I. Overview of the copyright levy system

1. Origin

Since the birth of the copyright system, each technological advance will push the system to make new choices, and the emergence and evolution of the system has been related to the technological advancement in copying.

The copyright levy system first appeared in 1965 in German Copyright Law, originating from the cases of Grundig Reporter and Personalausweise.

In Grundig Reporter case in 1955, German Copyright Administration held that “taping” did not qualify as “fair use,” and required the recording equipment manufacturers to pay a certain amount of levy. However, the two sides failed to reach an agreement, and the Administration filed a copyright infringement action against the manufacturers, seeking injunction against their recording equipments and damages. The German Supreme Court opined that the time lag was a special defect in law and copyright law was no exception, that if the old law was directly applied because the copyright law failed to keep pace with technological advancement, limitations of law would be highlighted. Therefore, in this case, the legal interpretation should favor the right holders, even if the copying was non-commercial, the copyright holders should also get certain remuneration and the court granted the injunction against the sale of the taping equipments. Subsequently, in Personalausweise case in 1964, the Copyright Administration asked for a court order obliging manufacturers of tape recording equipment, upon delivery of such recording equipment to wholesalers or retailers, to request from the latter that they communicate the identity of the purchasers to the administration. The court held that home taping was a copyright infringing act, but the obligation to provide identify of purchasers undoubtedly harmed their personal rights. On the basis of these two cases, the Copyright Law revised in German in 1965 introduced the copyright levy system and put in place the equipment levy for visual or sound records.

2. Development

With the development of technology, the digital technology in particular, duplicating has been increasingly simple and speedy, and private duplicating has had a growing impact on the interests of copyright holders. Germany made changes to the copyright levy system in the copyright law successively in 1985 and 2007.

First, as recording equipment prices continued to fall in 1985, duplicating equipment became popular and the previously set copyright levies were unable to compensate losses suffered by copyright holders. Therefore, German legislators, under pressure, revised the Copyright Law and imposed duplicating equipment levies on videos and media.

Second, with the development of digital technology and great popularity of duplicating digital media and equipment, duplicating has been more simple and diverse. In order to adapt to changes of private duplicating in the digital network environment, the 2003 revision of Copyright Law further expanded the levy onto “appliances and storage media capable of carrying out copying,” almost covering all products with duplicating functionality, including highly controversial mobile phones and computers.

II. Legislation of EU and its member states

1. Directive No. 2001/29/EC

The copyright levy system has the most obvious advantage: on the one hand, the user is entitled to use of works legally and conveniently; on the other hand, manufacturers and sellers of duplicating equipment and media are free of copyright infringement allegations from copyright holders, easing the conflict of interests between copyright holders and consumers and facilitating extensive dissemination and use of works under the Copyright Law. For this reason, the system has gained recognition in many countries, and the EU has put in place such a system in the EU Directive in 2001. The EU held that “in certain cases of exceptions or limitations, right holders should receive fair and adequately remuneration for the use made of their protected works or other subject matters.” In line with the Directive, the majority of the EU member states have established legislation copyright levy systems. However, due to different national circumstances, the member states have different requirements, in particular in areas of levy subjects and standards. This article will elaborate further on this topic.

2. Overview of rules of EU member states

(1) Legal bases: a. Directive No. 2001/29/EC (collecting rules on private copying of audio and video products); b. national legislation from member states.

(2) In the legislation of each member state there are three parties, namely: a. copyright holders that receive remuneration under the system, including authors of works and holders of neighboring rights; b. obligors that are obliged to pay the levy, generally referring to importers and manufacturers. But some states have got special provisions in this regard, for example, in Italy, dealers are obliged to pay the levy if importers or manufacturers fail to fulfill their obligations; and c. the collecting and distributing organizations, each member state has established corresponding copyright organizations to collect levies and distribute the same to each copyright holder, such as SIAE in Italy.

(3) Copying levies generally apply to media or equipment capable of duplicating or both in the member states, such as CD/DVD, memory cards, MP3, and etc.

