OPINION OF ADVOCATE GENERAL
WAHL
delivered on 4 May 2016 (1)
Case C‑110/15
Microsoft Mobile Sales International Oy, formerly Nokia Italia SpA,
Hewlett-Packard Italiana Srl
Telecom Italia SpA
Samsung Electronics Italia SpA
Dell SpA
Fastweb SpA
Sony Mobile Communications Italy SpA
Wind Telecomunicazioni SpA
v
Ministero per i beni e le attività culturali (MiBAC)
Società italiana degli autori ed editori (SIAE)
Istituto per la tutela dei diritti degli artisti interpreti esecutori (IMAIE), in liquidation
Associazione nazionale industrie cinematografiche audiovisive e multimediali (Anica)
and
Associazione produttori televisivi (Apt)
(Request for a preliminary ruling from the
Consiglio di Stato (Council of State, Italy))
(Intellectual property — Directive 2001/29/EC — Copyright and related rights — Article 5 — Exclusive right of reproduction — Exceptions and limitations — Fair compensation — Extent — Determination of the criteria for ex ante exemption from the levy by private negotiation — Request for reimbursement confined to the final user)
1. The present request for a preliminary ruling from the Consiglio di Stato (Council of State, Italy) concerns the proper construction of Article 5(2)(b) of Directive 2001/29/EC. (2) In accordance with that provision, Member States may provide for an exception to the exclusive ‘reproduction right’ of rightholders in respect of private copying. Where a Member State has decided to limit the exclusive rights of rightholders in that way, the directive requires Member States to put in place a system that ensures that rightholders are compensated fairly for the use of the copyrighted material.
2. In Italy, where private copying is allowed, that compensation takes the form of a private copying levy for equipment, devices and media suitable for copying protected works and other material. The questions referred concern the compatibility of the Italian system of compensation with Directive 2001/29. More specifically, the case allows the Court to define the limits of the Member States’ discretion in devising the details of the system for compensation for private copying and to provide further guidance on the interpretation of Article 5(2)(b) of Directive 2001/29.
I – Legal framework
A – EU law
3. Directive 2001/29 deals with the harmonisation of certain aspects of copyright and related rights.
4. Recital 31 of Directive 2001/29 explains that one of the objectives of the directive is to ensure that a fair balance of rights and interests is struck between the different categories of rightholders, as well as between the different categories of rightholders and users of protected material.
5. Recital 35 deals with exceptions and limitations. According to that recital, rightholders should in certain cases receive fair compensation to compensate them adequately for the use made of their protected works or other material. When the form, detailed arrangements and possible level of such fair compensation are determined, account should be taken of the particular circumstances of each case. In the assessment of those circumstances, the possible harm to the rightholders resulting from the act in question is held to be of particular relevance.
6. Article 2 of Directive 2001/29 concerns the reproduction right. It provides:
‘Member States shall provide for the exclusive right to authorise or prohibit direct or indirect, temporary or permanent reproduction by any means and in any form, in whole or in part:
(a) for authors, of their works;
(b) for performers, of fixations of their performances;
(c) for phonogram producers, of their phonograms;
(d) for the producers of the first fixations of films, in respect of the original and copies of their films;
(e) for broadcasting organisations, of fixations of their broadcasts, whether those broadcasts are transmitted by wire or over the air, including by cable or satellite.’
7. Article 5 of the directive deals with exceptions and limitations to the reproduction right. It states, inter alia:
‘…
2. Member States may provide for exceptions or limitations to the reproduction right provided for in Article 2 in the following cases:
…
(b) in respect of reproductions on any medium made by a natural person for private use and for ends that are neither directly nor indirectly commercial, on condition that the rightholders receive fair compensation which takes account of the application or non-application of technological measures referred to in Article 6 to the work or subject matter concerned;
…’
B – Italian law
8. The relevant provisions of Law No 633 on the protection of copyright and other rights relating to its exercise (‘the Copyright Law’) (3) are the following.
