On
7 June 2013 the Government published four short consultation papers, setting
out for technical comment the draft statutory wording by which it proposes to
implement new exceptions for private copying,
parody, quotation and public administration. I should like briefly to discuss the private copying exception.
The
consultation paper states that it is the Government’s intention that the
exception be available to an individual, not a body corporate; that the
individual must have lawfully acquired the copy from which the further copy is made and on a permanent basis;
and that the further copy must be made for the individual’s private use, for
non-commercial ends. The Government contends that no compensation should be
payable to the right holder, on the basis that its proposal “allows for
appropriate compensation to be paid at the point of sale, and ensures the
exception will cause minimal harm to copyright owners”.
The Government proposes to insert the
following section 28B in the 1988 Act:
28B
Private copying
(1) Copyright is not infringed where
an individual uses a copy of a copyright work lawfully acquired by him to make
a further copy of that work provided that:
(a) the further copy is made for that
individual’s private use for ends that are neither directly nor indirectly
commercial;
(b) the copy from which the further
copy is made is held by the individual on a permanent basis (for example it is
not a copy that is rented to the individual for a specified period or borrowed
from a library); and
(c) the making of the further copy
does not involve the circumvention of effective technological measures applied
to the copy from which it is made.
(2) Copyright is infringed where an
individual who has made a further copy of a copyright work pursuant to
subsection (1):
(a) permanently transfers the copy to
another person; or
(b) permanently transfers the copy
from which it is made without destroying the further copy
and the further copy shall in those
circumstances be treated as an infringing copy.
(3) Nothing in subsection (2) prevents
an individual from storing a further copy made pursuant to subsection (1) in an
electronic storage facility accessed by means of the internet or similar means,
where that facility is provided for his sole private use.
(4) To the extent that the term of any
contract purports to restrict or prevent the doing of any act which would
otherwise be permitted by this section, that term is unenforceable.
The
Government will add this new exception to the list of exceptions falling within
the intervention mechanism under section 296ZA of the 1988 Act.
It
will be recalled that Article 5(2)(b) of the Copyright Directive 2001/29/EC
permits an exception “in respect of reproductions on any medium made by a
natural person for private use and for ends that are neither directly nor
indirectly commercial, on condition that the rightholders receive fair
compensation which takes account of the application or non-application of
technological measures … to the work or subject-matter concerned”. Application
of any exception “shall only be applied in certain special cases which do not
conflict with a normal exploitation of the work or other subject-matter and do
not unreasonably prejudice the legitimate interests of the rightholder”
(Article 5(5)).
There
are some interesting and, for right holders, concerning aspects to the proposal.
Lawful
ownership
The
Government was clear that the exception would apply only to copies lawfully owned
by the copier. In a digital era, however, the defining of ownership requires
some thought. The Government attempts to address this by providing that the
original copy has been “lawfully acquired” by the copier and that it is held by
him “on a permanent basis”. There is no requirement that he be the owner of the
physical carrier in which the original copy is embodied. However, in digital
transactions there is no transfer of a physical carrier, so it would be difficult
to define the exception by using explicitly the concept of “ownership” - in the
“sale” of a digital copy, nothing changes hands: the vendor performs a service
which changes the condition of media in the prior possession of the purchaser. The drafting of sub-section (2), which appears to attempt to confine the use of private copies to temporary lending, can be expected to provoke much debate.
Cloud
storage
Sub-section
(3) aims at legalising the use of online storage facilities for private copies.
The proposed wording does not purport to insulate Cloud service providers from
liability. It will be for the courts to decide who “makes” the copy when a user
stores a copy in the Cloud. Cloud storage facilities usually encode the uploaded data and potentially perform various transformations upon them, all of which would appear to require a licence of the reproduction right. The problem with this draft provision is that it
applies where the online storage facility “is provided for [the user's] sole private use”. This condition seems to focus
on the setting up of the facility, not its use. It might be read as excepting
the stored copy even if it could easily be accessed by others. Questions would
then arise whether there was an infringing communication to the public and if so,
by whom and in what jurisdiction.
Strictly
sub-section (3) is unnecessary. If from a technical perspective the consumer is
“making a private copy” within sub-section (1), it does not matter where it is
stored. It might better for it simply to be omitted; or for the reference to
provision of the facility amended so as to read: “where that facility is used [or “accessed”] solely by him”. In this
way the copy would cease to be a private copy if the online account were
accessed by others.
Compensation
As
mentioned above, the Copyright Directive requires that where there is a private
copying exception there be “fair compensation which takes account of the
application or non-application” of TPMs. In Padawan the Court of Justice of the European
Union held that “[c]opying by natural
persons acting in a private capacity must be regarded as an act likely to cause
harm to the author of the work concerned.”
The
exception would apply whether or not the original copy was made by or with the
consent of the holder of the UK copyright. Clearly it is the holder of the UK
copyright who is entitled to compensation (if any). If, as the Government
argues, the UK right holder can “compensate” himself at the point of sale it
seems inadmissible that, for example, copies could be acquired from outside the
UK and then copied pursuant to this exception without compensation. It would be
more logical to provide that the original copy must be one which was put in
circulation or made available to the public “by or with the consent of the
owner of the [UK] copyright”.
As mentioned in previous postings, the Government’s argument
that the value of the private copy is “priced in” at the point of sale has been
undermined by recent research,
which shows that in the audiovisual sector right holders can and do segment the
market for licensed copying by price, charging more for content which can be format-shifted. In
any case, the right holder may have nothing to do with the setting of the price
in the UK.
The Government’s
justification for denying compensation ignores the requirement of Recital 35
that “account should be taken of the particular circumstances of each case”. It
would deny compensation even to right holders whose works have never been the
subject of a sale. As mentioned above, it ignores the fact that the UK right
holder often will not be the licensor of the copy from which the private copy
is made. It treats all right holders in the same way, whatever their vulnerability
to the copying of their works. It would seem also to apply to the entire legacy
of physical copies in the market, even thought they were sold prior to the
application of any private copy exception (a point which the 2006 Gowers Review
recognised as preventing retrospective application of a format-shifting
exception). Arguably, to impose a private copying exception on existing copies would be an expropriation of private property, contrary to Article 1, Protocol 1 of the European Convention of Human Rights: Balan v Moldova (2008) ECHR, application no. 19247/03.
The
CJEU in Padawan held the
Spanish system of private coping levies incompatible with the Directive because
it failed to strike the correct balance between the need to compensate right
holders and the interests of persons involved in production of private copies.
An indiscriminate levy on all copying media, whether used privately or
professionally, was not permissible. The court also held in Thuiskopie that, having
regard to the Three-Step Test, a Member State which introduces a private
copying exception “must guarantee, within the framework of its
competences, the effective recovery of the fair compensation intended to
compensate the authors harmed for the prejudice sustained, in particular if
that harm arose on the territory of that Member State”.
In
the present case, the reverse applies: instead of an indiscriminately broad
levy on recording media, there is an indiscriminately narrow (or rather,
non-existent) levy in respect of all works. It seems possible that the
present wording, if enacted in a statutory instrument, would be struck down by
the English court as being incompatible with the Directive.
The
closing date for comments on the proposed exceptions is 17 July 2013. The UK
Intellectual Property Office will hold a series of open meetings in the week
commencing 8 July 2013 for discussion of the draft exceptions.