Reprobel secures victory in reprography lawsuit – Publishers granted sui generis right to remuneration

The beginning of the 21^st
century saw the makings of a dispute on Belgian copyright rules that would last
15 years. Since 2002, the Belgian branch of the multinational IT company Hewlett-Packard (HP) has refused to fully pay its remuneration for reprography to Reprobel, the Belgian copyright management society. Fifteen years later, the
Brussels Court of Appeal held that this refusal is unjustified. The long-standing
dispute between HP and Reprobel went all the way up to the Court of Justice of
the European Union, which ruled on 12 November 2015 that the Belgian
reprography legislation was in several respects contrary to EU law (Case C-572/13). Surprisingly, the
Brussels Court of Appeal ruled in its judgment of 12 May 2017 that the Belgian
rules on reprography are in fact only partially problematic under EU law. Pursuant
to this latest judgment, HP must pay the lump-sum levy for reprography on the
basis of the objective speed of its multifunctional reproduction devices. A
court expert has been appointed in order to determine the exact amount due. In
the meantime, the Belgian legislator has modified the set-up of the Belgian
reprography system, granting a sui generis right to remuneration to publishers,
situated outside the copyright framework.

Legal principles

In
principle, every reproduction of a copyright-protected work requires the
explicit permission of the right holder(s). However, there are a number of exceptions to this general rule, such as the private copying exception, the
quotation for criticism or review, the illustration for teaching or scientific
research, and the reprography exception, which is of relevance here.

The
Belgian reprography exception is set forth in Article XI.190, 5° of the Code on
Economic Law (CEL). According to this provision, photocopies of short fragments
of copyright-protected works, with the exception of sheet music, are allowed,
provided that these copies are made for private purposes or scientific research
and do not detract from the normal exploitation of the work. In order to
compensate for this exception, the law provides for a reimbursement of authors
and publishers, the so-called “reprografievergoeding” (or “reprography remuneration”
in English).

The
essentials of the Belgian reprography rules were the following (see below in
relation to recent modifications to these rules):

• Pursuant to Article XI.235 CEL, the remuneration is payable by the
  manufacturer, the importer or intracommunity purchaser of the reproduction
  devices.
• The Belgian remuneration for reprography consisted of two parts: a
  lump-sum payment, based on the objective copying speed of the reproduction
  device at issue, and a proportional remunerative payment, based on the amount
  of copies actually made.
• The amounts payable were and still are determined by Royal Decree. We
  note that the Royal Decree of 30 October 1997
  was very recently replaced by two Royal Decrees of 5 March 2017 (for authors and publishers respectively).
• The responsible party for the collection of the remuneration is the
  copyright management society Reprobel, who is also responsible for the
  remuneration for public lending. Reprobel divides the
  collected compensation into two equal parts and distributes it to the entitled authors
  and publishers.

Exceptions
to copyright have been harmonised on the EU level to a certain extent. Article
5 of Directive 2001/29 (the “InfoSoc
Directive”) provides a list of exceptions and limitations to the reproduction right
of copyright owners, which the EU Member States may include in their national
law. Only one of these exceptions, more specifically the exception for
temporary acts of reproduction (see Article 5, paragraph 1 InfoSoc Directive),
is mandatory. Paragraph 2 provides a long list of optional exceptions and
limitations, one of which is the exception for reprography (see Article 5,
paragraph 2, a) InfoSoc Directive). This provision allows (but does not
require) the inclusion of a reprography exception in Member State law, provided
that the right holders receive fair compensation.

Facts of the case

HP
imports reprographic devices into Belgium, including so-called ‘multifunction’
devices, the main function of which is to print documents at different speeds
depending on the desired print quality. By fax of 16 August 2004, Reprobel
informed HP that they were liable to pay a levy of 49,20 EUR per printer.
Subsequent party-to-party discussions did not lead to an agreement, and both
parties filed legal proceedings before the Brussels Court of First Instance.
Reprobel claimed payment of the remuneration due pursuant to the Royal Decree,
while HP argued that this remuneration was not due at all, among other reasons
because the amounts that HP had already paid, corresponded to the fair
compensation owed pursuant to the Belgian legislation interpreted in the light
of the InfoSoc Directive.

Judgments

By
judgment of 16 November 2012, the Brussels Court of First Instance ruled that
the relevant provisions of Belgian law were incompatible with EU law. Both
parties filed an appeal against this judgment. The Brussels Court of Appeal
decided to stay the proceedings and to refer a number of questions to the Court
of Justice of the European Union (CJEU).

The
CJEU handed down its judgment on 12 November 2015, ruling that a
number of aspects of the Belgian reprography system ran counter to EU law. Three
essential takeaways of this judgment are:

• Regarding the goal of
  the reprography exception (see paragraphs 28 through
  44): fair compensation is intended to
  compensate actual harm caused to right holders, resulting from the reproduction
  of their work without their authorisation, and must therefore be calculated
  proportionately to that harm. As a result, a distinction should be made between
  reproductions made for private/non-commercial use by natural persons and those
  made by other users and/or for other ends.
• Regarding the
  allocation of part of the reprography remuneration to publishers (see paragraphs 44 through 49): the InfoSoc Directive precludes national
  legislation from allocating a part of the fair compensation payable to right
  holders to the publishers of works created by authors. The CJEU found this aspect
  particularly problematic if the publishers are not obliged to ensure that the
  authors benefit, even indirectly, from some of the compensation of which they
  have been deprived in this way.
• Regarding the
  combination of a lump-sum and a proportional levy (paragraphs
  65 through 88): national reprography systems may not combine a lump-sum levy payable
  prior to the reproduction operation and a proportional levy paid after such
  operation, insofar as (i) such lump-sum levy is calculated solely by reference to
  the objective copying speed of the device; (ii) such proportional levy varies
  according to whether or not the payer was cooperative; and (ii) the combined
  system does not include mechanisms to ensure reimbursement if the levy
  outweighs the actual harm suffered as a result of the reproduction.

