After alone this year and alone in Germany, two other large product families became taxable through contracts between collecting societies and companies, Smartwatches are now also taxable. Manufacturers and importers have to pay 1.50 euros per unit. The agreement for Smartwatches applies retroactively from 1 January 2019 and at least until the end of 2022. Only then can the amount of levies be renegotiated.
While the scope of taxable products in Germany was manageable for a long time, it has now become inclusive and comprehensive. Germany is one of the countries with levies on reprography equipment, which includes copiers, printers and scanners. In addition, until a few years ago, only some storage media were subject to levies. But intensive negotiations took place so that today, practically all relevant IT devices, all storage media and the entire range of consumer electronics are additionally subject to copyright levies.
Ultimately, the contracting parties have overcome long-standing obstacles to negotiations, the European market is more competitive, companies have more planning security and right holders have more income.
However, many more companies now have more work to do in terms of sales volume reporting. For example, a Smartwatch must first be clearly distinguished from a pure fitness tracker as well as from jewellery and toys in accordance with the product definition in the tariff agreement.
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Copyright levies may be applicable on used products brought on to the market after repair or refurbishment. In the context of leasing contracts, the question also arises as to whether each new device is subject to levies during the term of the contract. Many suppliers aren’t aware of these particular payment obligations that are not uniform in all EU-countries and are difficult to be justified legally.
As a matter of fact, the obligation is legally controversial: On the one hand, national law doesn’t always regulate the payment obligations for refurbished products, while on the other hand, refurbished products placed on the market have the same functionality as the original products. The buyer may use and reproduce works protected by copyright, so that the right holder receives due compensation.
Accordingly, the competent German authority is currently approaching affected companies directly and claiming levies on used products like, PCs, mobile phones and tablets. When asserting claims in Germany, the suppliers’ contractual situation with the authorities has to be taken into account, as well. Consequently, parties that receive letters from the German collecting society are encouraged to check the claim carefully for applicability.
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Since 2016, companies in Germany are confronted with the threat of advance payments for copyright levies on devices and media storage in the form of juridical orders for security deposits. This is often the case with products for which there are no agreements with respect to the obligations for levy payments or tariff levels.
In this context, the industry in Germany is looking into the means of defining tariffs and scope based on negotiations and mutual agreement. However, such negotiations could take years. A ruling in favour of advance payments would reflect strongly on the willingness to negotiate and the course of the negotiations. The new legal option is intended to provide collecting societies with an effective instrument for enforcement.
The industry tends to be doubtful of whether such orders for security deposits are practically in place, or at all effective. To this end, the German Arbitration Board has recently ruled against the collecting society’s claim against a manufacturer for MP3/4 players (arbitral verdict; only in German). The reasons behind the ruling, or the rejection of the claim, were purely due to legal formalities. The process is a clear proof that the ZPUE (Central Organization for Private Copyrights) is acting on and applying the option and will enforce disputed tariff claims. The so-called security deposit requirement may not be a toothless tiger, after all.
After several attempts to amend the EU Copyright Directive 2001/29, the European Parliament voted in favor of amending the Directive on September 12, 2018. However, the expected changes do not affect the copyright remuneration system and foresee no developments in that matter. On the other hand, current national regulations are underway to lay the groundwork for innovations within the system.
France confirmed the levies on specific streaming services on August of this year. Initially, those levies addressing providers of TV and radio programs in the internet were intended to serve as a model, or a temporary solution. Similarly, a legislative proposal is currently underway in Belgium, where online content storage services are to be handled in the same manner as recording devices like tablets, mobile phones, HDD, USB Keys. Proposals in Government hearings in Canada are heading in the same direction: a new proposal reminiscent of the German “household levy” is aiming at including streaming in the copyright levy system. Such an online levy would close the gap between Internet offers and other means of distributing protected contents.
Ultimately and as long as a proposal for a Copyright Directive does not encompass copyright levies, the responsibility will remain in the hands of EU member states to try to confront developing new technologies, such as streaming services and cloud storage, with copyright levies in order to compensate right holders.
Since 2016, there are ongoing negotiations to amend the EU Directive 2001/29/EC, which is the legal basis for copyright levies. The outcomes of the negotiations, which are intended to expand and modernize this legislation, are until now reflected in a draft under the name “Copyright in the Digital Single Market”. To continue negotiations, one of the two major issues in the discussions that will take place at the beginning of September will be copyright levies with regard to technological innovations. The notion of applying copyright levies to internet platforms that can reproduce protected work will be under consideration.
On this background, 3D printers with the obvious potential to reproduce protected works are also considered as devices subject to copyright levies. The technological developments in 3D printers have repeatedly triggered discussions about the issues of copyright law and more precisely around copyright levies. Czech Republic and France are among the many countries thriving such discussions. Furthermore, a study conducted by the WIPO (World Intellectual Property Organization) in 2015 deals with the questions at stake.
In general, the EU Parliament considers the impact of 3D printers as important, evaluating potential copyright infringements of authors and artists. Therefore, EU Parliament approved the Resolution 2017/2007 (INI) with the intention to regulate innovative products such as 3D printers by copyright law. Moreover, this resolution proposes that similar products, such as 3D printers and normal printers – 2D printers are subject to copyright levies in many countries – should be regulated by the same legal basis.
