The Court of Justice’s case law on the Spanish private copying levy is on its way to becoming a soap opera—were it not for the significance of each new ruling.
It is curious to note that nothing satisfies either side and that the preliminary ruling has become a standard line of defense in the never-ending saga of litigation between collecting societies and the associations that defend collective interests.
The Court of Justice’s judgment of September 8, 2022, in Case C-263/21 is, in this context, like a vicious circle: the Spanish government decides to abolish the traditional private copying levy system by funding it through the General State Budget, and the Court of Justice, in its judgment of June 9, 2016, in Case C-470/14, rules that this is unacceptable; the government reinstates the levy and implements Article 25 via Royal Decree 1398/2018, and the new regime, among other challenges, ends up before the Court of Justice once again.
On this occasion, the pretext—which is, incidentally, hardly surprising—is very specific: the formula chosen by the Spanish legislature to establish, through a certificate issued by a certain legal entity, the right to be exempt from paying the fee.
It should be noted that Article 25 establishes a private copying compensation system for copyright holders for the reproduction of protected works, exclusively for private use, by means of non-typographic technical devices or instruments.
Purchases of equipment, devices, and reproduction media made by individuals or legal entities acting as end consumers are exempt from the payment of private copying compensation, provided they can demonstrate that the equipment, devices, or media purchased are intended exclusively for professional use, provided that such items have not been made available, either by law or in practice, to private users and are clearly reserved for uses other than the making of private copies.
Under the system devised by the Spanish legislature, this requirement must be substantiated by a certification issued by a legal entity established specifically by intellectual property rights management organizations. It is this legal entity that will, on behalf of all of them, manage exemptions from payment and refunds of compensation for private copying.
The Multisectoral Association of Companies in the Electronics, Information and Communication Technologies, Telecommunications, and Digital Content Sectors (Ametic) challenged these provisions through administrative litigation, and the Supreme Court has referred the matter for a preliminary ruling to seek guidance.
The question is obvious: to what extent is it normal for the legal entity that administers the system of exemptions through the issuance of certificates, as well as the reimbursement system, to be controlled by intellectual property rights management organizations—that is, by entities that exclusively represent the interests of the private copying compensation creditors themselves? The Court also questions whether the power granted to this legal entity to demand information on the activities of the parties concerned—a power that even allows it to deprive the economic operator in question of the ability to invoke business accounting secrecy—is not excessive.
On a battlefield like this, where any hint of hesitation on the part of the Court could lead to new offensives, the ruling appears to be particularly conclusive.
The Court of Justice holds, in essence, that EU law does not preclude national legislation under which a legal entity—established and controlled by intellectual property rights management organizations—is entrusted with the administration of exemptions from payment and refunds of compensation for private copying; nor does it preclude that legal entity from being empowered to request access to the information necessary for the exercise of the supervisory powers conferred upon it for that purpose, without it being possible, in particular, to invoke corporate accounting secrecy against it.
It is true that the judgment clarifies that a legal entity structured in this way will be acceptable provided that such national legislation establishes that exemption certificates and refunds must be granted within the prescribed time limits and in accordance with objective criteria that do not allow such a legal entity to deny a request for an exemption certificate or a refund on the basis of considerations involving the exercise of a of discretion, and provided that its decisions denying such a request may be challenged before an independent body.
But in this specific case, unlike in others, the Court of Justice does not leave that analysis to the discretion of the national court. The judgment explicitly states that Articles 10 and 11 of Royal Decree 1398/2018, which are at issue, “appear to impose” on the legal entity responsible for reviewing applications the obligation to issue, within specific time limits, the exemption certificate or to determine the existence of the right to reimbursement when the applicant provides the required identification information and signs the declarations made available to them. Furthermore, the ruling adds, those articles “appear to establish” the possibility of filing an appeal with an independent body—namely, the Ministry of Culture and Sports—regarding decisions by that legal entity to deny an application for a certificate of exemption or a refund.
Under these circumstances, the Court concludes, “the aforementioned articles appear to be sufficient to meet the requirements set forth in paragraph 45 of this judgment.” Nevertheless, the judgment notes, almost as a matter of style, that “it is, however, for the referring court to assess this.”
A mixed bag, in a ruling that will certainly not be the last one the Court will issue in the never-ending debate over compensation for private copying.
Author: ELZABURU
This article first appeared in Expansión (Sept. 2022). https://www.expansion.com/juridico/opinion/2022/09/09/631b5810e5fdea37548b4630.html