National courts obliged to find a way to impose copyright levies
on those based outside of their jurisdiction.
Copyright levies are imposed on the manufacturers or suppliers of
devices used by consumers to transfer media from one medium to
another. Not all EU jurisdictions impose them, so what happens when
goods are imported into a Member State that imposes a levy, by a
supplier based in a Member State that does not impose a levy? Can
the supplier get away with not paying, or, must the Member State
pursue him? Could the consumer be forced to pay the levy
instead?
A recent judgment of the Court of Justice of the European Union has
provided answers to these questions.
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Full Article
National courts obliged to find a way to impose copyright levies on those based outside of their jurisdiction.
Background: just another tax
Copyright levies are a tax on the manufacturers or suppliers of
devices used by consumers to transfer media from one medium (such
as a CD) to another (such as an MP3 player), imposed by those
countries where consumers are legally entitled to transfer media
between devices for their private use. Copyright holders are then
compensated with the proceeds of the levy for the
"infringement" of their copyright.
The levy is charged to manufacturers or suppliers as it is
impractical to identify and collect the levy from the consumers
themselves. The intention is that manufacturers or suppliers will
then pass on the cost of the levy to the consumer through the
overall sale price.
In the EU, Member States are authorised by the Copyright Directive
(Directive 2001/29/EC) to introduce a levy. The UK has not
done this – there is no legal right to transfer media
between devices, and consequently no levy. The same is true of
Germany and some other Member States. In contrast, the Netherlands,
Finland and others have introduced a right to transfer –
and therefore a levy.
The key issue
The issue that came before the Court of Justice in Case
C-462/09 Stichting de Thuiskopie v Opus Supplies Deutschland GmbH,
Mijndert van der Lee, Hananja van der Lee concerned a distance
selling situation, where the consumer is based in a country
imposing a levy (here, the Netherlands) and the supplier of the
device is based in a country not imposing a levy (here,
Germany).
On the facts, the Dutch levy authority argued that it was the
German based supplier who should pay the Dutch levy. The supplier,
however, refused to pay up, arguing (against the grain of existing
judicial authority) that it was the responsibility of the Dutch
consumer to pay, as it was in his or her name (under the sale
contract and shipping order) that the goods were imported from
Germany into the Netherlands (i.e. the consumer was the
"importer").
Referral to the Court of Justice of the European Union
The Dutch Supreme Court therefore put the following questions to
the Court of Justice (re-phrased for succinctness):
1. Does the Copyright Directive provide any assistance in
determining who should be regarded under national law as owing a
copyright levy?
The Court responded by re-affirming the existing principle outlined
above: that consumers should ultimately pay the levy but, due to
the complications of targeting them directly, it should be paid by
manufacturers or suppliers of the copying devices – who
can then pass on the cost.
2. In a distance selling scenario, such as the one on the facts,
does the Copyright Directive require national law to be interpreted
so that the copyright levy must be collected from a supplier even
if they are based in a Member State without a levy?
The Court responded that Member States that have a levy must
"guarantee" the recovery of the levy for copyright
holders. It is therefore for the authorities, in particular the
courts, of the Member State to seek an interpretation of national
law that enables it to obtain the levy from the importing supplier.
It is of no bearing that they are established in another Member
State.
A levy big headache
This case is somewhat of an inconvenience for those Member
States – namely, their courts – that have
introduced a copyright levy. Whilst the Court stated that Member
States must do all that they can to enforce levies, it has not
stated how they should do that where (as here) the person whom it
wishes to enforce the levy against is based in a Member State where
no levy exists – and over which its national courts will
have no jurisdiction.
Further, the statement that Member States must
"guarantee" copyright holders compensation from the levy
is a strong one. Normally, one might seek payment of guaranteed
sums from the guarantor if the principal is unwilling or unable to
pay.
Is the levy dry?
In a recent European Commission communication,
outlining its strategy for creating a better single market for
intellectual property, the Commission stated its desire to see
greater harmonisation amongst Member States as to levies, with
comprehensive legislation at EU level by 2012. We do not expect
that this would mean imposing a levy system on all Member States,
but rather harmonising the levy systems of those Member States that
choose to impose a levy. To that extent, it will be interesting to
see if the consultation on new legislation will address the issues
posed by this judgment.
Further, in the recent Hargreaves report on the future of UK
intellectual property law, Professor Hargreaves advised the UK
government against the introduction of a levy in the UK. Whilst the
UK government has yet to officially respond, we do not expect it
will take a radically different approach to Professor Hargreaves.
As such, manufacturers or importers supplying to the UK consumer
have less to fear from this judgment and the EU system of levies
than those in other jurisdictions.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 30/06/2011.
