Case C-572/13, Hewlett-Packard Belgium – objecting to a Belgian copyright rule ‘the faster the printer, the more you owe’ [judgment 2015, ECLI:EU:C:2015:750]

A Belgian copyright collecting society wants a levy on every printer imported into and sold in Belgium to compensate for the harm which these printers do to the income of Belgian authors and publishers. How much is owed depends on how fast each printer goes.  Hewlett-Packard objects to this levy because in their view it is not only arbitrary but also incompatible with the EU’s ‘InfoSoc’ Directive 2001/29/EC.

Facts
Hewlett-Packard is an American company. One of its daughter companies is registered in Belgium. The Belgian company imports and sells computers and printers to consumers in Belgium. Some of their printers are designed to be used in the home. To make these domestic printers commercially attractive, they are not only multi-functional (with in-built scanners and fax machines) but they are also sold for less than 100 euro.

A purchaser of a Hewlett-Packard printer may have had the idea that he is free to do with his printer as he sees fit. But in two respects that freedom may have come at a hidden cost. The first is that printers are said to deprive authors of revenue. This is because domestic printers and copiers can make reproductions of copyright-protected works in a way that apparently gets around a cardinal principle of copyright law, which is that reproductions are legal only once author has been paid for his consent to allow a reproduction to be made of the copyright-protected work.

And in a second but related respect, the freedom of a consumer may come at a hidden cost. In Belgium for example at least a part of the ticket price on a printer or other electrical good with a graphics card, or memory chip, may well comprise of a copyright levy. Such levies go into a variety of collective funds from which Belgian authors and publishers can then claim compensation for the economic harm they allegedly suffer from all those unauthorised copies of their copyright-protected works.

In this context, Hewlett-Packard received a letter from a collective fund administered by the Reprobel demanding a 49 euro levy on every Hewlett-Packard printer which had been sold through the Carrefour supermarket chain in Belgium. This letter was sent a decade ago, in 2004. However, even six years after that demand had first been made, Hewlett-Packard was refusing to pay Reprobel’s levy. Consequently, Hewlett-Packard was hauled up before the Brussels District Court of First Instance. Once there, Hewlett-Packard denied liability and then it also sought a judicial declaration that it was not obliged to pay the Reprobel any compensation whatsoever. Furthermore, Hewlett-Packard claimed that Reprobel should in fact pay Hewlett-Packard the sum of one million euro for the harm that Hewlett-Packard had suffered at the hands of the Reprobel. At first instance, Hewlett-Packard lost.

At the Brussels Court of Appeal
The key question facing the Belgian Court of Appeal was whether a part of Belgian copyright law was compatible with EU law.

The relevant part of Belgian copyright law concerns the so-called ‘reprographic’ exception. It is an exception to a cardinal rule of copyright law that the author’s consent needs to be obtained before a reproduction of graphic or typeset material can be made. More specifically, the Belgian legal exception makes plain that the author cannot object to the making of reproductions fixed on graphics carriers. But the Belgian exception also allows compensation to be paid, and to that effect the Reprobel is entitled to introduce a levy in order to finance a fund for the benefit of authors and publishers.

But Belgian law does not exist in isolation. The relevant EU legislation is the EU’s ‘InfoSoc’ Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (OJ [2001] L167/10).

And the InfoSoc Directive not only contains its own ‘reprographic’ exception but also an exception for ‘private-copies’. Namely, Article 5(2) of the Directive stipulates:

Member States may provide for exceptions or limitations to the reproduction right provided for in Article 2 in the following cases:
(a) in respect of reproductions on paper or any similar medium, effected by the use of any kind of photographic technique or by some other process having similar effects, with the exception of sheet music, provided that the rightholders receive fair compensation;
(b) 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 referred to in Article 6 to the work or subject-matter concerned;…

According to the Brussels Court of Appeal, there were three aspects to answering the question of whether Belgian law was compatible with the EU Directive.

i) Fair compensation
The first aspect related to the concept of ‘fair compensation’ mentioned in both Articles 5(2)(a) and (b). Although that term is an independent, ‘autonomous’ concept of EU law, the initial difficulty was deciding which provision of the Directive actually applied. Namely, Reprobel relied on the reprographic exception enshrined in Article 5(2)(a) but Hewlett-Packard relied on the ‘private copy exception’ in Article (5)(2)(b). A related difficulty arose from the fact that the CJEU’s case law on fair compensation was built on the private copy exception in Article 5(2)(b) but it was unclear whether that CJEU case law could be applied to situations in which people were using multi-functional printers at home for private use but perhaps falling within the scope of the reprographic exception enshrined in Article 5(2)(a). With these doubts in mind, the Brussels Court of Appeal decided to ask Question 1.

