government intends that the new legislation will come into force in October of this year, and we do not yet know the details. But it is interesting to look at some of the arguments raised for and against the exception.

The existing law
The current position in the United Kingdom is that the owner of the copyright in a work has the exclusive right to copy that work. Copyright in a work (including copyright musical works, lyrics and sound recordings) is infringed by a person who copies that work without the consent of the copyright owner.

Under the EU Infosoc Directive of 2001, Member States are entitled to provide exceptions to or limitations on the rights holders’ exclusive right to copy a work in respect of copies made for private use and for ends which are not commercial, provided the rights holders receive fair compensation. In the past, the UK had chosen not to incorporate this exception into UK legislation.

So, it may come as a surprise to those who have been transferring their CD collections to the hard drives of their PCs and onto their MP3 players for their own personal use, that they are infringing the copyright in the works reproduced on the CDs.

The proposed exception
The background to the proposed private copying exception can be found in Ian Hargreaves’ Digital Opportunity: A Review of Intellectual Property and Growth published in May 2011. Hargreaves’ conclusion was that the Government should introduce an exception to allow individuals to make copies for their own and their immediate family’s use on different media.

The Government’s response to the Hargreaves Review (set out in its paper Modernising Copyright) is to introduce a narrow private copying exception, allowing copying of content lawfully owned by an individual on one medium (such as a CD) to another medium or device owned by that individual (such as a mobile phone, MP3 player or cloud based storage service) for their own personal use.

The Government has decided not to extend the exception to allow individuals to make copies for their family’s use.

Curiously, the exception will not prevent rights owners from using technical prevention measures (TPM) to prevent people from making copies of their works, provided that the restrictions on use enforced by the TPM are made clear to consumers up front at the point of sale. If consumers believe any TPM is preventing them from benefitting from the private copying exception then they can appeal to the Secretary of State for an accessible copy. This appears a little cumbersome.

Rationale for the proposed exception
Hargreaves and the Government argue that a private copying exception is fair and reasonable. They argue that many people already make copies for their private use anyway (whether or not they realise that they may be infringing copyright).

Fair compensation for rights holders?
As mentioned above, under the Infosoc Directive EU Member States may introduce a private copying exception provided the rights holders receive fair compensation. A report published by the Intellectual Property Office in 2012 found that 22 of the 27 Member States have a private copying exception. The report further finds that these Member States have all chosen to meet the requirement of fair compensation through levies including on blank recording media, hard disks and MP3 players.

Controversially, the Government’s proposals do not provide for the introduction of a levy. Its argument is that the exception will be limited to people who already own a lawful copy of the work, so rights owners can factor the private copying right into the price charged at the point of sale. Indeed, the Government argues that this is already happening in the case of digital downloads which are able to be copied freely and are sold at a higher price than the equivalent downloads which are restricted by way of digital rights management software.

That all seems OK then?
Perhaps unsurprisingly, many rights holders and talent take issue with the proposed private copying exception and the Government’s rationale for introducing it. Their arguments include that the exception denies rights holders:

  • The right to license (and charge for) the right to make private copies. The reason why most lawful digital download services are able to allow their customers to make copies of their purchases is because the rights holder has granted a licence of this right to the digital service provider.
  • Fair compensation in the form of a levy. They argue that MP3 devices for example are bought by consumers to be filled with rights owners’ content. The device manufacturers are making vast sums from the creative industries and it is reasonable that this should generate some income for rights holders and talent in the form of a levy.
  • The right to license (and charge) cloud locker services. The Government’s view is that most cloud locker service providers (eg Spotify) offer services over and above mere storage of copies of content already owned by consumers and that these services will still require a licence. However, as the law currently stands a simple cloud based storage service for copies of lawfully owned copyright content requires a licence. Without content to store, these services would not be commercially viable and rights holders argue that the private copying exception will deny them an important source of income and will result in an unjustified windfall for the cloud locker service providers.

Rights holders and talent also argue that the exception will be open to abuse. They argue that it will be difficult to police the exception and that it will be easy for people to make copies of content not lawfully owned by them (even if it is lawfully obtained, for example a borrowed CD or a rented DVD). The Government recognises this as a legitimate concern and points to the ability of the rights owners to make use of TPM in this regard.

Conclusion
The proposed private copying exception is one that will be watched with keen interest by rights owners, talent and consumers and the arguments for and against it are likely to run and run.

What will happen for example, if someone lawfully owns a CD library, makes a copy of it for their private use and then sells the CD library. Will that person be entitled to retain the copy? Will the copy be deemed lawfully obtained content and will the owner be entitled to make further copies for his or her own further use?

The devil is in the detail and it will be interesting to see the language used in the draft legislation and whether or not the Government’s argument that the fair compensation requirement under the Infosoc Directive is satisfied by allowing rights holders to build this into the price they charge for content is subject to legal challenge.

More to follow when the draft legislation is published.