UK High Court holds government's introduction of a private copying exception was unlawful
The case arose because the UK government decided to use its discretion under the InfoSoc Directive to introduce a new private copying exception into UK copyright law. Under Article 5 (2)(b) of the InfoSoc Directive, Member States may provide for an exception to copyright infringement for private, non-commercial use "on condition that right holders receive fair compensation".
The UK private copying exception, which came into force in October 2014, allows individuals in the UK to make copies of copyright works they have legally acquired, for their own personal, non-commercial use, e.g. to copy a legally bought CD onto a pc. The new laws do not allow the personal copies to be shared with others. However, unlike other EU jurisdictions, there is no accompanying levy structure to compensate rights holders.
The Secretary of State's justification for introducing the exception without a compensation scheme was that any private copying is already and will be factored into the initial price of the work (so-called "pricing in") and therefore there is no harm to rights holders. Right holders are also given a right to use "restrictive measures" (such as DRM) to prevent the copying of their works for private use.
BASCA challenged the Secretary of State's reliance on the "pricing-in" principle and the assumption that there would be no harm to rights holders by introducing the exception and challenged the inferences drawn from the evidence collected. BASCA also argued that the Secretary of State predetermined the outcome of the public consultation. Green J decided most of the substantive issues in favour of the Secretary of State however he did conclude that the Secretary of State's conclusion that no (or minimal) harm would be caused to right holders was not justified based on the evidence and therefore the decision to introduce the exception was unlawful. Although Green J accepted that the Secretary of State's inferences that not every consumer that engaged in private copying would have bought a further copy if they could not make their own copy and secondly that pricing-in is a rational and normal pricing strategy this was not sufficient to conclude that no harm would be caused to rights holders.
Green J said his conclusion "does not necessarily result in that section being struck down". The Secretary of State may re-investigate to find evidence to show that there is no or minimal harm to right holders, in which case the decision will be justified or, if there is no such evidence, the Secretary of State could decide to repeal the new exception or introduce a compensation scheme. Green J also considered the possibility that questions should be referred to the Court of Justice of the European Union. Both parties will now make submissions as to next steps. We will keep readers updated on these developments as the case progresses.