In Case C-433/20 Austro-Mechana Gesellschaft zur Wahrnehmung mechanisch-musikalischer Urheberrechte Gesellschaft mbH Advocate General Hogan issued an opinion about how he thinks the Court of Justice of the European Union should interpret the private and non-commercial reproduction exception set out in Article 5(2)(b) of the Copyright Directive (2001/29/EC). The opinion considered the context of cloud computing.
The case arose against the background of a referral from the Austrian courts concerning the issue of whether compensation for the exploitation of the right of reproduction was due in respect of cloud-based storage capacity provided by it in Austria to natural persons for private use.
Austro-Mechana is a copyright collecting society which protects, in a fiduciary capacity, the rights of use and the rights to remuneration in respect of works of music (with and without lyrics) in its own name but in the interest of and on behalf of the beneficiaries of those rights. The interests protected by collecting societies such as Austro-Mechana include the right to remuneration in respect of the exploitation of the right of reproduction on storage media. Austro-Mechana brought an action against Strato, a German company, which provides a virtual cloud storage solution under the name ‘HiDrive’.
Under Article 5(2)(b) of the Directive, member states may provide for exceptions or limitations to the reproduction right in Article 2 for reproductions on any medium made by a natural person for private use and for ends that are neither directly nor indirectly commercial, as long as the right-holders receive fair compensation which considers the application or non-application of technological measures set out in Article 6 of the Directive to the work or subject matter concerned.
Advocate General Hogan said that the Court of Justice should rule that the terms “reproductions on any medium” in Article 5(2)(b) included reproduction based on cloud computing services provided by a third party.
In addition, he said that the Court of Justice should rule that a separate levy or fee is not payable in respect of the reproduction by a natural person for their own personal purposes based on cloud computing services provided by a third party provided that the levies paid in respect of devices/media in the Member State in question also reflects the harm caused to the rightholder by such reproduction. If a Member State has, in fact, elected to provide for a levy system in respect of devices/media, the referring court is in principle entitled to assume that this in itself constitutes ‘fair compensation’ under Article 5(2)(b) of Directive 2001/29, unless the rightholder (or their representative) can clearly demonstrate that such payment would in the circumstances of the case at hand be inadequate. This assessment – which requires considerable economic expertise and a knowledge of a range of industries – is one which must be carried out at national level by the referring court.
Advocate General opinions are advisory only, However, the Court of Justice tends to follow the AG’s advice and if it does in this case, it could affect licensing as well as possibly enforcement practices.