9. Article 71 sexies provides:
‘The private reproduction of phonograms and videograms on any media made by natural persons for personal use only shall be permitted, provided that it is not for profit or ends that are directly or indirectly commercial, in compliance with the technical measures referred to in Article 102 quater.
…’
10. Article 71 septies states:
‘1. The authors and manufacturers of phonograms, and the original manufacturer of audiovisual works, the performers and manufacturers of videograms, and their successors in title, shall be entitled to compensation for the private reproduction of phonograms and videograms referred to in Article 71 sexies. In respect of devices designed solely for the analogue or digital recording of phonograms or videograms, that compensation shall consist of a percentage of the price paid by the final purchaser to the retailer which, in respect of multipurpose devices and media, shall be calculated on the basis of devices and media with characteristics equivalent to those of the internal component designed to record or, where that is not possible, of a fixed amount for each item of devices and media. In respect of audio and video recording media, such as analogue media, digital media, internal or removable memory designed for recording phonograms or videograms, the compensation shall consist of a sum corresponding to the recording capacity provided by those media. In respect of remote video recording systems, the compensation referred to in this paragraph shall be due from the person who provides the service and correspond to the remuneration obtained for providing that service.
2. The compensation referred to in paragraph 1 shall be set, in accordance with Community law and having regard, in any event, to the reproduction rights, by the Decree of the Minister for Cultural Heritage and Activities [MiBAC] to be adopted by 31 December 2009, after consultation with … the trade associations which represent the majority of the manufacturers of the devices and media and media referred to in paragraph 1. In setting the compensation, account shall be taken of the application or non-application of the technical measures referred to in Article 102 quater and the different effect of digital copying in comparison with analogue copying. This Decree shall be updated every three years.
3. The compensation shall be due from any person who manufactures or imports into the territory of the State for profit-making purposes devices and media and media as referred to in paragraph 1. … Where no compensation is paid, the vendor of the recording devices and media or media shall be jointly and severally liable for payment.’
11. Article 71 octies provides:
‘1. The compensation referred to in Article 71 septies for devices designed for recording phonograms is to be paid to the Società italiana degli autori ed editori (SIAE) which will ensure, following deduction of its costs, the payment in equal shares to the authors and to the manufacturers of phonograms, including through the intermediary of the most representative trade and professional associations.
2. The manufacturer of phonograms will pay without delay, and in any case within 6 months, 50% of the compensation they have received to the performers concerned.
3. The compensation referred to in Article 71 septies for devices designed for recording videograms is to be paid to the [SIAE], which will ensure, following deduction of its costs, the payment of a 30% share of the compensation to the authors and the remaining 70% in equal shares to the manufacturer of the first fixations of films, the manufacturer of videograms and performers. 50% of the compensation paid to performers will finance the activities and objectives described in Article 7(2) of the Law No 93 of 5 February 1992.
…’
12. The MiBAC adopted a decree referred to in Article 71 septies, paragraph 2, of the Copyright Law on 30 December 2009 (‘the contested decree’).
13. Article 4 of the Technical Annex to that decree provides:
‘1. [SIAE] shall promote protocols for more effective application of these provisions, and for example for the purpose of providing objective and subjective exemptions, as, for example, in case of the professional use of devices and media and media or in respect of certain devices and media for videogames. Those application protocols shall be adopted in agreement with the persons obliged to pay the compensation for private copying, or their trade associations.
…’
II – Facts, procedure and the questions referred
14. The applicants in the main proceedings are manufacturers and retailers of personal computers, compact discs, recording devices, mobile telephones and cameras.
15. The MiBAC adopted the contested decree and the attached Technical Annex on the basis of Article 71 septies, paragraph 2, of the Copyright Law. That annex lays down the rules for calculating the compensation for private copying of phonograms and videograms due to rightholders. More specifically for the present purposes, the contested decree extended the scope of fair compensation. As a result, devices and media such as mobile telephones, computers and other equipment too are now covered by the private copying levy, even though those devices are not designed specifically for the reproduction, recording and storage of content. By contrast, before the contested decree was adopted, only devices designed primarily or exclusively for the recording of phonograms and videograms were subject to the levy in question.
