The first step towards fair compensation for private copying

In a decision that it is hoped may result in the introduction in the UK of fair compensation for copyright holders by way of a quid pro quo for the copyright exception for private copying (which came into force on 1 October 2014), the High Court has found in favour of BASCA, the MU and UK Music in judicial review proceedings which they brought against the Secretary of State for Business, Innovation and Skills¹.

The exception was introduced into UK law pursuant to the exercise of a discretion vested in the Secretary of State, pursuant to the Copyright Directive², to create such an exception to copyright where a purchaser of content wishes to copy it for private use. However, a condition that is attached to the exercise of this discretion is that, if the use that would be permitted by the introduction of an exception causes more than de minimis harm to the copyright owner, then compensation has to be payable.

The UK Government’s explicit justification for introducing a limited private copying exception without a related compensation scheme was that the value of the copying that would occur under the new exception had been (and would continue to be) built into the initial price by rightholders. As such, there was no harm for which compensation would be required.

Although the High Court found for the Secretary of State in relation to the majority of the substantive issues, it found for the applicants in relation to their contention that the decision to introduce the private copying exception without a compensation scheme was flawed because the evidence relied upon to justify the conclusion about harm was inadequate.

In terms of the next steps, as well as the potential for an appeal and/or a reference to the CJEU, there are a number of possible outcomes, including (potentially) the Secretary of State reinvestigating the issue, or simply introducing a compensation scheme. If, ultimately, it were decided to introduce a compensation scheme, that would raise a whole host of issues about who pays, how much, and how the monies raised should be split between rightholders.

Overall, the decision is potentially good news for rightholders. There are, however a number of hurdles that will need to be overcome to fully pave the way for the creation of a new revenue stream for private copying.

Eleanor Steyn, Associate, Michael Simkins LLP

[1] The Queen on the application of (1) British Academy of Songwriters, Composers and Authors (2) Musicians’ Union (3) UK Music 2009 Limited -and- Secretary of State for Business, Innovation and Skills, with the Incorporated Society of Musicians intervening [2015] EWHC 1723 (Admin)

[2] 2001/29