In a nutshell, the ruling confirmed that the Copyright and Rights in Performances (Personal Copies for Private Use) Regulations 2014 (which introduced the new section 28B private copying exception into the Copyright Designs and Patents Act 1988 in October 2014) (the Regulations) should be quashed with immediate and prospective effect. This means that consumers now find themselves back in the position they were in pre-October 2014 when making a copy of a copyright protected work for personal use (such as ripping a CD onto a computer and then copying it onto an MP3 player) was unlawful. However, any private copying activities carried out between 1 October 2014 and 17 July 2015 are not (yet) considered to be infringing activities.
The ruling also confirmed that there will be no reference to the CJEU – for the time being at least. The parties were, however, granted permission to apply for a reference at some point in the future if necessary, depending on what the Government decides to do next.
In Mr Justice Green's first judgment of 19 June 2015 (see James Seadon's previous blog here), he held that because of a defect in the evidence-gathering exercise during the consultation leading up to the adoption of the Regulations, the decision to adopt the Regulations was unlawful. The question of the remedy to be granted was left open, however, given that there were a number of possible alternative outcomes. The parties were therefore invited to make further submissions on the appropriate next steps and relief.
At the subsequent hearing on 3 July 2015, the judge had to determine the following issues:
- Whether the Regulations should be quashed;
- Whether, if the Regulations were quashed, this should have prospective or retrospective effect;
- Whether there should be a reference to the CJEU in relation to the meaning of the concept of "harm"? ; and
Should the Regulations be quashed?
Given Mr Justice Green's previous decision that the introduction of the private copyright exception had been unlawful, the Secretary of State accepted that the Regulations should be quashed. He confirmed that he would take the opportunity to "reflect further" and work out whether any further factual evidence- gathering exercise should be conducted, what form it should take and ultimately, whether a new private copying exception should be introduced. The Secretary of State clarified that he had not yet decided on any specific course of action and needed time to make any further decisions but that in the meantime, it was not right for the Regulations to remain in force – that would only create more legal uncertainty.
The Claimants took the same position that the Regulations should be quashed, highlighting that the quashing order was the natural consequence of Mr Justice Green's initial ruling that the Regulations had been adopted unlawfully. The Claimants added that it would not be fair to further deprive rightholders of the 'fruits of victory' of the current litigation, when the Secretary of State had not indicated whether he intended to reintroduce a private copying exception and wanted more time to think things over – and that could be a significant amount of time.
Mr Justice Green was in no doubt that the Regulations should be quashed and confirmed that the quashing order would apply to the entirety of the Regulations, including, for example, the analogous exceptions for performing rights.
Prospective or retrospective effect?
Mr Justice Green also had to address the issue of whether he should quash the Regulations with prospective effect only (ex nunc) or whether it was more appropriate to quash the Regulations with retrospective effect (ex tunc).
The Claimants sought a declaration that the quashing order had retrospective effect. Mr Justice Green however made it clear that he was not prepared to 'unravel the past' and declined to make a ruling on the retrospective position which he considered raised 'complex and far reaching issues'. He did not agree that the Claimants should be able to restore a cause of action against consumers who thought they had been performing lawful acts of copying whilst section 28B was in force. Rather he would leave this issue to be dealt with in separate private law litigation as between a specific rightsholder and an alleged infringer. It would be for the defendant in future proceedings to raise and explore this issue, in particular, whether the fact that they had relied on section 28B at the time created some kind of 'estoppel, legitimate expectation or fair use defence'. Mr Justice Green was also reluctant to address the past before a live issue had actually arisen and stressed that he felt his approach on this point was justified because it was rare, in practice, for private rightsholders to bring infringement proceedings against past infringers.
Reference to the Court of Justice of the European Union?
Mr Justice Green moved on to address the question of whether there should be any reference to the CJEU, in particular one relating to the concept of 'harm' (i.e. harm caused to the rightsholder as a result of private copying). Given the Claimants had succeeded in their judicial review and the Regulations were to be quashed and would therefore be ineffective, what would be the purpose of making a reference? There was now no need for questions to be answered by the CJEU to determine a case which had already been determined. The Secretary of State's view was that the court would be at risk of 'sending a hypothetical reference to the Court' which would be declared inadmissible. Mr Justice Green agreed and added that it was unacceptable to refer questions simply because they were 'interesting or important' and which did not represent any real issues in dispute between the parties before the national court.
Mr Justice Green did accept that the question of harm would be relevant to whether the test for liability damages had been met but the Claimants no longer pursued its claim for damages so that fell away. Nonetheless, the Claimants still thought a reference was necessary and as a compromise, because he did recognise that a reference to the CJEU on the concept of harm might be useful because it was an important issue and remained unclear, Mr Justice Green concluded that he would not make a reference at this stage, but that he would leave open the possibility that a reference might be made at some future point by introducing a liberty to apply in the final Order. This would enable the Claimants to avoid the costs and effort of commencing entirely fresh judicial review proceedings if the Secretary of State's ongoing thought process resulted in a dispute which raised questions on the meaning of harm. The Secretary of State accepted that 'this reflected a recognition that since the referability of the meaning of 'harm' was now acknowledged as at least a possibility…. there was pragmatic common sense in enabling an application for a reference to return to the court in a cost effective manner in the future'.
Mr Justice Green went on to say that this was by no means an active encouragement to make a further application and warned that achieving success on a reference on the subject of harm would be 'no mean feat'. The parties would have to overcome significant hurdles to prove that the conflicting methodologies they had put forward to assess harm were correct. The Claimants would have to prove that Member States have no discretion to choose a test to determine whether there has been any harm – the correct test was the "licensing test" (i.e. a hypothetical licence fee to cover every infringement of copyright). Alternatively, if Member States did have discretion to choose a test to determine harm, the Claimants would have to convince the CJEU that the "lost sales" test adopted by the Secretary of State (and which Mr Justice Green had accepted was a legitimate test) fell outside that discretion.
Even though the music industry had been successful overall, it had not won on all issues. Mr Justice Green therefore ruled that costs would be decided on an issue by issue basis because the issues were reasonably discrete and identifiable in their nature and it was clear who had won on each issue.
Given Mr Justice Green's initial decision on 19 June 2015 that the decision to introduce the private copying exception was unlawful, this is a logical and pragmatic ruling. It would not be acceptable to allow the Regulations to remain in force while the Secretary of State gathers his thoughts for an indefinite period of time. The issue of the concept of harm was not directly relevant for the purposes of this decision to quash the Regulations, but may become so in the future once the Secretary of State has 'crystallised' his thoughts and sheds some light on the way forward. Therefore the option to apply for a reference in the future, if necessary, is a sensible one.
And so we are left wondering what the future of the UK private copying exception holds. The Government has indicated in a Press Release that it is currently 'considering the implications' of the two rulings. We eagerly await the Government's proposals – will the private coping exception rise from the ashes in a different form incorporating a compensation scheme? If the Government does wish to have a second bite of the cherry, it will need to engage in a new impact assessment and solid evidence-gathering process to establish whether a compensation mechanism is required in the UK. It will also be interesting to see whether any rightholders take action seeking compensation from the Government for private copies made post October 2014.
In the meantime, consumers be warned! Any acts of private copying (e.g. format shifting CDs to MP3 players) that were covered by the exception introduced in October 2014, will no longer be covered.
We will be sure to keep you posted on any future developments as and when they happen.