16. After the contested decree was adopted, the applicants in the main proceedings brought an action before the Tribunale amministrativo regionale del Lazio (Lazio Regional Administrative Court, Italy) seeking the annulment of the contested decree. They claimed that the contested decree was contrary to EU law. In their view, this was so in particular because natural or legal persons obviously not engaging in acts of private copying are subject to the levy in question too. In that context, the applicants also levelled criticism against the powers that the contested decree afforded the SIAE: given the discretion of the SIAE in administering the levy, equal treatment of persons liable to pay the levy cannot in their view be guaranteed.
17. The Tribunale amministrativo regionale del Lazio (Lazio Regional Administrative Court) rejected the applicants’ claims.
18. Subsequently, the applicants in the main proceedings brought an appeal against that decision before the Consiglio di Stato (Council of State). Entertaining doubts as to the proper construction of Article 5(2)(b) of Directive 2001/29, that court decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:
‘(1) Does EU law, and in particular recital 31 in the preamble to, and Article 5(2)(b), of [Directive 2001/29], preclude national rules, such as Article 71 sexies of [the Copyright Law] read in conjunction with Article 4 of the contested decree, that provide that in case of media and devices acquired for purposes clearly unrelated to private copying —that is to say, for professional use only — determination of the criteria for an ex ante exemption from the [private copying levy] is left to private negotiation, or “free bargaining”, with particular regard to the “application protocols” referred to in Article 4 of the [annex to] the contested decree without any general provisions or guarantees of equal treatment between the SIAE and persons obliged to pay compensation, or their trade and professional associations?
(2) Does EU law, and in particular recital 31 in the Preamble to, and Article 5(2)(b), of [Directive 2001/29], preclude national rules such as Article 71 sexies of [the Copyright Law] in conjunction with the [contested decree] and the instructions on reimbursement given by the SIAE, that provide that, in the case of media and devices acquired for purposes clearly unrelated to private copying (that is to say for professional use only), reimbursement may be requested only by the final user rather than the manufacturer of the media and devices?’
19. Written observations were submitted by Assotelecommunicazioni-ASSTEL, Hewlett-Packard Italiana Srl (‘HP’), Microsoft Mobile Sales International (formerly Nokia Italia SpA), Samsung Electronics Italia SpA, Sony Mobile Communications SpA, Telecom Italia SpA, Wind Telecomunicazioni SpA and the SIAE as well as the Italian Government and the Commission. Oral argument was presented at the hearing on 24 February 2016 by Altroconsumo, Hewlett-Packard Italiana, Microsoft Mobile Sales International, Sony Mobile Communications, Telecom Italia, Samsung Electronics Italia, Dell and the SIAE as well as the Italian and French Governments and the Commission.
III – Analysis
A – Introductory remarks
20. To begin with, Directive 2001/29 is intended to ensure, amongst other things, that a fair balance is struck between the conflicting interests of rightholders and users of copyrighted works and other material. On the one hand, to reach that aim and to safeguard the rights of rightholders, Article 2 of Directive 2001/29 provides that Member States are to grant the rightholders referred to in that provision an exclusive right to authorise or prohibit reproduction of their works. That right extends to direct as well as indirect, temporary as well as permanent copying that can be done by any means and take any form. The reproduction right offers equally extensive protection irrespective of whether a whole piece of copyrighted work or a part of it is concerned.
21. On the other hand, however, in order to cater for the legitimate interests of users of copyrighted material too, Member States may limit the exclusive reproduction right stemming from Article 2 of Directive 2001/29 on the basis of Article 5(2) of the same directive. In accordance with that provision, an exception to that right may be provided, inter alia, in respect of copying on any medium by a natural person in so far as that copying takes place for private use. Therefore, only copying, which is neither directly nor indirectly commercial, is permitted under that exception (‘the private copying exception’). In addition, rightholders must receive fair compensation for the harm caused by such copying. Typically, as is the case in Italy, that compensation takes the form of a private copying levy.
