A wrong without a victim? How much harm does private copying do?

In October 2014, new section 28B of the Copyright Designs and Patents Act 1988 (“CDPA”) introduced an exception to copyright for copies made privately under certain conditions. The High Court has ruled that the Government did not have power to introduce this exception, in view of its obligations under the Information Society Directive of 2001. This is unlikely to stop the population from continuing to copy downloads and rip CDs. So where do we go from here?

Background

Since the first photocopier arrived in a library in the 1970s, a debate has raged as to the damage done to the publishing industry by photocopying, and later the music and film industries through consumers transferring audio and visual recordings onto tapes, CDs and now all forms of electronic memory. Of course all such copying breaches copyright, but in practical terms that is not enough: no individual making a copy or two, for a family member or friend, believes that their own act hurts anyone. Rather, it seems a generous use of time and information to give someone else access to an agreeable listening or viewing experience. That immediate and personal reward of doing something the recipient will gratefully approve, far outweighs any rational, objective appreciation that shareholders in a music company somewhere may receive slightly lower dividends as a result.

In much of the European Union, this problem has been addressed by giving broad copyright exceptions for private copying but at the same time introducing levies on all forms of copying machines. Article 5(2) of the Information Society Directive allows this, “on condition that the rightholders receive fair compensation which takes account of the application or non-application of technological [anti-copying] measures referred to in Article 6 to the work or subject-matter concerned”. However, under most continental implementations, for every photocopier or iPod sold, the manufacturer pays to the copyright collecting society a small fee intended to compensate the rightsholders for the loss of revenue due to the infringing copies which, it is assumed, the machine will be used to make. The downside to this solution is that every purchaser of a copying device pays the levy, whether or not they actually do make any copies, and the technology industry objects to the increase in its products’ prices, for the benefit of parties which have not contributed anything to their value.

The United Kingdom has been out of step in both respects for many years. Contrary to most consumers’ belief, UK copyright law did not include any general exception permitting the making of copies for private use save for a very limited, specific exception allowing TV programmes to be recorded on video for the purpose of watching at a time other than the broadcast time. Nor was any levy charged on copying devices.
But this approach, which might be described as the ostrich position, was also unsatisfactory: in reality, as everyone knew, private individuals were copying texts, music and films in ever-increasing volumes, and a law which much of the population blithely breaks makes a mockery of the rule of law. So in 2014 an amendment to the CDPA was introduced to legalise private copying, within certain constraints. Having concluded that the levy system abroad has not delivered a fair balance, the government elected not to introduce any such compensation. Arguing that this was incompatible with musicians’ rights under European law, the music industry, in the form of the Musicians’ Union and the British Academy of Songwriters, Composers and Authors, applied to the High Court for judicial review.

The decision 

The case came before Green J, who until made a judge in 2013 was one of the English bar’s leading competition specialists and one of a select group of public law barristers with a working knowledge of intellectual property. He agreed that the government had a “margin of appreciation” in deciding what level of harm was needed before triggering any obligation to provide a compensation mechanism, which should strike a balance between the competing interests of the three interest groups: consumers, rightholders and device manufacturers. In this case, the government had concluded that the only form of harm to be considered was the possibility of lost sales, and that this was adequately met by rightholders pricing into their sales a margin to address the risk that any copy sold might be illegally copied. There was some evidence to support the fact that such considerations were taken into account in setting pricing. 

Where the judge disagreed with the government was over the sufficiency of this evidence to support the government’s conclusion that private copying would lead only to zero or minimal harm. In his view, the inferences which the government had drawn from the available evidence went far beyond what could legitimately be drawn. The problem was not that the government had had a pre-disposition to reach that conclusion; a pre-disposition was allowable. But the government had a responsibility not to reach a final conclusion without proper evidence to support it, and in this it had gone beyond its power.

Consequences for consumers? 

Obviously this result is something of a victory for the music industry in that the current private copying exception will now have to be reviewed, and meanwhile consumers’ copying of digital content will once again be unlawful. However, in respect of the principle – can private copying be introduced without any compensation mechanism? – the court has accepted the government’s position that this is possible. It is only a question of whether the government can identify sufficient evidence to support that approach in practice. Of course, if it cannot, then it may have to consider bringing in a levy system after all… or, given that European countries’ attempts to get their levy systems right have been generating endless disputes and CJEU referrals, revert to the ostrich position successive UK governments had successfully held for nearly 30 years.