According to the European Court of Justice, the amount of the levy payable for making private copies of a protected work may not take unlawful reproductions into account. This principle has been stated today in the decision ACI Adam BV and Others v Stichting de Thuiskopie, Stichting Onderhandelingen Thuiskopie vergoeding (case C-435/12).

According to the court, the fact that no applicable technological measure to combat the making of unlawful private copies exists is not capable of calling that finding into question. The decision at stake involves a couple of relevant consequences for national policy makers and jurisdiction in the matter of private copy levies and fight to online piracy.

Facts

The current legislation in the Netherlands imposes a private copying levy on electronic devices with storage devices in order to compensate copyright holders for the unlawful reproduction of their works. The decision of the ECJ, following the AG opinion of January 9th, 2013, maintains that such Dutch legislation is detrimental to the functioning of the internal market as far as it allows reproductions for private use from unlawful sources. Moreover, the court noted that “national legislation which makes no distinction between private copies made from lawful sources and those made from counterfeited or pirated sources cannot be tolerated”. This indiscriminate application effectively penalises users who lawfully reproduce their digital content from authorized sources as they also pay the private copy levy and creates a disincentive for business based on legal content.

Consequences for private copy legislations 

This ruling will have an impact in countries where the private copy levies mechanism has been arbitrarily used as a compensation for the potential losses deriving from online piracy. In various countries (for instance Italy) the right-holders are lobbying the government to increase the levies on the grounds that their revenues are declining because of pirated content on the iNternet. By doing so, however, the industry blurs the difference between legal and illegal content and creates a contradiction: if pirated content is illegal it should be stopped, not remunerated, both things together are not possible. Some legislators or governments did not understood such distinction and believed that the such kind of mechanism may be a way to make everybody happy: rights-holders and pirates. Right holders may be happy about this solution, because at the very end they want money and not principles: but they stop to fight piracy then.

The ECJ correctly quashed the above reasoning and reinstated the correct interpretation and application of the private copy exception.

Consequences for pirated content

Clearly, the hidden result of the Dutch legislation was to legalize illegal content. In fact, if illegal content is taken as a basis to remunerate rights-holders via the private copy mechanism, then it will not illegal any longer: it will be part of the business. In this case, however, one should stop to fight piracy, which will become a licit business remunerated via a peculiar way. From policy point of view, it is an interesting perspective, however such approach requires a correct legal basis to go ahead.

And in fact, the ECJ rebutted this reasoning, because the private copy mechanism (which is an exception to copyright, but he way, applicable only in some countries and in different ways) has not been deemed for this purpose. Of course Netherlands could decide to legalize illegal content (like drugs!), but they have to choose another legal basis.

Other consequences: filtering?

Following the ECJ’s decision, some stakeholders and commentators have started saying that now Dutsch ISP should start to filter Internet traffic in order to intercept and block users making illegal download. To this purpose, someone has evocated the latest ECJ’d decision on web-blocking (the UPC case). See for instance the director of Brein, the Dutch anti piracy committee:

“It’s BREIN to do about the fact that there are illegal traders on the internet (sites and services) that make it their business to facilitate access to illegal content ,” said BREIN director Tim Kuik. “Obviously it’s of the utmost importance that we can claim blocking of access to persistent illegal websites. Blocking [of Pirate Bay] was recently rejected by the appeal court in The Hague. BREIN asked the Supreme Court to annul that decision”

This approach is not correct. Monitoring/filtering was admitted by the ECJ in the well-known Sabam case only under strict criteria which, to my opinion, make this measure not really enforceable in practice. In any case, it should be up to the national courts/legislators to foresee a blocking mechanism allowing ISPs to detect illegal downloading without infringing the principles laid down by the European court.

This new Dutch case does not add anything to this perspective. In many countries pirated downloading is already an illegal practice, even a criminal fact: whether ISPs may be required to intercept such conducts is still the same old story. In any case, the reference to the UPC case is inappropriate, because:

– filtering of content to block it (like in Sabam); and

– filtering of Internet traffic for the sole purpose to block the access to a forbidden website (like in the UPC case);

are technically not the same thing. Filtering like in the Sabam case requires a kind of DPI, because intercepting illegal downloading involves an intrusive analysis of IP packets; by contrast, blocking Internet traffic towards a given destination should be in principle less intrusive, depending on the kind of technology chosen to implement the measure. In any case, in the UPC case the European Court made clear the web-blocking should not interfere with individual rights, including privacy – this should prevent ISPs from applying DPI technologies to implement web-blocking measures.