22. As the case-law of the Court clearly illustrates, the issue of fair compensation — and in particular the form and the arrangements surrounding the collection thereof — constitutes a vexed question in today’s digitalised world. (4) That is not surprising: the levy system was put in place because, in the ‘offline world’, levies were the only way to ensure that rightholders were compensated for copies made by end users. (5) That does not fully correspond to the digitalised online environment in which copyrighted material is used today.
23. In fact, in accordance with Article 5(2)(b) of Directive 2001/29, fair compensation is typically levied on devices and media suitable for private copying including, but not limited to, CDs, computers of different kinds, mobile phones, memory cards and USB-sticks. However, such a system of fair compensation necessarily resides on a fictio juris: it assumes that a person acquiring devices and media that are, as a matter of principle, suitable for private copying will use all possible functions inherent thereto, including those that make private copying possible. (6) To be sure, at the time of the adoption of Directive 2001/29, it was still commonplace to use such devices and media for private copying. Today, however, as is well-known, it seems that private copying has at least partly (if not largely) been substituted by various kinds of internet-based services that allow rightholders to control the use of copyrighted material through licensing arrangements. (7)
24. Despite those technological developments and the arguably declining practical importance of private copying, the private copying exception is still widely applied in the European Union. Member States have adopted divergent approaches to the private copying exception in more than one respect: amongst other divergences, not only do the methodologies for setting the private copying levies vary, so do the products subject to such levies. (8) In the present case, the Court is once again confronted with the scope of the discretion that Member States are to enjoy in devising such a system of fair compensation.
25. As I shall illustrate below, two different situations must be clearly distinguished from each other: on the one hand, circumstances in which Member States must ensure that equipment, devices and media are exempted, ex ante, from the private copying levy, and on the other hand, circumstances in which Member States must ensure that an effective ex post reimbursement system for unduly paid private copying levies exists.
B – Question 1: The requirement of an ex ante exemption from the private copying levy
26. The first question referred deals with (the absence of) an ex ante exemption from the private copying levy and the conditions for granting such an exemption under Italian law. In that regard, the referring court expresses doubts as to the compatibility of the Italian system of fair compensation with Article 5(2)(b) of Directive 2001/29 and the principle of equal treatment.
27. The doubts of the referring court are explained by the fact that, firstly, the levy in question falls to be applied, as a matter of principle, to all equipment, devices and media covered by the contested decree without distinction. No legislative provision exists that would lay down an exemption from that levy where such equipment is acquired for professional use. Secondly, another particularity of the Italian system resides in the way in which manufacturers and importers of equipment, devices and media suitable for private copying (that are responsible for the payment of the private copying levy) may be exempted from the payment of the levy in question.
28. More specifically, even though the private copying levy is applied indiscriminately to certain categories of equipment, devices and media suitable for private copying, an exemption from the obligation to pay that levy may be negotiated between the SIAE and the manufacturers and importers of the devices and media subject to the levy (or the associations thereof). In that respect, the SIAE appears to enjoy considerable discretion in negotiating and, in the final analysis, delimiting the parameters regarding a possible exemption from the levy.
29. At the outset, I would point out that the overarching feature of the systems of fair compensation scrutinised by the Court thus far is that the obligation to pay the levy applies, as a matter of principle, indiscriminately to certain types of equipment, devices and media suitable for reproduction. (9) That is so here too.
30. There is nothing in the wording of Article 5(2)(b) of Directive 2001/29 that would suggest that such indiscriminate application of a levy would be contrary to EU law. In fact, that provision states that Member States may allow a private copying exception to be applicable to reproductions on any medium made by a natural person for private use, provided that fair compensation for rightholders is secured.
31. However, undoubtedly to ensure that a fair balance is struck between the conflicting interests involved, as required by recital 31 of the directive, the Court has formulated certain provisos in its case-law regarding the reach of Article 5(2)(b) of Directive 2001/29. Those provisos are highly relevant here.
32. In Padawan, the Court held that the indiscriminate application of the private copying levy to digital reproduction devices and media acquired for purposes clearly unrelated to private copying does not comply with Article 5(2) of Directive 2001/92. (10) To my mind, that statement excludes, from the outset, from the sphere of the private copying exception equipment, devices and media that are clearly designed for professional use.
