Dutch Supreme Court: home copying levy was too restricted

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10 March, 2014

Today, the Dutch Supreme Court decided that the home copying levy has been applied too restricted for years. In an earlier case before an appellate court, the Dutch State was condemned to pay damages to collecting society Norma, to compensate rights holders for the fact that home copying levies were not applied to the retail of many modern devices, such as external hard drives and MP3-players. In today’s decision, the Supreme Court of the Netherlands confirms this ruling. 

Until 1 January 2013, the home copying levy only applied to empty CDs and DVDs, but not to devices such as external hard disks or MP3 players, even though these devices have largely replaced recordable CDs and DVDs. The Dutch government was unable to adjust the scheme to modern day technology, because in 2007, the home copying levy was frozen by the Minister of Justice. This meant that the amount could not be adjusted and that there was no possibility to expand the levy to other devices.

In 2008, Norma, the collecting society for performing artists’ rights, and some trade unions and individual musicians and actors started legal proceedings against the Dutch State, arguing that artists were unfairly disadvantaged by the status quo in which the home copying levy could not be adjusted and that they missed out millions of euros. Besides, according to Norma, that decision violated EU Copyright Directive 2001/29/EC and therefore, the Dutch State acted unlawfully. However, the District Court of The Hague rejected Norma’s claim in 2010. According to the Court, the State didn’t act unlawful, as it had the freedom to decide which devices would fall under the home copying levy regime. Furthermore, the court ruled that the total amount that Norma received from the home copying levy was enough to compensate for all home copies, including those copies on MP3 players or hard disk recorders. Norma appealed this ruling.

In 2012, the Court of Appeal of The Hague agreed with Norma and ruled that performing artists are entitled to fair compensation for their work and that there should be a private copying levy on devices such as external hard disks and MP3 players. The Court of Appeal also argued that the State acted unlawful towards Norma by not assigning devices intended (and substantially used) for the copying of protected works as devices for which compensation levies are required. Copying to CDs and DVDs decreases, while copying to digital audio and video players and recorders increases, remarked the Court of Appeal. Therefore, the compensation for artists is running back. The State was condemned to pay damages to Norma.

As a result of the ruling of the Court of Appeal, a new system for home copying levies was put in place. From 1 January 2013 onwards, practically all devices are subject to home copying levies, such as PCs, tablets and smartphones. The amount of the levy depends on the storage capacity of the devices. Meanwhile, the State went to the Supreme Court.

Today, the Supreme Court confirms the decision of the Court of Appeal. It follows from European legislation and case law, that the State has the obligation to ensure that rightholders receive a fair compensation for home copies, said the Supreme Court. However, rights holders represented by Norma have not received the fair compensation that they were entitled to., now that the home copying levy was frozen  for several years and digital audio and video players and recorders were disregarded. Therefore, the State acted unlawful and should pay damages. A separate case about the height of the damages is still pending; a decision in that case is expected within six months.

In January of this year, the Advocate General of the European Court of Justice has published an opinion on the legal status of the home copying levy in the Netherlands and Austria. In this case, the ECJ will answer preliminary questions about the legality of imposing home copying levies as a fair compensation for downloading from illegal sources. He advised that home copying levies may only be imposed as a means to ensure fair compensation in cases where a legitimate private copy has been made in accordance with the EU Copyright Directive, but that such a levy cannot compensate the revenue that rights holders miss out due to the massive spread of their protected works on the internet. If the judges of the ECJ take over this advice, this case may have a large impact on the Dutch copyright climate. So, the last word about the home copying levy has not been written yet…

The decision of the Supreme Court is published here (in Dutch).

Source: Future Of Copyright

Jonathan Toornstra

Legal Consultant

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