“Back to the past” for the private copying levy in Spain

The recent approval in Spain of Royal Decree-Law 12/2017 enables the closure of a period of legal uncertainty regarding the regulation of the laws concerning equitable remuneration for private copying. It should be noted that this regulation was also substantially amended by Royal Decree-Law 20/2011: it went from being a generally accepted traditional system in which equitable remuneration had to be paid by manufacturers in Spain insofar as they acted as commercial distributers and by acquirers outside of Spain, for the commercial distribution or use thereof within this, of equipment, apparatus or devices in which certain works were reproduced (books, related publications, phonograms and videograms or other sound, visual or audio-visual media), to a system (now repealed) in which the financial remuneration for using the copies for private use was paid and charged to the State Budget for each year.

The legislative change was significant and it did not really correspond with the legal channel used for its approval (i.e. the form of the royal decree-law and the urgent reasons to justify it) and its compliance with the legal framework establishing the legislation of this equitable remuneration was even more questionable.

For information purposes only, it is worth pointing out that this principle stems from the need to compensate the holders of intellectual property rights over specific works or services that are exploited in a specific manner (literary editions, phonograms and videograms) for the loss of revenue resulting from private reproductions made under the protection of the limitation of private copying set forth in article 31 of the Intellectual Property Act. In order to fully understand the issue, it should be noted that this Act recognises the possibility of users making copies for private use, not commercial or collective use, of lawfully disseminated works or services, limiting the exclusive right of reproduction held by the holders of rights over such works or services. Quid pro quo: to you, the holder of the rights, in exchange for depriving you of the right of reproduction for private use, you shall be entitled to financial compensation for the reproductions or copies that may be made of your work or service and to mitigate the financial damages this may cause. canon-digital-web

Within this legal framework, compatible at all times with the traditional theory of compensating for damages caused to others, those that had to pay the relevant compensation were those who created the situation that led to the loss: the manufacturers of the storage media used to copy or reproduce certain works or services and the devices intended mainly for carrying out such reproductions.

Therefore, the legal leap taken at the time (2011) meant changing this legal framework for another in which all of us were financially responsible for the damages caused to the holders of the intellectual property rights (…charged to the National Budget…), regardless of whether or not we were the cause of the loss, or whether or not we copied the works or services in question.

The legislator’s inappropriate provision was amended by the Judgement of the Court of Justice of the European Union (Fourth Chamber) on 9 June 2016, seconded by the judgement issued by the Supreme Court (3rd Chamber) on 10 November 2016, confirming the incompatibility of the system with European Union Law. Therefore, the approval of this new regulation shall enter into force on the first of August.

This basically returns to the previous system with the approval of Royal Decree-Law 20/2011, however some important aspects are included, namely:

      1. The new text of article 31.2.b of the Consolidated Text of the Intellectual Property Act (TRLPI, for its Spanish acronym), clarifies that reproductions made from unlawful sources or that violate the conditions of access to the work or service are not covered by the limitation of private copying. These should be understood to be those made outside of any legal limitations regarding an intellectual property right and those made through the exploitation of the work without the authorisation of the holder of the relevant rights.

 

      1. The seventh section of the new article 25 of the TRLPI, in relation to the provisions set forth in the fifth section, includes cases excluded from the payment of the aforementioned remuneration. Accordingly, the following shall be exempt from the payment obligation: (i) equipment, apparatus and reproduction devices acquired by entities that include the public sector, (ii) those acquired by individuals with mandatory authorisation to reproduce the works or services while carrying out their activity, or (iii) those acquired by individuals or legal entities acting as end consumers, provided the professional purpose of the equipment or devices acquired can be proven and these are clearly designed for professional use and made available to private users for making private copies. The relevant aspect of this last point is that the reproduction use given to such equipment, apparatus and devices is clearly reserved for professional, not private, uses.

 

      1. Expressly included (it was already outlined in rule 4a.a of article 25.6 TRLPI before the amendment applied by Royal Decree-Law 20/2011) a form of “harmless use” exception for cases in which the damages caused to the holder of the right of reproduction are minimal, which shall be determined by means of royal decree.

 

      1. The ex-ante form of exceptions also includes an ex-post reimbursement system, applicable to non-exempt cases in which the end consumer that has paid the compensation justifies the right to reimbursement based on legally established grounds (section 8 of the new article 25 TRLPI). With the exclusion of exceptional cases, applications for reimbursement for sums under twenty-five euros shall not be accepted.

 

      1. Another addition is the creation – within a maximum period of three months from the entry into force of the Royal Decree-Law – of a legal entity to manage the remuneration payments for private copying and reimbursements that may be made as a result of the provisions referred to in the preceding point. This legal entity shall be formed, managed and financed by management entities for intellectual property rights representing the holders of the relevant rights.

 

      1. Lastly, in terms of the system for determining the sum of the equitable remuneration –the definitive development of which shall be carried out pursuant to a royal decree referred to by the Royal Decree-Law, which is to be approved within a maximum period of one year-, this includes new criteria such as the price of the unit of each reproduced category, the availability, degree of application and effectiveness and impact of the technological measures referred to in article 160.3 of the TRLPI or a comparative law criterion such as the sums of equitable remuneration for private copying applicable in other European Union member States.

Otherwise, the Royal Decree-Law merely returns to the regulatory framework governing equitable remuneration for private copying in force until 1 January 2012.

 

By José Carlos Erdozain and Violeta Arnaiz, attorneys from the Legal Department at PONS IP.