33. In Copydan Båndkopi, the Court clarified further the scope of Article 5(2)(b) of Directive 2001/29. It held that a private copying levy cannot, in the first place, lawfully fall to be applied to the supply of devices and media where it can be established that the person liable to pay compensation has supplied those devices and media to persons other than natural persons for purposes clearly unrelated to copying for private use. (11) To my mind, it is clear that, as a result of that statement, the direct supply of equipment, devices and media a priori suitable for private copying to business customers and public entities must fall outside the scope of Article 5(2)(b) of the directive. (12) Or, to employ the language of the Court, that equipment must be exempted (ex ante) from the private copying levy.
34. In that regard, suffice it to note that in Italy there is no statutory exemption for equipment, devices and media acquired by legal persons for purposes clearly unrelated to private copying. Instead, the decision to grant (or not to grant) ex ante exemptions is left to the discretion of the SIAE in accordance with Article 71 sexies of the Copyright Law, read in conjunction with Article 4 of the Technical Annex to the contested decree. During oral argument, it was further explained that not only are the exemptions granted by the SIAE few and limited in scope, they are also accompanied by strict conditions related, amongst other things, to compliance with a code of conduct by the entity acquiring the devices and media in question. Put simply, the Italian system allows the SIAE to apply exemptions to the persons obliged to pay compensation, as it sees fit.
35. Yet, as already explained, manufacturers and importers must be exempted ex ante from the payment of the levy where they can show that they have supplied devices and media for use clearly unrelated to private copying. (13) That would be the case of direct sales by the persons liable to pay compensation to business customers or public entities, irrespective of whether those entities are registered with the organisation responsible for administering the levy. (14)
36. In any event, an ex ante exemption should not be made conditional on the successful negotiation and conclusion of an agreement with the organisation administering the levy. For the right to an ex ante exemption to be effective, it must fall to be applied generally and without distinction to manufacturers and importers of devices and media suitable for private copying that are able to show that the devices and media in question have been supplied to persons other than natural persons for purposes unrelated to private copying. Otherwise, overcompensation can hardly be avoided. That would run counter to the requirement of a fair balance set out in recital 31 of the directive.
37. On that point, it is clear to me that the Italian rules fall foul of Article 5(2)(b) of Directive 2001/29.
38. Additionally, however, the referring court has identified further problems with the Italian rules regarding the (absence of a generally applicable) ex ante exemption.
39. As already noted, in the Italian system, the criteria for securing (a potential) ex ante exemption from the payment of the levy are determined in private negotiation (or so-called free bargaining). The negotiations take place between the manufacturers and importers of equipment, devices and media subject to the levy (or the associations thereof), on the one hand, and the SIAE, on the other. In that respect, the referring court is unsure whether that is compatible with the requirement of fair compensation in Article 5(2)(b) of Directive 2001/29, the principle of equal treatment and the principle of fair balance referred to in recital 31 to the directive.
40. At the outset, a point that should not be overlooked is that the Court has placed particular importance on the principle of equal treatment in the application of the exceptions provided in Article 5 of Directive 2001/29. (15) In the context of fair compensation, that means that Member States may not discriminate — without justification — between different categories of manufacturers and importers of comparable devices and media covered by the private copying exception.
41. That statement has a manifest bearing on the present case.
42. Admittedly, the parties are in disagreement regarding the extent to which the SIAE has discretion in negotiating exemptions from the private copying levy. Nevertheless, it transpires from the order for reference with sufficient clarity that the criteria and application protocols for an exemption from the levy are in fact negotiated between the SIAE and the manufacturers and importers of the devices and media concerned (or by associations representing them). That fact alone casts doubt on the compatibility of the Italian rules with the principle of equal treatment. That is so because Article 4 of the Technical Annex to the contested decree allows the SIAE to conclude exemption agreements separately with specific entities and associations, thereby failing to ensure that the right to be exempted from payment is consistently, generally and universally applied to the supply for professional use of devices and media suitable for private copying. As I see it, the conclusion of individual and separate agreements will lead, by way of necessity, to dissimilar treatment of manufacturers and importers that might otherwise be in a comparable situation.
