Out-Law News | 19 Jun 2015 | 3:01 pm | 4 min. read
The government's decision to introduce private copying rules, which allow people who have acquired permanent and legal copies of copyrighted works to make personal copies of that material, without also introducing a mechanism to compensate rights holders for that activity, was not supported by sufficient evidence, the Court held.
"The decision to introduce [the private copying exception] in the absence of a compensation mechanism is unlawful," Mr Justice Green said in his judgment. "The decision adopted by the [government] was nowhere near to being justified by the evidence that the [government] specifically accepted and endorsed."
EU copyright laws require EU countries that elect to introduce a new private copying exception into national copyright laws to ensure that rights holders receive 'fair compensation' for that activity. However, the EU rules allow countries introducing such an exception into national laws to do so without an associated mechanism for compensating rights holders where only minimal harm to rights holders would arise as a result of private copying activities.
Prior to introducing the private copying exception, the UK government argued that it did not believe the private copying exception would result in lost sales for rights holders. However, the new regime was challenged by music industry bodies. The British Academy of Songwriters, Composers and Authors (BASCA), the Musicians’ Union (MU) and UK Music claimed that the government should have to compensate them and other rights holders for the harm caused to them by the new exception.
Mr Justice Green said that that the UK government was entitled to "implement a private usage exception" and to define the scope of that right. He said, though, that the government was obliged to introduce a "compensation mechanism" for rights holders if the harm caused to them by the introduction of the private copying exception was above a "de minimis level".
The judge said that the government had limited freedom to "select a sensible de minimis threshold" of harm when assessing whether the evidence of harm from its proposals would require it to set up a scheme to compensate rights holders for private copying. However, despite recognising the importance of the threshold to its decision making it failed to define the 'de minimis' threshold that was to apply and to outline the evidence supporting the fact the threshold had not been met, he said. This was "a material failing", Mr Justice Green said.
Intellectual property law expert Emily Swithenbank of Pinsent Masons, the law firm behind Out-Law.com, said: "This judgment will be seen as a victory for musicians and other copyright holders but they are unlikely to find themselves in a better position as a result. What rights holders want is ‘fair compensation’ for the private copying that will continue to take place with or without the exception, but this decision is unlikely to produce this."
"The government will need to put forward more evidence to show that only minimal harm will be caused by the private copying exception, but as the government has a degree of discretion to set the de minimis harm threshold, they should be able to overcome this hurdle. If not, as the government has shown that it is reluctant to introduce private copy levies on the electronic devices and blank media that can be used to enable format shifting, the likely consequence would be that the copyright exception will simply be dropped," she said.
The judge gave guidance on how the government might calculate whether it needs to establish a compensation mechanism alongside a new private copying right if it decides to reintroduce a private copying framework into UK law in future.
"In my view, the [government] will need to consider both the global sums which might be uncompensated for; but also the scale of the sums likely to be payable to individuals," Mr Justice Green said. "If, for instance, the [government] concluded that there were a very large number of rightholders who would be due some minor payment I do not consider that the fact that the sum total of all outstanding payments might appear to be a significant figure necessarily means that the de minimis exception would not apply."
"I consider that the [government] is also entitled to take proportionality into account; if the payments due are overwhelmingly trivial then it might be disproportionate to set up a system that may be complex and bureaucratic … simply to administer the payment out of a large number of very minor payments," he said.
The judge also clarified that governments within the EU that implement private copying regimes that would see harm to rights holders exceed the de minimis threshold can determine the precise mechanism through which rights holders should receive fair compensation.
"It is open, for instance, to member states to pay compensation themselves," the judge said. "However, it is also open to them to impose the payment obligation upon third parties such as device manufacturers or even, through a sales levy, upon consumers."
A statement issued by UK Music said that the music bodies that brought the legal challenge against the private copying rules "remain open to meaningful talks" with the government on how to resolve their dispute.
Jo Dipple, chief executive of UK Music, said: "It is only right that Government gives us the standard of legislation our music deserves. We want to work with government so this can be achieved. Changes to copyright law that affect such a vital part of the creative economy, which supports one in twelve jobs, must only be introduced if there is a robust evidential basis for doing so."
In response to the High Court's ruling, a UK government spokesperson said: "The government is disappointed by the ruling on the private copying exception, but respects the opinion of the Court. We are considering the implications of the ruling and the available options."