EU Computers, Printers May Face Copyright Tax

(CN) - European countries can tax printer and computer companies to compensate copyright holders for the illegal copying of consumers, the EU high court ruled Thursday.

The decision comes after German copyright administrator VG Wort asked a regional court to order Canon, Epson, Fujitsu, Hewlett-Packard, Kyocera and Xerox to release sales figures for printers sold in Germany since 2001. Additionally, the administrator sought information on the capabilities of the computers, printers and copy machines the companies marketed.

VG Wort also asked the court for an order requiring Kyocera, Epson and Xerox to pay restitution - in the form of a tax - on all devices they sold between 2001 and 2007. The court ordered both the release of information and restitution, prompting legal wrangling where an appellate court reversed and a German federal court dismissed VG Wort's challenge on a point of law.

Germany's highest court resurrected VG Wort's appeal, however, and remanded the case to the federal court, which - determined to get it right - asked the EU's Court of Justice for clarification of copyright law.

Specifically, the court asked whether printer and copy machine manufacturers can be forced to pay in advance for potential copyright infringements.

In a preliminary ruling Thursday, the Luxembourg-based Court of Justice noted that EU law required member states to come up with a scheme to compensate authors and artists for inevitable copyright infringement from copy machines and printers.

Since the law took effect in 2003, however, and was not retroactive, the court canceled two years of restitution that VG Wort sought.

It said the companies must pay any restitution levied by member states even where the equipment is used for authorized reproductions, if national law requires it.

"The court has already held, in relation specifically to the private copying exception, that the purpose of fair compensation is to compensate authors for private copying, without their authorization, of their protected works, meaning that it must be regarded as recompense for the harm suffered by authors, resulting from such a copy which is not authorized by them," the court wrote. "Where, in the particular case, that reproduction right has been preserved, the provisions relating to fair compensation cannot apply given that the limitation provided for by the national legislature does not allow a reproduction to be made without the authorization of the authors and, therefore, it does not cause the type of harm for which fair compensation would constitute recompense. Conversely, where, in the particular case, the reproduction right has not been retained, the act of authorization does not affect the harm caused to the authors, and cannot therefore have any bearing on the fair compensation owed."

The national court must now decide whether works outfitted with technology designed to prevent unauthorized copying might exempt companies from the tax, according to the ruling.

"It is open to the member state concerned to make the actual level of compensation owed to rightholders dependent on whether or not such technological measures are applied, so that those rightholders are encouraged to make use of them and thereby voluntarily contribute to the proper application of the private copying exception," the justices wrote.

Acknowledging the difficulties associated with the EU's system of pre-emptively compensating copyright holders for potential infringement, the court said manufacturers could pass the added costs on to their customers.

"Member states are free, given the practical difficulties encountered, to put in place, where appropriate, a levy chargeable to the persons in possession of the equipment on which the reproduction has been made," the justices wrote. "Where the reproductions at issue have been made by means of a single process, with the use of a chain of devices, it is likewise open to the member states to go back to the stages before the copying stage and put in place, where appropriate, a system in which fair compensation is paid by the persons in possession of a device forming part of that chain which contributes to that process in a non-autonomous manner, in so far as those persons have the possibility of passing on the cost of the levy to their customers. Nevertheless, the overall amount of fair compensation owed as recompense for the harm suffered by the rightholders at the end of that single process must not be substantially different from the amount fixed for a reproduction obtained by means of a single device.

"In those circumstances, the fundamental right to equal treatment of all interested parties is respected," the court concluded.

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