Last year saw the introduction of a number of new exceptions to copyright in the UK, including which allows personal copying for private use. Although in general this was welcomed, certain sectors – notably the UK music industry – objected to the terms. In most European countries with a similar exception, the law also requires a levy to be paid on media and devices which facilitate private copying (for example blank CDs, SD cards and hard drives). The idea is that this levy then offers rightsholders a degree of compensation. Nonetheless, the UK Government chose to introduce last year's reforms without any private copying levy at all, explaining why it did not think this was needed. In part it relied on the fact that the UK exception would be much more narrow than exceptions elsewhere in Europe, where "private copying" can allow copying for friends and family and even as gifts (potentially depriving rightsholders of very many sales). We've covered this topic in various ways over the last few months, including blog posts on the exceptions and subsequent developments as well as at our IP Crammer and Media Crammer events in October and February.
Those of you who've kept up to speed will know that on behalf of the UK music industry, BASCA, the Musicians' Union and UK Music applied for a judicial review of the decision to introduce a private copying exception without a compensatory levy scheme. They were asking the courts to decide whether in making the legislation the Government had exceeded its jurisdiction or acted irrationally or in a way that was procedurally unfair. You may also recall that in January the High Court expedited proceedings so as they would be heard by May. In fact the dispute reached the Administrative Court commendably quickly, being heard before Mr Justice Green over the course of three days at the end of April. The three claimants were joined by the Incorporated Society of Musicians as an intervener, arguing that the economic effect of last year's reforms was to offer unlawful state aid to the tech industry.
Mr Justice Green's detailed judgment was handed down today. The headline is that he found in favour of the claimants: the judicial review succeeded. In broad terms his reasoning was as follows. In deciding to enact the private copying exception without any levy scheme, the Government had relied on its own conclusion that any harm which could be caused to rightsholders was negligible (if it existed at all). It was argued that any such harm had already been priced in to the original sale of each work. In legal terms, any such harm was de minimis and therefore below a threshold of what should be compensated. In reaching that conclusion it relied on an Updated Impact Assessment which had been published in March 2014, as well as a research report produced by a team at Sussex University. Mr Justice Green found, however, that the meaning of de minimis in this context was not addressed; the empirical research on which the Government relied in answering the de minimis question was inadequate; and other evidence (and an entire potentially relevant category of harm) had been ignored.
While the judicial review application failed on other grounds, and it was held that there was no unlawful state aid, the key finding is that that the introduction of the private copying exception was unlawful because of the improper analysis of potential harm. This will be a blow to the UK Government, which had gone to some considerable effort to justify its position in advance of enacting the legislation. Consumers and rightsholders alike will want to understand the implications of this judicial review as soon as possible. Might the Government now be forced to introduce a levy scheme, or will it be able to find more evidence to justify its original policy? An alternative (albeit an unpopular one) would be to repeal the exception entirely. In the meantime we will wait to see whether any of the issues – including the fundamental question of whether a private copying exception with no compensatory levy is in principle compatible with European law (something that the judge did not decide) – will be referred to the CJEU.
We're keeping tabs on developments and will discuss this story in more detail at our next copyright Breakfast Briefing, which will be held at our London offices on 15 July 2015. Rebecca Swindells and I will also be talking about other hot topics in copyright, such as the Reda report and the Digital Single Market strategy, so do let me know if you'd like to join us for the discussion.