There was a further problem related to Question 1 and this gave rise to Question 2 namely, whether and how Member States should calculate the rate of fair compensation. Here, the doubts circled around a non-binding Recital to the Directive, and some reasoning of the CJEU in Case C-467/08, Padawan.

Recital 35 of the Directive provides

In certain cases of exceptions or limitations, rightholders should receive fair compensation to compensate them adequately for the use made of their protected works or other subject-matter. When determining the form, detailed arrangements and possible level of such fair compensation, account should be taken of the particular circumstances of each case. When evaluating these circumstances, a valuable criterion would be the possible harm to the rightholders resulting from the act in question. In cases where rightholders have already received payment in some other form, for instance as part of a licence fee, no specific or separate payment may be due. The level of fair compensation should take full account of the degree of use of technological protection measures referred to in this Directive. In certain situations where the prejudice to the rightholder would be minimal, no obligation for payment may arise.

And in Case C-467/08, Padawan, the CJEU had reasoned:

40 It is clear from those provisions that the notion and level of fair compensation are linked to the harm resulting for the author from the reproduction for private use of his protected work without his authorisation. From that perspective, fair compensation must be regarded as recompense for the harm suffered by the author.
41 Furthermore, the word ‘compensate’ in recitals 35 and 38 in the preamble to Directive 2001/29 expresses the intention of the European Union legislature to establish a specific compensation scheme triggered by the existence of harm to the detriment of the rightholders, which gives rise, in principle, to the obligation to ‘compensate’ them.
42 It follows that fair compensation must necessarily be calculated on the basis of the criterion of the harm caused to authors of protected works by the introduction of the private copying exception.
43 In the second place, as regards the question of the persons concerned by the ‘fair balance’, recital 31 in the preamble to Directive 2001/29 provides for the maintenance of a ‘fair balance’ between the rights and interests of the rightholders, who are to receive the fair compensation, on one hand, and those of the users of protected works on the other.

In light of both the wording of the Recital and the reasoning of the CJEU, the Brussels Court of Appeal deduced that merely using a copying device could be subject to a levy and the levy could be justified on the basis of the private copy exception but the legal issue which still remained unanswered by EU law was how that levy should be calculated.

The Brussels Court of Appeal thought that any calculation seemed particularly arbitrary when the harm suffered by the author could be merely ‘hypothetical’, and that harm could arise simply by dint of the fact that it might be possible to make a copy on a particular device.

Adding to the complexity of the issue was the CJEU’s reasoning in Case C-271/10, VEWA when the CJEU had said:

35 As regards, more specifically, the criteria for determining the amount of the remuneration due to authors in the event of public lending, it must be recalled that there is no objective reason justifying the imposition by the Community judicature of specific methods for determining what constitutes uniform equitable remuneration, which would necessarily entail the Court’s acting in the place of the Member States, which are not bound by any particular criteria under Directive 92/100. It is thus for the Member States alone to determine, within their own territory, what are the most relevant criteria for ensuring, within the limits imposed by Community law, and in particular by Directive 92/100, compliance with that Community concept (see, by analogy, SENA, paragraph 34).
…
37 However, given that remuneration constitutes, as has been stated in paragraphs 28 and 29 of the present judgment, consideration for the harm caused to authors by reason of the use of their works without their authorisation, the determination of the amount of that remuneration cannot be completely dissociated from the elements which constitute that harm. As that harm is the result of public lending, that is to say, the making available of protected works by establishments accessible to the public, the amount of the remuneration due should take account of the extent to which those works are made available.

Now if that was right, then the Brussels Court of Appeal wondered whether this meant that Member States were not under any obligation in respect of ‘fair compensation’ if the harm to the right holder was minimal. The doubts of the Brussels Court of Appeal grew in light of the above-mentioned Recital 35. And those doubts grew still further when the Recital was read together with Article 5(3) (o) of the Directive, which allows Member States to have restrictions and limitations to copyright law where works are used:

… in certain other cases of minor importance where exceptions or limitations already exist under national law, provided that they only concern analogue uses and do not affect the free circulation of goods and services within the Community, without prejudice to the other exceptions and limitations contained in this Article.

Nevertheless, the Brussels Court of Appeal recalled a submission made by the Belgian State, namely, the best criteria for assessing the harm was the rule of thumb which it had used: ‘the faster the printer, the greater the harm’. But the Brussels Court of Appeal did not seem convinced by this submission and it wondered whether the amount of compensation that was being demanded by the Reprobel from the manufacturers and importers of multi-functional printers, together with the amount that Reprobel was demanding from consumers for using these printers, might actually exceed the harm that was suffered by the copyright holder.

Indeed, the Brussels Court of Appeal questioned whether the combined amount could really be said to be ‘fair compensation’ since the CJEU had already said that when setting the rate for ‘fair compensation’ that amount had to be determined with due regard being paid to a proportionate balancing between the interests of the various parties concerned.

