Doubt cast over proposed UK laws on private copying

Out-Law News | 03 Jul 2014 | 9:44 am | 4 min. read

Doubt has been raised about the UK government's power to introduce a new private copying exception to copyright without an associated mechanism for compensating rights holders.

A UK parliamentary committee has drawn the "special attention" of both MPs and peers to the draft Copyright and Rights in Performances (Personal Copies for Private Use) Regulations in a new report it has published. It questioned whether the proposed new rules correspond to EU copyright laws.

Under the proposed private copying exception, individuals in the UK would be given a new right to make a copy of copyrighted material they have lawfully and permanently acquired for their private use, provided it was not for commercial ends. Making a private copy of the material in these circumstances would not be an act of copyright infringement, although making a private copy of a computer program would still be prohibited under the plans.

There is no mechanism envisaged in the draft legislation for rights holders to be specifically compensated for the act of private copying.

However, the Joint Committee on Statutory Instruments (JCSI) said it was unclear whether the introduction of a new private copying right without a mechanism for ensuring rights holders receive "fair compensation" was permitted (49-page / 3.08MB PDF) under overarching EU copyright legislation that applies.

The JCSI is tasked with scrutinising proposed new legislation and drawing MPs and peers' "special attention" to those laws in certain cases, including if "there appears to be doubt about whether there is power to make it or that it appears to make an unusual or unexpected use of the power to make". It said that the EU's highest court, the Court of Justice of the EU (CJEU), may have to determine the legitimacy of the UK's plans for a new private copying right.

"Only a court, and ultimately the CJEU, can give an authoritative ruling on whether the [EU's Copyright] Directive precludes the private copying exception provided for in [the  draft Copyright and Rights in Performances (Personal Copies for Private Use) Regulations] without the inclusion of a compensation scheme for rightholders adversely affected by the exception," the JCSI said.

"It is clear to the Committee that there are persuasive arguments that may be advanced against, and in favour of that proposition. It also seems likely that it would be for the government to satisfy a court that 'fair compensation' should, in effect, mean 'no compensation'. In those circumstances, the Committee considers it right that each House, when invited to approve the draft Regulations, should be aware that there is a doubt about the Secretary of State’s power to make them in their present form," it said.

Under the EU's Copyright Directive rights holders generally have the "exclusive right to authorise or prohibit direct or indirect, temporary or permanent reproduction" of their works. However, the Directive enables EU member states to introduce a range of exceptions to this general rule. One of those exceptions, enacted in the laws of some member states, allows individuals to make reproductions of copyrighted material for non-commercial private use. This is on condition that rights holders receive "fair compensation" to account for lost revenues.

The private copying exception, like the other exceptions that can be introduced, can only apply "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," according to the Directive.

In a ruling by the CJEU in 2010, the Court said that what constitutes 'fair compensation' must be determined by the "harm suffered by the author".

In its report the JCSI said that it had asked the Department for Business, Innovation and Skills (BIS) to explain why it had not provided for a mechanism for compensating rights holders in the draft private copying regulations.

According to the report, BIS believes that a recital to the Copyright Directive, which is itself non-binding but used to interpret the formal provisions in the Directive, provides it with the legal basis for excluding a compensation mechanism alongside its private copying proposals.

The recital said: "In certain cases of exceptions or limitations, rightholders should receive fair compensation to compensate them adequately for the use made of their protected works or other subject-matter. When determining the form, detailed arrangements and possible level of such fair compensation, account should be taken of the particular circumstances of each case. When evaluating these circumstances, a valuable criterion would be the possible harm to the rightholders resulting from the act in question."

"In cases where rightholders have already received payment in some other form, for instance as part of a licence fee, no specific or separate payment may be due. The level of fair compensation should take full account of the degree of use of technological protection measures referred to in this Directive. In certain situations, where the prejudice to the rightholder would be minimal, no obligation for payment may arise," the recital stated.

BIS believes the private copying right it proposes to introduce is much narrower in scope than private copying rights enjoyed in other EU countries, the report said. It said it has "a degree of discretion" over what compensation schemes to set and said that, on the basis of an impact assessment it conducted, no compensation scheme was deemed necessary in this case.

"The Department emphasises that the proposed new United Kingdom personal copying exception has been narrowly drawn to ensure that no harm is caused to rightholders," the JCSI said in its report. "As it applies only to lawfully purchased copies, the exception ensures that rightholders remain able to receive adequate remuneration with respect to their works at the point of sale. The impact assessment shows that the type of activity permitted by the proposed new exception is unlikely to cause any harm to copyright owners."

The JCSI said, however, that there is sufficient doubt about the legality of the UK government's proposals to draw the special attention of the Houses of Commons and Lords to the draft private copying regulations.

If introduced as drafted, the Copyright and Rights in Performances (Personal Copies for Private Use) Regulations would come into force on 1 October.