However, in the digital era, it has been a great controversy as to the levy on emerging digital products, such as mobile phones and tablet PCs. Member states differ greatly in this regard. For example, Italy clearly imposes levies on mobile phones, personal computers and tablet computers, while Greece is silent in this regard, only providing removal of 2% levy on personal computers, therefore there is room for debate as to whether levies will be imposed on mobile phones. Generally speaking, in the EU member states which have put in place the copyright levy systems, four countries, namely Germany, France, Italy and the Czech Republic, have claimed to impose levies on personal computers. Moreover, in Germany, France and Italy, tablet computers are levied as personal computers: the levy fees are 12.15 euros in Germany, 8 euros in France (with memory capacity over 8GB to 12GB) and 1.9 euros in Italy.

(4) Levy standard

According to national legislation, levy standards differ from state to state, some based on capacity of storage media and equipment (such as Belgium), others on carriers (such as the Netherlands) or on equipment (such as France). The following will take levy on mobile phones as an example.

III. Brief introduction of levies on mobile phones as an example

At present, strong opposition remains as to imposition of copyright levies on mobile phones, especially smart phones. However, nine member states within the EU expressly impose copyright levies on mobile phones, namely Germany, France, Spain, Belgium, Croatia, Italy, Hungary, Lithuania and Romania, but they have different provisions over types of mobile phones and levy standards.

1. Types of mobile phones required to pay levies

(1) Countries that levy on all types of mobile phones: Germany and Hungary.

(2) By functionality, six countries levy mobile phones with audio or video functionality.

(3) Special provisions on memory capacity: Romania only levies mobile phones with memory capacity higher than 64MB.

2. Difference in fees

(1) Uniform fees

Four countries have uniform fees, 0.9 euro for each phone in Italy, 1.1 euros in Spain, 1.37 euros in Croatia, and 0.5% of the import or base prices of each phone in Romania.

(2) Levy by memory capacity

Levy by memory capacity has been adopted by the majority of countries, including Germany, France, Belgium, Hungary, Lithuania, but the difference lies in specific standards which can be categorized into two types as follows:

a. By memory capacity alone - Take France, Belgium, Hungary, Lithuania and France, for example:

Capacity Levy (Euro) 
≤128MB 0.09 
>128MB 0.35 
>512MB 0.7 
>1GB 1.4 
>2GB 3.5 
>5GB 5.6 
>8GB 7 
>10GB 8 
>20GB 10 
>40GB 15 
>80GB 20 
>120GB 25 
>160GB 35 
>250GB 45 
>400GB 50 

b. Mobile phones with a touch screen - Germany
(a) Phones with a touch screen: Storage capacity is less than 8G: 16 Euros; storage capacity greater than or equal to 8G: 36 Euros.
(b) Phones without a touch screen: 12 Euros.

2. Special provisions on memory cards

Some countries provide that if a mobile phone is sold with a memory card bundled, the memory card is also applicable for levies which are generally divided into the following categories:

(1) Separate levy - Italy

Italian law provides that if a mobile phone has a built-in memory card, then the memory card applies to a separate copying levy as follows:
Capacity Levy (Euro) 
> 32GB to < 5GB 0.05 per GB 
≥5GB 0.03 per GB 
Note: The maximum levy for each memory card cannot exceed 3 euro in the first and second year and 5 euro in the third year. 

(2) Bundled levy - France

In France, if a mobile phone is sold together with a memory card, then the levy basis, storage capacity, will be the combined capacity of the mobile phone and the memory card, applicable for that of the mobile phones. For example: a. If the mobile phone and the memory card are sold separately: Phone memory: 1GB, Memory Card: 5GB, the levy: 0.7 euro (for mobile phone 1GB) + 0.072 (for memory card 5GB) * 5 = 10.6 euros. b. If the mobile phone and memory card are sold as a package: Phone memory: 1GB, Memory Card: 5GB, the levy: 5.6 euros (for mobile phone with 7GB).

IV. Conclusion

The copyright levy system, as a product of technological advancement and a last-resort compromise, aims to give copyright holders remuneration for reproduction going beyond reasonable limits, so that private duplicating may be restricted to a reasonable limit after payment of a fee, ensuring reasonableness of the private duplicating regime. This system has effectively balanced the interests of many parties: copyright holders get remuneration, the public may get satisfaction from works and manufacturers can also be exempted from infringement claims from rights holders. In practice, the system has been running stably in the majority of European countries for more than 20 years, despite current challenges of new issues arising from the digital technological advancement. However, as an effective economic method, the levy system will tend to run extensively as digital private duplicating has done increasing harm to copyright holders.

(Translated by Wang Hongjun)