Moving Forward with a Canadian Private Copying Levy: Lessons From the EU

Moving Forward with a Canadian Private Copying Levy: Lessons From the EU

Steven Zuccarelli is a 2012 JD Candidate at Osgoode Hall Law School.

It is often surprising for the newest generation of multimedia consumers to realize that making private copies of copyrighted work has been occurring long before the arrival of digital music players.  In fact, few remember or even know of recording radio songs onto those things we call cassettes.  However, in the digital age of the personal computer and of the iPod, the access individuals have to the means to record, copy and distribute copyrighted works is considerably greater than at any point in time before.  Consequently, artists and copyright owners are seeing a proliferation of the distribution and consumption of their works without their permission.

Now more then ever, national governments are faced with a balancing act between protecting the Intellectual Property of artists, producers and broadcasters while also giving users a flexible and relatively unrestricted right to consume that media legitimately.  As Canada struggles to find that balance, it will be helpful to look to our European neighbours in order to better solve the problem of protecting copyrighted media while not unduly burdening consumers.

Advocate General Verica Trstenjak of the Court of Justice of the European Union (CJEU) has recently issued an opinion on a number of issues facing the implementation of a private copying levy in Spain.  The levy applies to manufacturers of reproduction media and devices in order to accommodate the use of these devices for the duplication of copyrighted material by consumers for personal use.  The compensation is paid for in lump sum to rights management agencies who distribute that income to artists and copyright owners who experience losses due to the private copying.  While the opinion was made in relation to a private dispute between a Spanish rights management group responsible for collecting the levy and a digital media manufacturer, it nonetheless provides insight into how Canada can make its way forward in the often-contentious issue of private copying levys.  Canada currently employs a similar levy restricted only to reproduction media such as CDs or cassettes, and the collection and distribution of that levy by the Canadian Private Copying Collective (CPCC) has led to hundreds of millions of dollars going to artists.

The opinion serves to specifically address two main issues; the first is what level of consistency between EU member states is required with regards to their approaches to private copying.  The court ultimately found that to optimally regulate private copying, the characteristics of what constitutes fair compensation for the copyright owner must remain uniform across all European nations.  To do otherwise would undermine the objective of internalizing the market failure that private copying creates.  For the Spanish levy, this poses particular problems, addressed in the second issue.

For Canada and its closest neighbour, the United States (US), this serves to highlight the importance of creating harmonized law to avoid undermining the creation of functioning fair compensation mechanisms.  The level of integration that the US and Canadian markets experience, necessitates similar approaches to regulating such widely distributed media.  While it must be acknowledged that the EU arguably enjoys a level of legal integration between member states that better facilitates cross border law, the notion that optimal regulation of copyrighted material is best served through harmonized state law is an important lesson for North American nations.  Cooperation between the US and Canada in this area would serve to provide consistency and certainty for copyright holders and users alike.  In the context of reproduction devices, cross border harmonization would also assure that Canadian consumers do not go to the US to purchase expensive media and devices like iPods, avoiding the Canadian private copying levys that may be applied to them in the future.

The second issue that the opinion addresses is whether the Spanish levy, applied indiscriminately to all media and digital media devices, is consistent with the aforementioned EU laws regulating fair compensation.  The Court found that where there is insufficient evidence to suggest that the use of the media or device is for private copying, the levy would breach EU directives regulating fair compensation to artists and producers.  Essentially, the Court expressed that EU law does not give member states the ability to apply a levy to entities that produce reproduction media or devices when the ultimate use of the product is not for private copying.

While the court acknowledged the practical reasons for applying a pro-active levy to media and devices, it is clear from the Advocate General’s opinion that user rights play a part in limiting the reach of a levy.  The Court expressed an unwillingness to impose on manufacturers, and therefore the consumers who will eventually bear that burden, a levy for which there is insufficient correlation between the fair compensation and the limitation of private copying justifying it.

The Canadian private copying levy has encountered similar resistance from Canadian Courts, specifically for the extension of the levy to iPods or even their hard drives.  Consequently, the viability of the levy as a functioning model of internalizing a market externality is at risk since CDs and cassettes are increasingly becoming secondary to iPods and computers for private copying.  While the notion of a Canadian iPod levy has gained greater momentum, it is clear from the EU’s stance that rights management agencies will have a difficult time attempting to grow such a levy’s reach.