Two questions relating to the InfoSoc Directive were referred to the CJEU in the case of C-435/12 ACI Adam, a reference for a preliminary ruling from the Dutch Supreme Court (here).  The CJEU considered the private copying exception set out in Article 5(2)(b), and in particular whether the exception covers reproductions from both lawful and unlawful sources alike or whether it only applies when the reproductions are taken lawfully, i.e. where no copyright infringement has taken place.

The InfoSoc Directive (Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society) is an EU directive designed to implement the WIPO Copyright Treaty and to harmonise aspects of copyright law across Europe, including copyright exceptions. 

Article 5(5) of the InfoSoc Directive states that copyright exceptions may only be "applied in certain special cases which do not conflict with a normal exploitation of the work or other subject-matter and do not unreasonably prejudice the legitimate interests of the rightholder".  The InfoSoc Directive therefore includes what is known as “the Berne three-step test”, which attempts to standardise possible limitations and exceptions to exclusive rights under respective national copyright laws.  The CJEU was also required to consider the role of the three-step test in the context of defining the scope of the private copying exception in Article 5(2), namely whether its application leads to the expansion or reduction of the scope of the exception.

The key issue is whether rightsholders would be in a better position if the private copying exception extended to cover reproductions from unlawful, infringed sources (in return for fair compensation).

By way of background to the present case, the Dutch Copyright Act permits the reproduction of a work within the private copying exception, provided that the reproduction is carried out without commercial motivation and is intended exclusively for personal exercise, study or use.  Dutch law has extended the exception to include also copies made from unlicensed sources, e.g. unlawful downloads from the internet.

Following a referral of this case to the CJEU, the AG held that the private copying exception may only apply to reproductions from lawful sources.  The AG’s Opinion explained that a private copying exception that includes reproductions from unlawful sources is not compatible with the three-step test in Article 5(5) of the InfoSoc Directive, in particular the requirement that exceptions and limitations must not conflict with the normal exploitation of the work.  According to the AG, allowing reproductions from unlawful sources permits the distribution of unlawful copies and, in any event, even awarding “fair compensation” would not be enough to compensate rightsholders from the lack of income from lawful online reproduction, distribution and communication to the public.

The CJEU has today upheld the AG’s Opinion, confirming that the InfoSoc Directive precludes national legislation “which does not distinguish the situation in which the source from which a reproduction for private use is made is lawful from that in which that source is unlawful”.  The full judgment is here and the press release is here.

The press release confirms that "if Member States were free to adopt legislation permitting, inter alia, reproductions for private use to be made from an unlawful source, the result of that would clearly be detrimental to the proper functioning of the internal market. Similarly, the objective of proper support for the dissemination of culture may not be achieved by sacrificing strict protection of copyright or by tolerating illegal forms of distribution of counterfeited or pirated works. Consequently, the Court holds that national legislation which makes no distinction between private copies made from lawful sources and those made from counterfeited or pirated sources cannot be tolerated.