These considerations gave rise to Question 2 being asked about how to fix the amount which was due under the concept of ‘fair compensation’.

ii) Collected levies given not to compensate the authors but to their publishers
The second main aspect to determining whether the Belgian reprographic exception was in conformity with the EU’s InfoSoc Directive turned on the fact that the Belgian legislation gave half of the fair compensation due to rightholders to the publishers – even though publishers were under no obligation whatsoever to ensure that the authors benefited, even indirectly, from the compensation which was their compensation, and which was being syphoned off by the publishers.

On this point, the Brussels Court of Appeal noted that once again there were two main judgments from the CJEU which were relevant. On the one hand there was Case C‑462/09, Stichting de Thuiskopie in which the CJEU had reasoned:

34 It follows that, unless they are to be deprived of all practical effect, those provisions impose on a Member State which has introduced the private copying exception into its national law an obligation to achieve a certain result, meaning that it 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.

And on the other hand, the CJEU in Case C-277/10 Luksan had reasoned:

99 It should be made clear first of all that, since the questions asked refer to remuneration rights for the purposes of the preceding question, they will be answered solely from the point of view of the reproduction right and of the right to the fair compensation provided for in Article 5(2)(b) of Directive 2001/29 under the private copying exception.
100 As has been pointed out in paragraph 93 of the present judgment, it follows from Article 5(2)(b) of Directive 2001/29 that, in the Member States which have decided to establish the private copying exception, the rightholders concerned must, in return, receive payment of fair compensation. It is clear from such wording that the European Union legislature did not wish to allow the persons concerned to be able to waive payment of that compensation to them.
101 Furthermore, since Article 5(2)(b) of that directive establishes an exception to the author’s exclusive reproduction right in his work, that provision must be the subject of a restrictive interpretation under which such an exception cannot be extended beyond what is expressly imposed by the provision at issue. The provision at issue authorises an exception solely to the reproduction right and cannot be extended to remuneration rights.
102 This conclusion is borne out, at a contextual level, by Article 5(2) of Directive 2006/115, read in the light of recital 12 in the preamble to that directive, which respectively reproduce the wording of Article 4(2) of, and the 15th recital in the preamble to, Directive 92/100, the measure to which the national court refers. Those provisions state that the right to obtain an equitable remuneration for rental cannot be waived by authors.
103 It is true that in Directives 92/100 and 2006/115 the European Union legislature used the term ‘remuneration’ instead of the term ‘compensation’ employed in Directive 2001/29. However, that concept of ‘remuneration’ is also designed to establish recompense for authors, since it arises in order to compensate for harm to the latter (see, to this effect, Case C‑271/10 VEWA [2011] ECR I‑5815, paragraph 29).
104 As has been observed in paragraphs 84 and 85 of the present judgment, the European Union legislature is deemed, when adopting Directive 2001/29, to have kept the concepts for the protection of intellectual property that were elaborated under the earlier directives, unless it expressly provided otherwise.
105 Here, with regard to the right to the fair compensation payable to authors under the private copying exception, it does not follow from any provision of Directive 2001/29 that the European Union legislature envisaged the possibility of that right being waived by the person entitled to it.
106 Furthermore, the Court has already held that, unless it is to be deprived of all practical effect, Article 5(2)(b) of Directive 2001/29 imposes on a Member State which has introduced the private copying exception into its national law an obligation to achieve a certain result, in the sense that that State must ensure, within the framework of its powers, that the fair compensation intended to compensate the rightholders harmed for the prejudice sustained is actually recovered (see, to this effect, Case C‑462/09 Stichting de Thuiskopie [2011] ECR I‑5331, paragraph 34). Imposition on the Member States of such an obligation to achieve the result of recovery of the fair compensation for the rightholders proves conceptually irreconcilable with the possibility for a rightholder to waive that fair compensation.
107 It follows from all the foregoing that European Union law precludes a provision of domestic law which allows the principal director of a cinematographic work to waive his right to fair compensation.

From these two CJEU judgments, there seemed to be a contradiction between the obligation placed on a Member State that had introduced a private copy levy to ensure that there was compensation for the harm suffered; and paragraph 105 of Luksan when the CJEU had talked about an obligation on the Member State being ‘conceptually irreconcilable with the possibility for a rightholder to waive that fair compensation’.

In the present case before the Brussels Court of Appeal that seemed problematic. At first blush, the effect would appear to be that there was absolutely no possibility for Belgian law to allow publishers the right to claim compensation from the levies collected by the Reprobel. That was not altered by the fact that the CJEU in Case C-521/11, Amazon.com had only recently allowed collected levies to be diverted to social and cultural institutions. After all, the Amazon.com ruling did not seem applicable to a situation in which publishers could not be equated with a social or cultural institution, and when publishers in any event did not hold the copyright to a protected work.

