August 07 2008
A recent judgment of the District Court of The Hague has reopened the discussion in the Netherlands about the infringing nature of downloading illegal content.(1)
A private copying exception has existed in the Copyright Act since the early 1990s. Non-profit organization the Home Copying Foundation was established to collect levies on blank videotapes and audiotapes, soon followed by blank CDs, DVDs and other carriers. As in other jurisdictions, the millions of euros collected by the foundation are subsequently distributed to collective rights organizations for subsequent distribution to their members - copyright and neighbouring rights owners. Pending the attempt to harmonize levies among EU member states, the government has temporarily blocked a suggested levy on MP3 players.
When the EU Directive on Copyright in the Information Society (2001/29/EC) was implemented into the Copyright Act in 2004, parliamentary questions were asked as to whether unauthorized copying from an illegal source for private purposes (eg, downloading from a peer-to-peer network or copying a counterfeit DVD for home use) should be deemed an act of copyright infringement. The government replied that the source of the copy was irrelevant in this respect, because mere downloading is not a form of reproducing or making available. The government also held that blank levies were the right way to compensate rights owners for the damage caused by illegal downloading, because otherwise it would be practically impossible to enforce copyright within the private sphere. This line of reasoning was repeated in subsequent parliamentary discussions on private copying. In particular, the government confirmed that only the act of uploading illegal content was an act of infringement, and not mere downloading.
The Netherlands does not have a copyright tribunal which deals with copyright royalties. A recent study by the Competition Authority concluded that royalty rates applied by Buma/Stemra, the Dutch collecting society for authors, could not be considered to be excessive in comparison to those in other countries, but it did not answer the question of what a reasonable rate would be, as it is not competent to set such rates. The District Court of The Hague has exclusive jurisdiction over certain copyright levies, including disputes about the private copying levies, but it does not set the rates themselves.
A procedure was instigated by an association of manufacturers of electronic equipment asking the court for a declaratory judgment. The court was asked to order the foundation to take account of almost 20 factors, such as time-shifting and digital rights management, when determining the amount of the private copying levy. The court was also asked to confirm that copying from an illegal source should not be compensated through home copying levies, alleging that this would be contrary to the directive and in particular the 'three-step' test of Article 5(5).
The court denied most of the claims issued by the manufacturers for technical and procedural reasons. However, one particular paragraph of the judgment has sparked a debate in the press and among copyright lawyers. The court wrote in its judgment that the minister’s interpretation on the subject of copying from illegal sources was contrary to the three-step test in the directive. In other words, the court considers that the downloading of illegal content is itself an act of infringement because it is contrary to the reasonable interests and normal exploitation of the rights owners. Unsurprisingly, the entertainment industry has applauded this part of the judgment, although it has confirmed that its main targets for copyright enforcement remain large-scale uploaders of pirate content, and not consumers. The judgment leaves many open questions: in particular, it has been argued that if private copying levies are deemed to include remuneration for the damage caused by illegal downloading, this could be interpreted as a form of consent by the rights owners.
It is expected that the manufacturers will appeal the judgment.
For further information on this topic please contact Diederik Stols at DLA Piper Nederland NV by telephone (+31 20 541 9888) or by fax (+31 20 541 9899) or by email (firstname.lastname@example.org).
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Diederik E Stols