Perhaps the most frustrating way to lose a court case for a party is to lose with the court ruling on the basis of what it thinks is best for you.
A few years ago, there was a striking example of this paternalistic tendency in the field of intellectual property law with France's highest judicial court (Cour de cassation) deciding a case involving the applicability of the so-called statutory license (authorizing the use of sound recordings without the consent of performers and producers against payment of an equitable remuneration) to the television broadcast of video clips incorporating sound recordings. Despite the performers' stated position that they preferred for such use to be covered by the statutory license (as they would thus be guaranteed payment of a portion of the equitable remuneration) and not by their exclusive prerogatives, the Court held that the performers were entitled to the "more advantageous" exclusive rights regime whereby their consent was required. The net result of the Court's solicitude was that, as their exclusive rights were invariably assigned to the producers (unlike the right to the equitable remuneration), the performers were deprived of potential income.
France's highest court in administrative matters (the Conseil d'Etat) recently handed down a ruling in the field of copyright law that can be similarly be characterized as paternalistic (Conseil d'Etat ruling of July 11, 2008, the SIMAVELEC decision).
France (like many other EU countries) has a private copying exception to copyright. Under this exception, an author (or other rights holder such as performer or producer) cannot object to a copy of his work being made provided that such copy is strictly for the private use of the person making the copy. However, in order to compensate authors (as well as performers and producers) for this, the State decided in 1985 to impose a levy on the manufacturing and importing of blank storage devices that can be used to record or store copyrighted works under the private copying exception.
Initially intended to cover blank audio and video cassettes, the advent of digital storage devices has led to its extension to flashcards, hard drives, CD-RW, DVD-R, cell phones, etc. The amounts levied are paid to collective rights societies that then allocate the statutorily determined shares to the various rights holders (authors, performers and producers). The amounts generated are substantial and account for a significant portion of revenues distributed by the collective rights societies.
The levy amounts are set by a special Commission on the basis of the kind of device at issue and, especially, its storage capacity. The Commission includes members representing the rights holders (the beneficiaries of the amounts collected) and those representing the mass electronic consumer industry which pays the amounts levied.
In determining the appropriate levy rate, the Commission, highly sensitive to the prevalence of peer-to-peer communities on the internet and other illegal online offerings on which musical and audio-visual works are shared or otherwise made available, made a decision in 2006, with regard to certain digital storage devices, based on their storage capacity and their potential for use as storage devices for all kinds of private copies (without distinguishing between those that properly fell within the strict parameters of the private copying exception and those that did not).
The representative body for the electronics consumer companies (SIMAVELEC) brought the matter to court and argued that, in so doing,the Commission exceeded its mandate because it took into account the capacity of the devices to be used as storage for copies that did not properly qualify as private copies. In other words, SIMAVELEC argued that inasmuch as the levy system's very raison d'être was to compensate the rights holders for lawful private copying (under the private copying exception), the rate of the levy had to be set in light of potential use for such private copying (and nothing else), i.e., private copying done outside the scope of the private copying exception could have no bearing on the levy rate.
The Conseil d'Etat agreed.
From a legal point of view, the Court's reasoning is perfectly understandable: it is true that the levy system was put into place to compensate authors and other rights holders for the financial harm suffered as a result of private copying under the private copying exception. It therefore follows, axiomatically, that the compensation it generates should reflect the reality of lawful private copying and not extend to other acts (such as unlawful private copying). The Court's decision, however, suffers from an important legal shortcut and from a certain paternalism vis-à-vis the rights holders.
As regards the shortcut, the Court faults the Commission for taking into account both legal and illegal private copying in its determination of the appropriate levy. However, the Court's concept of 'illegal" private copying is simply based on the fact that, in its opinion, the private copying exception cannot come into play where the source of the copy is not authorized by the relevant rights holder (e.g. many peer-to-peer networks).
In fact, this is a highly debated question in French copyright law. While there is certainly some authority for the proposition implicit in the Court's reasoning (i.e., private copying exception requires a lawful source), there is also ample authority to the contrary (relying principally on the fact that the statute itself imposes no such requirement). The reality is that there is simply no clear cut Supreme Court decision on this specific issue. While there was a ruling by the Cour de cassation in 2006 remanding a case back to a lower court for a ruling on this specific issue, the appellate court's ruling on remand artfully avoided the issue and ruled on other grounds.
The Conseil d'Etat's view that unlawful private copying (as taken into account by the Commission) corresponds to cases where the source is unauthorized is therefore unsupported by case law and stated without argument or explanation. Moreover, while the Conseil d'Etat's view on this highly contentious issue is interesting, it can hardly be taken as conclusive given that such an issue ought to be resolved by the Cour de cassation (the judicial Supreme Court and, as such, copyright law's final arbiter) or, naturally, the legislator.
With regard to the paternalism underlying the Court's decision, it is striking that it hands a victory to SIMAVELEC on the basis of an argument that ostensibly favors the rights holders. Implicit in the Court's opinion is the idea that if private copying outside the scope of the private copying exception has nothing to do with the compensation to be paid for private copying, it is precisely because such copying constitutes copyright infringement and ought to be dealt with as such. In other words, the court appears to be inviting the rights holders to seek compensation for these acts not via the private copying levy but rather through legal proceedings based on copyright infringement. While technically possible, this approach ignores the fact that the authors, performers and producers themselves preferred a solution based on the levy system; they are perfectly well aware that the alternative course of action (suing their own customers) is cumbersome and fraught with danger. Unfortunately, the Conseil d'Etat, adopting a paternalistic approach, appears to be telling them where their own best interests lie.
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