Out-Law News 3 min. read

Users should be able to buy licences to allow copying of copyright-protected material

People should be able to buy a licence that allows them to download and pass on copyright material in a way that would currently break the law, an academic has said. He said that this would encourage innovation and compensate rights owners.

Activities covered by the proposed licence would include downloading for personal use, non-commercial adaptation and distribution within networks of friends, according to Martin Kretschmer, director of Bournemouth University's Centre for Intellectual Property Policy & Management.

These state-regulated licenses could help free up copyrighted works for private copying whilst ensuring the rights holders are fairly compensated for the economic harm that causes, Kretschmer said.

He said that current EU laws permitting copying of works for private use were causing piracy because they "incentivise" rights holders to restrict access to their works.

"Good public policy should incentivise right owners to make copyright materials available in a form that enables private copying, since there are obvious benefits to innovation and learning if users have as wide access as possible to cultural materials (as long as the incentives to produce in the first place are sufficient)," Kretschmer said in a report on private copying and fair compensation (74-page / 2.94MB PDF).

"Yet, the European Commission has read the fair compensation provisions of the [Copyright] Directive in the opposite way. Right owners who give permissions for private copying ... lose their entitlement to fair compensation. Thus European policy, perversely, appears to incentivise right holders to apply restrictive settings which are then breached by users, allowing the right owners to claim harm that should be compensated," he said.

"A solution to this contradictory policy could be to avoid the entitlement to compensation from narrowly conceived private copying activities, such as format shifting ... and to convert a range of other private, non-commercial activities which would encourage consumer led innovation, and services that facilitate such innovation, into state regulated licences (which can be understood as 'fair compensation' for harm)," Kretschmer said.

"A more widely conceived exception that would cover private activities that take place in digital networks (such as downloading for personal use, or non-commercial adaptation and distribution within networks of friends) may be best understood not as an exception but as a statutory licence. Such a licence could include state regulated payments with levy characteristics as part of a wider overhaul of the copyright system, facilitating the growth of new digital services," he said.

Some European countries allow the unauthorised copying of material that a person legitimately owns, as long as that is for private use. Under the EU's Copyright Directive this is permitted as long as there is 'fair compensation' to the copyright holders. In a ruling by the European Court of Justice last year, the Court said that what constitutes 'fair compensation' must be determined by the "harm suffered by the author".

Countries which allow private copying ensure this fair compensation by charging a levy on the media such as discs and media players – that material is typically copied on to. That levy is then distributed through collection societies to rights holders.

Kretschmer said 22 of the 27 EU countries use a 'levy' system for private copying but reported "dramatic differences" in how the member states identified the products where levies should be added and who should benefit.

"The scope and legal construction of private copying differs considerably between countries," Kretschmer said in his report.

"In some countries, sources need to be lawful, in others not; in some countries, there are a set number of permitted copies specified, in others there are definitions of private circles; in some countries, the levy is constructed as a statutory licence, in others as a debt; in some countries compensation is only due for private copying of music, in others for printed matter (reprographics) and audio-visual works," he said.

"There are levies on blank media in 22 EU countries, on MP3 players in 18 countries, on printers in 12 countries, on personal computers in 4 countries. Revenues collected per capita vary between €0.02 (Romania) and €2.6 (France). The distribution of levy revenues to recording artists is less than €0.01 per album," Kretschmer said.

"These variations cannot be explained by an underlying concept of economic harm to rightholders from private copying," he said.

The cost of goods in the UK already has private copying factored in, the academic said. The UK is one of five EU countries not to currently impose levies on private copying but the Government has said it will introduce a private copying exception into UK copyright law.

"In non-levy countries, such as the UK, a certain amount of private copying is already priced into retail purchases," Kretschmer said. "For example, right holders have either explicitly permitted acts of format shifting, or decided not to enforce their exclusive rights. Commercial practice will not change as a result of introducing a narrowly conceived private copying exception," he said.

EU countries that use levies relieve consumers from liability from copyright infringement, but only in relation to activities that "generally do not match with what consumers ordinarily understand as private activities," Kretschmer said.

Activities such as "file sharing in digital networks, online publication, performance and distribution within networks of friends and user generated content / mixing / mash-up" would be considered private activities by consumers, but are not covered under the private copying exception in the Copyright Directive, Kretschmer said.

"In the analogue world, the private copying exception was aimed at discrete copies for non-commercial use in [making back-up copies / archiving / time shifting / format shifting and passing copies to family / friends]. In digital networks, the distinction between private and public spheres has become blurred. Regularly, new services are invented that challenge earlier divisions (P2P, social networks, cloud servers)," the academic said.

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