IP Update: Failure to Pay Private Copying Levy is a Tort
13 June 2016
A recent decision by The Court of Justice of the EU ("CJEU")  means that copyright collecting societies, who collect private copying levies, can bring non-payment proceedings in their own Member State, rather than suing in the jurisdiction where the person in default of payment is domiciled. This is relevant to Irish companies who place recording material on the EU market. They may be sued in a foreign court for unpaid private copying levies, the liability for which they may not have been aware since copyright law is not harmonised across the EU.
Under Austrian law, following the Copyright Directive (2001/29/EC), private copying of copyright works is permitted provided that “fair compensation” is paid to the copyright owner. Given the practical difficulties in identifying persons who may reproduce copyright material, and obliging them to pay compensation to rights-holders, Austrian law provides that businesses who sell recorded material on the domestic market must pay a levy.
Austro-Mechana, a collecting society, sued various Amazon companies for unpaid private copying levies. Amazon objected to the jurisdiction of the Austrian courts, and the Austrian Supreme Court asked the CJEU to rule on whether Austro-Mechana’s claim for the unpaid levy constitutes a matter relating to “tort, delict or quasi-delict” within the meaning of the Brussels Regulation, so that the Austrian court had international jurisdiction to hear the proceedings.
The general rule under the Brussels Regulation is that a defendant should be sued in the Member State of its domicile. The special jurisdiction exceptions to this general rule, which would allow a defendant to be sued in another Member State, include:
- in matters relating to a contract, the courts for the place of performance of the obligation in question; and
- for matters relating to tort, delict or quasi-delict, the courts of where the harmful event occurred or may occur.
The CJEU noted that under settled case law, the concept of "matters relating to tort, delict or quasi-delict" covers all actions which seek to establish the liability of a defendant and do not concern "matters relating to a contract" within the meaning of the Brussels Regulation.
Matter of contract?
The CJEU’s view was that Austro-Mechana’s claim for payment of the private copying levy from Amazon was not a "matter relating to contract" within the meaning of the special jurisdiction exceptions. The Court noted that application of this exception, for matters relating to a contract, presupposes the establishment of a legal obligation freely consented to by one person towards another and on which the claimant’s action is based. In the current case, Amazon’s obligation to pay the levy to Austro-Mechana was not a matter of contract as it was not freely consented to by Amazon, but rather it was an obligation imposed by Austrian law.
Liability for tort, delict or quasi-delict
The CJEU considered whether Amazon’s failure to pay the levy was a "harmful event" within the special jurisdiction exception for matters relating to "tort, delict or quasi-delict". The Court noted that liability in "tort, delict or quasi-delict" can only arise provided that a causal connection can be established between the damage and the event in which that damage originates. Austro-Mechana sought to obtain compensation for the harm arising from Amazon’s non-payment of the levy provided for under domestic law. Failure by Austro-Mechana to collect the levy was a "harmful event" within the meaning of the Brussels Regulation. According to the CJEU, it followed that if the harmful event at issue in the main proceedings occurred or may occur in Austria, which is for the national court to establish, the courts of that Member State have jurisdiction to hear Austro-Mechana’s claim.
Unlike Austria, Ireland did not implement the private copying exemption under Article 5(2)(b) of the Copyright Directive (2001/29/EC). For this reason, this judgment is interesting as it highlights that copyright law is not harmonised across the EU. Furthermore, this judgment could mean that other exceptions under the Copyright Directive, as implemented in a particular Member State of the EU, may be considered to fall under ‘matters relating to tort, delict or quasi-delict’, within the meaning of Article 7(2) of the recast Brussels Regulation.
It is now clear that those charged with collecting ‘fair compensation’ for private copying, e.g. collecting societies, can bring their claims in their domestic courts, rather than undergoing the inconvenience and cost of having to sue in a foreign jurisdiction. Companies who place recording material on the EU market should establish which EU Member States have implemented the private copying exception under the Copyright Directive, and assess their current or planned activities in those countries. Failure to do this may result in them defending a claim for unpaid levies in a foreign court.
For more information, please contact our Intellectual Property team.
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