But there were also doubts which pointed in the contrary direction. That is to say, Reprobel had made the submission that the literal wording of Article 5(2)(a) and (b) was in fact couched in terms of ‘rightsholders’. Since the word ‘rightholders’ was far broader than the word ‘author’, Reprobel could see no logical impediment in the Directive to Member States being entitled to give publishers, who were rightsholders, fair compensation for the harm they suffered. With these doubts in mind, the Brussels Court of Appeal had to ask Question 3.

iii) Illegal copies and sheet music
The third aspect of the question of whether Belgian fair compensation law was compatible with the EU’s InfoSoc Directive concerned illegal copies and sheet music for these fall within the scope of the Belgian reprographic exception.

Under Belgian law, fair compensation goes to rightholders on the basis of lump-sums paid by importers and manufacturers on the one hand, and a sum paid by people for every copy that they make on the other. Belgian law also deems the relevant amounts to be paid are to be made without distinction as to whether the copy that is made is a legal copy or not. This plank of Belgian law originates in a 2004 judgment of the Belgian Council of State, which granted fair compensation for the harm suffered from the making of partially illegal copies, and copies of sheet music.

The Brussels Court of Appeal felt that it needed to ask a question of the CJEU on this too because unlike Belgian law, the EU’s InfoSoc Directive made absolutely no exception for the copying of sheet music. Equally, the EU’s InfoSoc Directive made no provision for the compensation of right holders for illegal acts committed while making illicit reproductions of works and other protected material.

The issue was further clouded by the fact that the Advocate General in Case C-467/08, Padawan had said this:

78. As far as the second part of the question is concerned, it should be pointed out to begin with that ‘fair compensation’ within the meaning of Article 5(2)(b) of Directive 2001/29 is not aimed at compensating the rightholder for illegal actions in connection with the unauthorised reproduction of works and other subject‑matter. There is only a claim to compensation in connection with private copying, provided that such copying is permitted according to the copyright laws of the Member States. […] The fact that – for instance on the internet via so-called ‘P2P’ (peer-to-peer) file sharing – widespread infringement of the essentially comprehensive reproduction rights of the author may be observed is not relevant in connection with that provision of the directive, and neither can it be regarded as a factor for the purpose of ensuring a balance between the interests of the rightholder and of the user. […]Copies which are made illegally in that way in fact mostly serve commercial purposes. In any case, they serve purposes other than ‘private use’ within the meaning of Article 5(2)(b) of Directive 2001/29 and are therefore not covered by the limiting provision.

Consequently, the 9th Chamber of the Brussels Court of Appeal headed up by Court President Macklebert felt obliged to ask Question 4 which was all about illegal copies and sheet music.

Questions Referred
According to the Curia website, the Brussels Court of Appeal has asked:

1. Must the term ‘fair compensation’ contained in Article 5(2)(a) and Article 5(2)(b) of Directive 2001/29 […] be interpreted differently depending on whether the reproduction on paper or a similar medium effected by the use of any kind of photographic technique or by some other process having similar effects is carried out by any user or by a natural person for private use and for ends that are neither directly nor indirectly commercial? If the answer is in the affirmative, on what criteria must that difference of interpretation be based?

2. Must Article 5(2)(a) and Article 5(2)(b) of Directive 2001/29 be interpreted as authorising the Member States to fix the fair compensation payable to rightholders in the form of:
(1) a lump-sum remunerative payment made by the manufacturer, importer or intra-Community acquirer of devices enabling protected works to be copied, at the time when such devices are put into circulation on national territory, the amount of which is calculated solely by reference to the speed at which the copier is capable of producing a number of copies per minute, without being otherwise linked to any harm suffered by rightholders;
and,
(2) a proportional remunerative payment, determined solely by means of a unit price multiplied by the number of copies produced, which varies depending on whether or not the person liable for payment has cooperated in the collection of that remuneration, which is payable by natural or legal persons making copies of works or, as the case may be, in lieu of those persons, by those who, for consideration or free of charge, make a reproduction device available to others.

If the reply to this question is in the negative, what are the relevant and consistent criteria that the Member States must apply in order to ensure that, in accordance with European Union law, the compensation may be regarded as fair and that a fair balance is maintained between the persons concerned?

3. Must Article 5(2)(a) and Article 5(2)(b) of Directive 2001/29 be interpreted as authorising the Member States to allocate half of the fair compensation due to rightholders to the publishers of works created by authors, the publishers being under no obligation whatsoever to ensure that the authors benefit, even indirectly, from some of the compensation of which they have been deprived?

4. Must Article 5(2)(a) and Article 5(2)(b) of Directive 2001/29 be interpreted as authorising the Member States to introduce an undifferentiated system for recovering the fair compensation due to rightholders in the form of a lump-sum and an amount for each copy made, which, implicitly but indisputably, covers in part the copying of sheet music and counterfeit reproductions?