In an unsurprising ruling, the CJEU has followed the opinion of the AG (in this case AG Cruz-Villalón) that the private copying exception within Art. 5(2)(b) of the Information Society Directive (2001/29) only applies to reproductions of works or other subject matter from legitimate sources, and not to copies made from illegal sources.

The reference from the Dutch Supreme Court concerned the interpretation of the Dutch Copyright Act. The provision implementing the private copying exception did not distinguish between private copies made from works which had  been obtained lawfully or unlawfully, and had been widely interpreted as including copies made from unlawful sources. The Dutch Secretary of State considered that its application should be limited to copies made from legitimate sources, but this was rejected by the Parliament which imposed temporary private copying levies on digital and electronic devices and storage media. Various producers and importers of these goods argued that they should not be required to pay levies in respect of private copying from unlawful sources.

The CJEU acknowledged that Article 5(2) does not address expressly the lawful or unlawful nature of the source from which a reproduction of the work may be made, but made it clear that the exception must be interpreted strictly.

Ultimately, the Court emphasised that "If Member States had the option of adopting legislation which also allowed 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" as it would"encourage the circulation of counterfeited or pirated works, thus inevitably reducing the volume of sales or other lawful transactions…with the result that a normal exploitation of those works would be adversely affected".

Furthermore the finding that the private copying exception must be interpreted as not covering private copies made from an unlawful source is not called into question by the fact that no applicable technological protection measures may exist to combat the making of unlawful, private copies.

This ruling is unsurprising, but clarifies the position that the Directive precludes any national law implementation of Art 5(2) which does not distinguish between reproductions from lawful or unlawful sources

For more guidance  from the CJEU on levies and the effect of TPMs, see our alert below on the subsequent opnion of AG Cruz Villalón in Copydan Båndkopi.