43. Lastly, with regard to the requirement of fair compensation laid down in Article 5(2)(b) of Directive 2001/29, I would recall at the outset that the concept of ‘fair compensation’ constitutes an autonomous concept of EU law. Although the exact meaning of what constitutes fair compensation cannot be defined without some difficulty, the concept must nevertheless be interpreted uniformly across all Member States that have decided to make use of the private copying exception. (16)
44. The concept of fair compensation is based on the idea that private copying is deemed to cause harm to the copyright holder and, in order for that harm to be compensated, the rightholder must receive fair compensation. (17) Thus, a necessary link is presumed to exist between the compensation paid and the harm, or potential harm, suffered by the rightholder as a result of private copying. (18) In the case of devices and media supplied to consumers, it is accepted that this link is sufficiently strong to justify the payment of compensation.
45. No such link exists where the devices and media are intended for use clearly unrelated to private copying. Indeed, if the devices and media in question are supplied for professional use, no harm (related to private copying) occurs. While it may seem counterintuitive, that is so also where natural persons can use equipment, devices and media supplied to business customers or public entities to make copies for private purposes.
46. As explained, the Court’s interpretation of Article 5(2)(b) of Directive 2001/29 leaves media acquired by businesses and public entities outside the scope of that provision. Therefore, that a natural person (as an employee) takes copies for private purposes on such media is beside the point. Given that the equipment has been acquired for professional use, we no longer remain in the sphere of private copying. Quite simply, those situations fall beyond the scope of the private copying exception. Instead, they are covered by the general rule of licencing. Any copy made without express permission in such a context would be illegal. (19)
47. In the Italian system, the possibility that the persons liable to pay compensation may benefit from an ex ante exemption hinges upon private negotiation even where it can be shown that the equipment, devices and media in question are intended for professional use. I have difficulty in accepting that such a system could be consistent with the requirement of fair compensation based on the harm caused to the rightholder. Indeed, compensation is thus detached from the harm presumably caused by private copying. Quite simply, we are no longer dealing with copying that falls within the scope of the private copying exception.
48. On that basis, the answer to the first question referred must be that Article 5(2)(b) of Directive 2001/29 precludes a system of fair compensation under which a private copying levy is charged even on equipment, devices and media acquired for purposes clearly unrelated to private copying and where a possible exemption from that levy is left to negotiation between the organisation administering the levy and the persons obliged to pay compensation.
49. That having been said, there are, nevertheless, circumstances in which the levy can be charged indiscriminately, irrespective of whether the final use of the devices and media in question is private or professional. As I shall explain further in the context of the second question, that is, however, only so where practical difficulties related to the identification of the final user justify such an approach. In systems in which manufacturers and importers are responsible for the payment of compensation, an ex post system of reimbursement appears to be a quasi-mandatory component of a system of fair compensation.
C – Question 2: The ex post reimbursement of the private copying levy
50. The second question referred turns on the ex post reimbursement of unduly paid private copying levies. The referring court is unsure whether the Italian system of fair compensation is compatible with Article 5(2)(b) of Directive 2001/29 given that — as in the situation described above in relation to the absence of legislative provisions on an ex ante exception — ex post reimbursement is also left to the discretion of the SIAE without express legislative provisions on the issue. In accordance with the instructions and guidelines of that organisation, a request for reimbursement of a levy — that has been unduly paid for equipment, devices and media acquired for professional use — may be made only by the final user.
51. From the outset, I must stress that no levy should, in the first place, be charged where the professional use of the equipment, devices and media in question can be identified beforehand by the person liable to pay compensation. Those situations should be covered by an ex ante exemption from the payment of the levy, as explained above.
52. Account taken of that fact, in what circumstances should a Member State provide for a system of ex post reimbursement?
