Lack of fair compensation requirement in UK private copying exception not supported by sufficient evidence, High Court rules

The good news was
that at last you could finally copy this ...

Is a national private copying exception that does not come with a "fair compensation" requirement - as is the case of the recently introduced exception for personal copies for private use pursuant to s28B of the Copyright, Designs and Patents Act 1988 ('CDPA') - compatible with what is required under EU law, notably Article 5(2)(b) of the InfoSoc Directive?

This very question was subject to an application for judicial review brought by BASCA, the Musicians' Union, and UK Music against UK Government.

After months of uncertainty, this morning Green J issued his judgment in BASCA v The Secretary of State for Business, Innovation and Skills. HOWEVER: while accepting claimants' application, the judge did not expressly rule on the actual compatibility of UK exception for personal copies for private use with EU law, and envisaged the possibility that a reference is made to everybody's favourite court, ie the Court of Justice of the European Union ('CJEU') [see para 21].

The judge started by noting that Article 5(2)(b) of the InfoSoc Directive leaves Member States with a wide margin of discretion as to the scope of the resulting national private copying exceptions. As IPKat readers will know, there are indeed fairly diverging approaches at national levels as regards both the language of relevant exceptions and the "fair compensation" systems, with currently 21 out of 28 Member States having levies in place.

Coming to the case of the UK, in this Member State the Secretary of State decided to introduce a narrow exception only for those purchasers of content who wish to copy for their own private use. The Government decided against any broader exception which would, for example, have permitted copying by family, friends or others within a social circle [so called "household exception"]. Because of the narrow scope of the UK exception, the Government also decided against introducing a "fair compensation" requirement by means of copyright levies, on consideration that these would be "inefficient, bureaucratic and unfair, and disadvantage people who pay for content" [see Katreport here, and also para 9 of the judgment]. This appeared possible under Recital 35 in the preamble to the InfoSoc Directive [whose meaning has been recently addressed by the CJEU in Copydan, here], which states that "[i]n certain situations where the prejudice to the rightholder would be minimal, no obligation for payment may arise."

In addition, UK Government provided two main justifications for not introducing a levy system alongside a private copying exception [see paras 12 ff]:

1. The only relevant “harm” that would, in principle, need to be compensated for is the risk to rightholders of lost, duplicate sales. In the view of the Secretary of State, there was no automatic correlation between the desire to copy and lost sales; if the former was constrained the latter would not necessarily occur. As such, if a limited exception to copyright was introduced this would not impact upon duplicate sales.
2. Sellers of content already price-in to the initial sale price - whether fully or in part - the fact that consumers treat content that they purchase as fair game when it comes to copying for personal use [so called "pricing-in principle"].

.. The bad news now is that
lack of compensation requirement
was not supported by sufficient evidence

According to the judge, the problem was that UK Government failed to provide adequate evidence as to the fact that no compensation was required because the harm to rightholders would be minimal.

In other words, "the conclusions and interferences which have been drawn from the evidence the Secretary of State has relied upon are simply not warranted or justified by that evidence." [so all the evidence-based policy advocated in recent years has not translated to actual evidence-based legislative outcomes? That's shocking, says Merpel]

Does this mean that s28B must be struck down? Not really ... or not yet.

According to the judge, whilst this may be "sufficient ... to result in the decision [to adopt s28B CDPA] being rendered unlawful", it does not invalidate this provision. In fact, 

"It is, in theory, possible for the Secretary of State to re-investigate the issue in order to address the evidential gap which now prevails. If he does this then one possible outcome would be that the gap that I have identified is plugged and the present decision becomes justified. Another outcome might be that following further investigation the gap in the evidence remains un-plugged in which case the Secretary of State could either repeal section 28B or introduce a compensation scheme. A third possibility is that the Secretary of State simply decides to introduce a compensation scheme without more."

What may happen now is that a reference to the CJEU is made, seeking further clarification about questions yet to be determined.

So stay tuned for further developments!