The Court of Justice of the European Union has ruled in the case of Case C-433/20 Austro-Mechana. Austro-Mechana is a copyright collecting society which exercises the legal rights to the remuneration due under the private copying exception.
It brought a claim for payment of that remuneration before the Handelsgericht Wien (Commercial Court, Vienna, Austria) directed against Strato AG, a provider of cloud storage services. The Austrian court dismissed the claim on the ground that Strato does not supply storage media to its customers, but provides them with an online storage service.
The Austrian court asked the CJEU if the storage of content in the context of cloud computing comes within the scope of the private copying exception in Article 5(2)(b) of Directive 2001/29.
The CJEU ruled that the private copying exception applies to copies of works on a server in storage space made available to a user by the provider of a cloud computing service. However, member states are not obliged to make the providers of cloud storage services subject to the payment of fair compensation under that provision, as long as the payment of fair compensation to rightsholders is provided for in some other way.
Findings of the Court
Does the exception apply to the cloud?
Directive 2001/29 provides that the private copying exception applies to reproductions on any medium. As regards the concept of ‘reproduction’, the Court states that the saving of a copy of a work in storage space in the cloud constitutes a reproduction of that work. The upload of a work to the cloud consists in storing a copy of it.
As regards the words ‘any medium’, the Court said that this refers to all media on which a protected work may be reproduced, including the servers used in cloud computing. The fact that the server belongs to a third party is not decisive. Accordingly, the private copying exception may apply to reproductions made by a natural person with the aid of a device belonging to a third party. In addition, one of the objectives of Directive 2001/29 was to prevent copyright protection in the EU from becoming outdated or obsolete due to technological developments. That objective would be undermined if the exceptions and limitations to copyright protection were interpreted to exclude digital media and cloud computing services.
Consequently, the concept of ‘any medium’ covers a server on which storage space is made available to a user by the provider of a cloud computing service.
Fair compensation
The Court ruled on whether cloud storage services should be subjected to the payment of fair compensation and says that is within the discretion conferred on the national legislature to determine the various elements of the system of fair compensation. Member states which implement the private copying exception are required to provide for a system of fair compensation intended to compensate rightsholders.
As regards the person liable to pay the fair compensation, it is in principle for the person carrying out the private copying, namely the user of cloud computing storage services, to finance that compensation.
However, if there are practical difficulties related to the identification of end users, member states may introduce a private copying levy chargeable to the producer or importer of the servers by means of which the cloud computing services are offered to natural persons. That levy will be passed on economically to the purchaser of such servers and will ultimately be borne by the private user who uses that equipment or to whom a reproduction service is provided.
When setting the private copying levy, member states may take account of the fact that certain devices and media may be used for private copying in connection with cloud computing. However, they must ensure that the levy thus paid, to the extent that it affects several devices and media in the single process of private copying, does not exceed the possible harm to the rightsholders.
Consequently, Directive 2001/29 does not preclude national legislation that does not make the providers of cloud storage services subject to the payment of fair compensation, as long as that legislation provides for the payment of fair compensation in some other way.
