What's this all about? In short, Opus, a German company, sold blank recording media via, inter alia, (i) Dutch-language websites and (ii) non-Dutch websites aimed at the Netherlands. Its general terms of business stated that orders were placed with Opus in Germany, that its prices did not include any Levy, Auvibel, Thuiskopie, GEMA or other charges. All products purchased were dispatched by order of the customer and in the customer's name, so that the customer and not Opus was the importer. Unsurprisingly Opus's prices were generally cheaper than others since they did not include any remuneration levy.
Dutch copyright society Thuiskopie sued Opus and two local directors, hoping to get these cheap, unlevied recording media wiped out and asking for interim relief. The trial judge and, on appeal, the Gerechtshof, would have nothing of it and dismissed their application, whereupon Thuiskopie brought an appeal in cassation to the Hoge Raad der Nederlanden. That court considered that, under Opus's contract, the delivery took place upon the transfer of possession (i.e. in Germany). Since Dutch legislation states that the importer is responsible for paying the fair compensation, the obligation in this case is placed on the Dutch customer, not on Opus. However, staying the appeal, the Hoge Raad wanted to know whether Directive 2001/29 (on the Information Society) requires the term ‘importer’ used in national legislation to be interpreted in a manner contrary to its normal meaning and asked:
‘(1) Does [Directive 2001/29], in particular Article 5(2)(b) and (5) thereof, provide any assistance in determining who should be regarded under national law as owing the “fair compensation” referred to in Article 5(2)(b)? If so, what assistance does it provide?This morning, rolling the two questions into a single answer, the Advocate General advised:
(2) In a case of distance selling in which the buyer is established in a different Member State to that of the seller, does Article 5(5) of [Directive 2001/29] require national law to be interpreted so broadly that a person owing the “fair compensation” referred to in Article 5(2)(b) of the directive who is acting on a commercial basis owes such compensation in at least one of the Member States involved in the distance selling?’
"Articles 5(2)(b) and 5(5) of Directive 2001/29 ... do not impose on the Member States a single solution as to how the payment of fair compensation to the rightholders is ensured in the case where the Member State has availed itself of the option to allow for private copying of copyright protected works and other protected subject-matter. These provisions do exclude any interpretation of the relevant national legislation that does not ensure effective payment of such fair compensation by a distant seller of media for reproducing such works or other protected subject-matter that targets customers in that Member State unless the seller has already paid comparable compensation in the Member State where the transaction takes place".It's not clear to the IPKat where the ruling, if followed by the Court of Justice, would leave the litigants -- or indeed the Dutch government. What is however clear is that there is an apparent lack of congruence between the law of contract and the obligation to require the payment of fair compensation. Given that the Opuses of this world have the potential to sell recordable media from any one of the EU Member States to purchasers in another EU Member State, a single legislated solution would appear to offer a better chance of creating and preserving a level playing field within the single European market than would any country-by-country patchwork of solutions.
Merpel adds, I'd hoped to discover some deep and meaningful truths about the "three step test", but there's not much here -- other than to say that it must be observed and that (at para.62) "the three-step test does not, in my view, require that fair compensation is paid by all companies engaged in cross-border distance selling of reproduction media between the Member States, but merely by companies that are targeting the Member State’s consumers in question" -- i.e. who pays, not how or how much.