1. The conditions for the indiscriminate application of a private copying levy
53. As the SIAE and the Italian Government point out, Member States enjoy considerable discretion in devising the details of a system for a private copying levy at the national level. Given that leeway, the Court accepted in Amazon.com International Sales and Others that Member States may take as a starting-point a rebuttable presumption that the devices and media are intended for private use. (20) However, such a presumption is compatible with Directive 2001/29 only under strict conditions. Firstly, practical difficulties must exist in determining whether the final use of the media at issue is private or professional. Secondly, such a presumption is acceptable only in relation to products marketed to natural persons. (21)
54. Here, it is useful to note that in the cases dealt with by the Court thus far, the starting-point appears to have been that the levy is charged when the devices and media subject to the private copying levy are placed on the market. (22) In light of the explanations of the parties at the hearing, I take that as my starting-point here too.
55. Practical difficulties can justify the indiscriminate application of a private copying levy where — as in Copydan Båndkopi — manufacturers and importers responsible for payment of the levy employ retailers to distribute their products. In such circumstances, the persons responsible for payment cannot identify the final user without considerable difficulty. (23)
56. By contrast, where a person liable to pay compensation sells its equipment, devices and media directly to business customers (or public entities, such as hospitals, for example) without intermediaries, practical difficulties may not, in my view, be relied upon as justification for extending the application of the levy to such circumstances. Although the language employed in the case-law admittedly leaves room for interpretation, it must be understood that such cases simply fall beyond the scope of Article 5(2)(b) of Directive 2001/29.
57. Therefore, as I see it, a private copying levy can be applied indiscriminately to equipment, devices and media suitable for private copying in the context of retail sale, irrespective of whether the final use is professional or private. That is so presuming that manufacturers and importers are to pay compensation. In that case, a system of ex post reimbursement must be put in place for unduly paid levies.
2. The scope of the right to seek reimbursement and its effectiveness
58. At first sight, one might be led to think, mistakenly, that Member States may freely choose to confine ex post reimbursement to final users. Indeed, the Court held in Copydan Båndkopi that Article 5(2)(b) of Directive 2001/29 does not preclude a system of fair compensation under which reimbursement may be requested only by final users. Crucially, however, the Court formulated an important proviso in that regard. It observed that such a system is compatible with EU law provided that the persons responsible for payment are exempt from the levy if they can establish that they have supplied the devices in question to persons other than natural persons for purposes clearly unrelated to private copying. (24) Indeed, the need for such an ex ante exemption follows neatly from the Court’s statement in Amazon.com International Sales and Others, that an indiscriminate application of a private copying levy can be justified only where the products in question are marketed to natural persons. (25)
59. Put another way, a system of fair compensation under which ex post reimbursement may be requested only by the final user is compatible with Article 5(2)(b) of Directive 2001/29 only in so far as that system also includes an ex ante exemption for equipment, devices and media acquired for purposes clearly unrelated to private copying (that is, for professional use).
60. Bearing that in mind, the Italian system of ex post reimbursement confining the right to request reimbursement to final users can be compatible with EU law only if an ex ante exemption related to professional use is provided for in the relevant provisions of national law.
61. However, as was established above, no generally applicable ex ante exemption for equipment, devices and media supplied for professional use exists in Italy. In those circumstances, an approximate, albeit unsatisfactory, balance between the interests involved seems achievable only if the persons obliged to pay compensation can also seek reimbursement.
62. As pointed out by the French Government, it is true that extending a system of reimbursement in that way entails a risk of overcompensation in the other direction: a request for reimbursement could be made twice, by both those responsible for the payment of the levy, and the final user. However, in so far as no generally applicable ex ante exemption exists for equipment, devices and media acquired for professional use, I see no other way of reconciling the interests involved. In any event, given that as a result of subsequent sales, the manufacturers and importers responsible for payment cannot in most cases know (or can only find out with some difficulty) who the final user will be, that solution remains unsatisfactory.
