The Spanish Supreme Court annuls the Royal Decree which approved levy for private copying

In a judgment given on 10 November 2016, the Spanish Supreme Court upheld the administrative appeal filed by several copyright collection entities against Royal Decree 1657/2012, of 7 December, regulating the payment procedure of the private copy levy from the General State Budget. This has led to the annulment of the existing private copy levy system which substituted the previous “fee” system on all suitable devices regulated.

On 9 December 2012, Royal Decree 1657/2012, of 7 December, regulating the payment procedure of the private copy levy from the State General Budget (“RD 1657/2012”) entered into force. Its main aim was to approve and set up the new private copy levy system, as a development of a mandate introduced into law by the modification of Royal Legislative Decree 1/1996, of 12 April, approving the consolidated text of the Copyright Law and regularising, clarifying and harmonising the legal provisions in force in the field (“Spanish Copyright Law”) carried out through Royal Decree Law 20/2011, of 30 December, on urgent measures on budgetary, tax and financial matters for the correction of public deficit (“RLD 20/2011”).

Thus, a new system was set up that substituted the previous one through which the private copy levy was operated via what was commonly known as a “fee”. This fee involved the application of a small surcharge on the price of “equipment, devices and material media suitable to perform said reproductions, manufactured in Spain or acquired abroad for its commercial distribution or use within Spain”

In March 2011, the Spanish High Court ruled in favour of the annulment of a 2008 Ministerial Order on the regulation of media equipment/devices/material upon whose price the fee would have to be applied. This system had been largely criticised by the public and also seen as unfair towards consumers for the indiscriminate application of the levy on all suitable media equipment/devices/material.

Indeed, the elimination of this private copy levy was carried out by means of RLD 20/2011, which regulated that “the Government shall develop through a regulation the payment procedure to receivers of the private copy levy from the State General Budget”. This elimination was one of the first legislative measures adopted at the end of 2011 by the incoming Government at the time. Over the time, the system change was channelled through a legislative modification by Law 21/2014, of 4 November, modifying the consolidated text of the Spanish Copyright Law which established the private copy levy to be funded “by the State General Budget, and shall be aimed at compensating the copyright royalties that will not be received as a consequence of the legal limitation of the private copy”.

The administrative appeal that led to the annulment of the current system was filed by three collecting rights management entities and even required the referral of a preliminary ruling to the Court of Justice of the European Union (“CJEU”). The CJEU concluded that the system established a private copy levy system funded by the General State Budget- under the last legislative modification of the Spanish Copyright Law was not within the scope of Directive 2001/29/EC as it does not ensure that the cost of the private copy levy is borne by the actual users of the private copies. As commented by the Spanish Supreme Court in its ruling on 10 November 2016, the CJEU does not directly pronounce that the established system was not inside the scope of Directive 2001/29/EC but rather that it cannot ensure that the cost of the private copy levy be solely borne by the actual users of the private copies, this is, it is not capable of avoiding that legal persons, for instance, become also payers of the private copy levy. The Supreme Court further states that those are the very reasons for finding the system incompatible with the relevant provision of Directive 2001/29/EC.

Thus, the Spanish Supreme Court highlights the intrinsic difficulty in making a system as the one currently established and annulled by the judgment- be compatible with the requirements set out in Directive 2001/29/EC in the sense pointed out in the previous paragraph as the Spanish legal system does not allow, in principle, public income to affect some specific expenses.

Finally, the Spanish Supreme Court declares that RD 1657/2012 is null and void for having been enacted without legal support, since RD 1657/2012 is an executive regulation developing a specific legal provision which, by virtue of the preliminary ruling of the CJEU, must not be applicable any longer as a consequence of the EU law primacy principle.
Faced with this scenario, it is legitimate to wonder about the effects of the statement by the Spanish Supreme Court on the private copy levies effectively deducted from the General State Budget hitherto, as they would have been carried out without legal support.