The
CJEU judgment was warmly welcomed by manufacturers and
importers of reproduction devices. It was thought by many that the referring
court, the Brussels Court of Appeal, would now refuse to apply the Belgian
regime as it then stood in the Belgian proceedings on the merits. As a response
to the CJEU judgment, HP confidently decided to fully rescind payment of any
reprography remuneration to Reprobel.

In
response to the CJEU judgment and before the final judgment in the HP v. Reprobel case was handed down, the
Belgian legislator modified the set-up of the reprography remuneration system
to a considerable extent. The lump-sum levy per device was abolished and
instead, the proportional remuneration per copy of a copyright-protected work
was increased to 0,0277 EUR per reproduction (with a risk of subsequent
increase to 0,0423 EUR per reproduction in case of late, incomplete or
inaccurate declaration by the payer). The new system, introduced by the Act of 22 December 2016, entered into
force on 10 March 2017. Interestingly, this Act was accompanied by two separate
Royal Decrees of 5 March 2017, for authors and publishers respectively. The authors’ Royal Decree sets forth the new ‘real’
reprography system, with a fair remuneration accorded to authors of copyrighted
works that are reproduced. The publishers’ Royal Decree provides for a sui generis remuneration to publishers,
which does not have anything to do with copyright. This right to remuneration
is granted for a period of fifty years, starting from the 1^st of
January of the year following the first publication on paper. In this way, the
Belgian legislator wished to address the CJEU’s concern that part of the
authors’ remuneration was being forwarded to the publishers.

While
the set-up of the remuneration for reprography has undergone significant
changes, the situation in practice remains quite similar. Indeed, Reprobel is
still responsible for the collection of a remuneration that is distributed
equally between authors and publishers. Furthermore it may be argued that, due
to the increase of the proportional remuneration, the abolition of the lump-sum
levy remains without any real consequence. The question remains whether the
remuneration as it now stands actually provides compensation for the damage
suffered by the right holder and nothing more, as required pursuant to the case
law of the CJEU (see in this regard not only Case C-572/13, HP v. Reprobel, but also Case C-467/08, Padawan v. SGAE, in relation to the private copying exception).

The
CJEU decision was a preliminary ruling, which constitutes a
final determination of the interpretation of EU law. However, the final
decision – in which this EU law is interpreted to the facts at hand – remains
with the referring court. Given the rather scathing review of the original
Belgian system by the CJEU, many expected the Brussels Court of Appeal to side
with HP on the issue of compatibility of the Belgian reprography system with EU
law. However, on 12 May 2017 it became clear that the Brussels Court of Appeal
had a mind of its own on this issue. The full judgment in French as well as an
unofficial English translation, can be found on the Reprobel website.

The
Court of Appeal overturned the Court of First Instance’s 2012 decision, ruling
that HP does have to pay the
reprography levy for the sale of its devices. The Court of Appeal ruled that the
Belgian reprography system is only partially in violation of EU law and merely
to the extent that Belgian law imposes a combined system of lump-sum and proportional
remunerative payments without a recovery mechanism and thus without any
possibility to correct the lump-sum payments on the basis of the actual damage.
However, the Court of Appeal held that this limited breach of EU law did not
justify not applying the Belgian
rules on reprography to the facts at hand. In this regard, the Court of Appeal reasoned
that the applicable provisions of the InfoSoc Directive were not sufficiently
clear, precise and unconditional, thus excluding any direct effect in the
Belgian legal order. Surprisingly, the Court of Appeal took the view that the
Belgian scheme can be interpreted in conformity with EU law in relation to
reproductions of sheet music and reproductions from an illegal source. Furthermore,
the Court of Appeal ruled that the compensation granted to publishers is in
fact legitimate. In the Court’s view, this remuneration does not detract from
the ‘fair compensation’ to which authors are entitled on the basis of EU law.
The mere fact that the compensation for authors and publishers is collected at
the same time and is only subsequently divided into equal parts, is not
considered problematic.

As
a result, the Court of Appeal decided to apply the (old) Belgian reprography
system in its entirety. The Court of Appeal ordered HP Belgium to a provisional
payment to Reprobel of 1 EUR. A court expert was appointed to determine the
objective speed of HP’s devices and on that basis the exact amount of levies still
due for the period between 2002 and 2017. As of yet, it is unclear how much exactly
HP and the other companies who had stopped paying their fees over the years,
will have to pay. We note that we are not aware of any appeal to the
Belgian Supreme Court in this case.

In a press release following the
judgment, Reprobel expressed its wish to meet with all the companies involved
in order to solve the dispute in a spirit of mutual respect. It remains to be
seen whether the new Belgian reprography system will stand the test of time.