On March 1, 2018, the new German Law on the alignment of copyright with the current requirements of the Knowledge Society (Gesetz zur Angleichung des Urheberrechts an die aktuellen Erfordernisse der Wissensgesellschaft, UrhWissG) came into force. After careful scrutiny, it became clear that the legal provisions are relevant to the compliance efforts of IT/CE manufacturers: In short, the law broadens the scope of rights to private copying, which is remunerated via copyright levies.
The UrhWissG specifies the acts of copyright use in the field of education and science that are permitted without requiring the consent of authors and other right holders. This leads to the assumption that copyright fees may increase. However, there are no new or higher claims, or planned tariff adjustments other than the ones known by collecting societies.
Nonetheless, the notion of higher levy claims could be adopted in the current negotiations on products by collecting societies. Negotiations are underway in Germany on copyright levies for hard disks, among other things, and the claims might go up to 34 Euro per unit.
1cc will continue to monitor developments.
Since 1 August 2017 Spain’s new copyright levies system is in force. The new tariffs stated in the Royal Decree-Law 12/2017 as well as the product scope subject to copyright levies are transitory; because there are doubts about the adequacy of the levy amounts.
According to the tariffs published, the new copyright system in Spain will collect between six and 10 times more than necessary – market researchers say. Copyright levies are aimed at compensating rightholders for the licence revenues they lose due to permitted private copying.
Market studies ordered by the Ministry of Education, Culture and Sport to determine the appropriate amount for compensation for the years 2012 to 2015, carried out by independent auditors such as Mazars, KPMG and PWC, reveal a total of 51,729,168 euros during those four years. That means that the damage caused by private copying for music, audiovisual works and books, has an average of less than 13,000,000 euros per year.
On the other hand, estimated sales of devices subject to a compensation reflect that the amount that will be collected annually with the new digital copyright levy is over 72 million euros. In other words, the new copyright system in Spain will collect between six and 10 times more than the damage actually caused by private copying today.
If the market researchers’ assumptions are correct, companies should already be preparing, for example by setting up accruals. 1cc will be happy to advise.
As a result of recent court decisions at European and National level, Spain has now reintroduced its copyright levy system as from 1 August 2017. Affected companies are strongly recommended to make appropriate preparations. Although there is no competent authority yet installed to support the administrative process right down to payments, manufacturers and importers of IT and CE equipment should take the new levies into account in their product pricing from now on.
Thus, there is little time in which to implement the administrative process: the recommendation for affected companies is to identify the relevant tariffs per device and storage medium, to list Copyright levies on invoices as of 1 August 2017, to build accruals for future payments and to prepare reportings (as of end of September).
Beyond that, there is the possibility to actively seek further clarification. Until 31 July 2017, representative individuals and organizations which are possibly affected, can participate in a previous public consultation (Consulta Pública previa), which does not provide any specific text or questionnaire to be commented, but is rather general. They can send their input to the competent Ministry via email: Propiedad.firstname.lastname@example.org
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Already one year ago, on October 1, 2015, Austria’s Copyright Act Amendment 2015 entered into force. The major amendment was the introduction of copyright levies on digital storage. Five month later, in March 2016, collecting societies and industry associations finally agreed on tariffs for storage media and devices newly in scope ranging from as little as EUR 0.35 for memory cards up to EUR 5.00 for computers. These tariffs are applicable retroactively from October 1, 2015.
However, there are claims for levies on these products for considerably longer retroactive periods. Therefore negotiations had to be continued for the period up to September 30, 2015. It took negotiating partners another 2 months to find an agreement for periods between 2012 and 2015. Although the rates are quite similar (there is no tariff for memory cards, digital picture frames and smart watches), they are applied retroactively for devices sold as of January 1, 2013, January 1, 2012 for mobile phones respectively.
Moreover, Austrian collecting society Austro-Mechana (AUME) has published a list of “compliant” companies. This so called whitelist is in line with paragraph 1.6 of the contract between collecting societies and industry. Contractors on this list have registered, reported and paid copyright levies in time.
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Copyright Levy Systems are gaining popularity: More and more countries worldwide are implementing these mechanisms in order to ensure adequate remuneration for right holders. This being true for several African countries, here some light is being shed on three countries which just activated or amended their copyright levy system by legislative revisions. The following shall give a brief overview of the characteristics.
Morocco: Exemption for private copying and payment obligations had already been introduced by mid-2014. Now, tariffs as well as reporting and payment regulations have been implemented by a Royal Decree on 17 March 2016. While manufacturers obligations arise when putting the product into circulation, importers are required to declare product information, quantity and origin before the product will be imported to Morocco. The entitled collecting society BMDA (Bureau Maroccain du droit d´auteur) authorized customs to collect copyright levies on their behalf. 1cc received stakeholder information that preparations are ongoing and personnel is being trained in order to enforce the legal provisions at customs.
Mauritius: Mauritius is about to revise thoroughly its Copyright Act of 2014. The law provides for a private copying exemption and requires to pay an “equitable remuneration” to authors. However, it leaves room for interpretation for the remuneration. In addition to many organizational issues, for example, with regard to the representation of authors, many questions should be clarified now by law-amendments. Copyright levies on blank media are expressly included in the considerations of a consultative body.
Ivory Coast: Already since 1996, the Copyright Act allows the private copy and requires manufacturers and importers to pay remuneration. Competent authority BURIDA (Bureau Ivoirien du Droit D’Auteur) is empowered “[…] To collect and distribute all rights to remuneration recognized by the Act […] in particular the remuneration for private copying, equitable remuneration, the remuneration for reprographic reproduction […]”
We will keep you updated on the further developments.