63. To open a brief parenthesis, the theoretical starting-point of the case-law of the Court is that the persons responsible for payment of the levy can pass on the amount of that levy in the sale price of the devices and media concerned. (26) While that may constitute an accurate assumption in relation to certain types of equipment, devices and media, it is not systematically the case. The extent to which it proves to be profit-maximising to pass on a levy hinges upon several variables that may differ across markets. Interestingly, a study suggests that it is possible to determine a pan-European retail price point for several consumer devices, irrespective of levy schemes. (27) Thus, passing on does not necessarily take place and the levy might in fact be absorbed by the persons responsible for the payment of compensation. Bearing that in mind, in circumstances such as those underlying the present case (where no generally applicable ex ante exemption exists), confining a system of ex post reimbursement to final users would in fact penalise the persons responsible for payment in more than just one respect.
64. Now, even assuming that a generally applicable ex ante exemption existed in Italy, I would nevertheless have doubts regarding the compatibility with EU law of the Italian system of reimbursement.
65. The Court’s case-law requires a system of reimbursement to be effective. In that context, Member States must ensure, in particular, that it is not excessively difficult to obtain reimbursement of the levy unduly paid. (28) In assessing the effectiveness of the system of reimbursement, factors such as the scope, availability, public awareness and simplicity of use of the right to reimbursement assume a key role. (29)
66. To my mind, and subject to verification by the referring court, a system of reimbursement, such as the one described in the order for reference, fails to respect the fair balance sought by Directive 2001/29 for at least four interlocking reasons. Firstly, the implementation of that system is left to the discretion of the SIAE without express legislative provisions detailing the rules governing reimbursement. As suggested by Altroconsumo, that clearly limits availability and public awareness as regards the possibility of obtaining reimbursement. Secondly, under the rules applied by the SIAE, natural persons are excluded from the personal sphere of those having the right to request reimbursement. This is so even where those persons are able to show that they have acquired the equipment, devices or media in question for professional use. I see no reason why natural persons (such as the self-employed) should not be able to request reimbursement if they can prove that they have acquired the equipment covered by the private copying levy for professional purposes. Thirdly, the reimbursement of an unduly paid levy requires the legal persons in question to apply a code of conduct regarding the use of the devices and media concerned, carry out special checks to enforce that code of conduct, and request reimbursement within a prescribed time-limit (90 days from the date of the invoice). Clearly, such additional conditions for reimbursement — which may change over time in light of the discretion afforded to the SIAE in that respect — will discourage persons concerned from seeking reimbursement. Fourthly, and more generally, it seems highly problematic that the procedure for obtaining reimbursement is based on the instructions on reimbursement given by the SIAE, which it can freely modify.
67. Fundamentally, therefore, it seems to me that the system of reimbursement applied in Italy falls short of the requirement of effectiveness, in particular, as laid down in the Court’s case-law. Where a levy has been charged for equipment, devices or media acquired for professional use through a retailer, it must be genuinely possible for the final user to obtain reimbursement. That possibility must be actual and real so as to ensure that the compensation paid does not exceed what is necessary to offset the harm potentially caused by private copying.
68. That leads me to conclude that the answer to the second question referred must be that — in circumstances such as those underlying the present case where no generally applicable ex ante exemption exists for equipment, devices and media acquired for purposes clearly unrelated to private copying — Article 5(2)(b) of Directive 2001/29 precludes a system of fair compensation under which reimbursement for an unduly paid private copying levy can only be requested by the final user.
IV – Conclusion
69. In light of the arguments presented, I propose that the Court should answer the questions referred by the Consiglio di Stato (Council of State) as follows:
(1) Article 5(2)(b) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society precludes a system of fair compensation under which a private copying levy is charged even on equipment, devices and media acquired for purposes clearly unrelated to private copying and where a possible exemption from that levy is left to negotiation between the organisation administering the levy and the persons obliged to pay compensation.
(2) In circumstances such as those underlying the present case where no generally applicable ex ante exemption exists for equipment, devices and media acquired for purposes clearly unrelated to private copying, Article 5(2)(b) of Directive 2001/29 precludes a system of fair compensation under which reimbursement for an unduly paid private copying levy may be requested only by the final user.