Advocate General Hogan delivered an opinion on copyright, private copying exception, and cloud computing services

On September 23, 2021, the Advocate General of the European Court of Justice Gerard Hogan delivered an opinion on the Austro-Mechana case, C-433/20 (“Opinion”; full text of the Opinion available here), a pending referral from Austria filed on September 15, 2020 (full request for the preliminary case accessible here).

In a nutshell, the request at issue raised the following questions: (i) Do the private copying exception and the fair compensation requirement, both mentioned in Art. 5(2)(b) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (“InfoSoc Directive”; full text available here), apply to reproductions carried out using cloud-based recording services? (ii) If so, can rightsholders require providers of this service to impose a levy, even though customers have already paid a levy when purchasing the devices then used to undertake acts of reproduction pursuant to Art. 5(2)(b) of the InfoSoc Directive?

In response to (i), AG Hogan concluded that the wording “reproductions on any medium” in Art. 5(2)(b) of the InfoSoc Directive surely includes reproduction based on cloud computing services provided by a third party. That provision clearly is not restricted to reproductions on physical media or substrate or, for that matter, in analogue or non-digital form. On the contrary, the exception covers, among other things, reproductions in both analogue and digital form and reproductions on a physical substrate or in a somewhat more intangible media/substrate, such as space made available in the cloud by an internet service provider, the scenario in the case at hand. It can be concluded that AG Hogan interpreted that exception in a technology-neutral manner.

In response to (ii), AG Hogan affirmed that the national legislature enjoys a wide margin of discretion as to how this copyright levy is to be collected. When a chain of devices is used to create a private copy, the legislature is free to impose the levy on only one device in the chain. Therefore, there is no obligation to introduce an additional levy for cloud services. Rather, caution must be exercised when introducing new levies, as there is a risk of overcompensating rightsholders. Finally, it should be assumed that where a national levy system is in place, that existing system already provides the required “fair compensation” for rightsholders. In AG Hogan’s own words, “If a Member State has, in fact, elected to provide for a levy system in respect of devices/media, the referring court is in principle entitled to assume that this in itself constitutes ‘fair compensation’ in the sense of Article 5(2)(b) of Directive 2001/29, unless the rightholder (or their representative) can clearly demonstrate that such payment would in the circumstances of the case at hand be inadequate” (from the Opinion conclusions).

The case at issue originated with Austrian collecting society Austro-Mechana, which filed an action against a German cloud storage provider. According to Austro-Mechana, the provision of storage space in the cloud from Germany to Austria constitutes an act of distribution of storage media under Austrian law—and thus is subject to the levy provided by Austrian law. Even if this were not the case, a levy for cloud storage would still have to be paid based on the InfoSoc Directive.

The court of first instance (i.e., the Commercial Court of Vienna) rejected these claims with reference to the Austrian legal situation and the legislative history of the relevant provision. The Vienna court of appeals, however, brought the case before the European Court of Justice.

In the coming months the European Court of Justice will deliver its judgment, which will be binding on national courts. Do keep in mind that opinions from the AG are not binding on the Court of Justice—rather, such an opinion is purely a recommendation.

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