Journal of Intellectual Property Law & Practice (2015) doi: 10.1093/jiplp/jpv128, first published online: August 5, 2015
Legal context
A private copying exception is provided under Article 81(b) of the Author's Right and Neighbouring Rights Code (Decree-Law 63/85, of 14 March, last amended by Law 32/2015, of 24 April). In return, Article 82 establishes a levy compensation system, which is further regulated by a separate bill.
The levy has been in place since 1998 in accordance with Law 62/98, of 1 September, with the amendments introduced by Law 50/2004, of 24 August. It applied to blank media and analogue equipment whose sole or primary purpose was the fixation and reproduction of works. Despite successive attempts to update the law in accordance with social, technological and economic developments, no amendment to the bill had been approved since 2004.
To become law, a decree must be approved by the AR and promulgated by the President of the Republic (PR). However, the PR can opt to exercise a right of veto and seek reconsideration of the Act. In that situation, the AR can confirm its vote by an absolute majority of the Members of Parliament (MPs) in effective office, in which case the PR must enact the legislative Act.
Facts
In August 2014, the Portuguese Government approved a proposal to amend Portugal's Private Copying Law. Following several controversies, including citizens' petitions and disagreements between the two government parties, the final text of the law was approved by the AR in February 2015, with the supporting votes of the coalition parties (with the exception of two MPs from the junior coalition partner, who voted against the proposal).
On 31 March, the PR sent the decree back to the AR, refusing to promulgate it. The reasoning behind the refusal was as follows: (i) there was a need to achieve an adequate balance between authors' rights to fair compensation and consumers' rights to access digital economy goods and services in fair market conditions; (ii) the ongoing debate at European Union (EU) level and the need for a common regulation to avoid market imbalances and disparities, which, in a globalized economy, could result in an increased acquisition of goods and services abroad to the detriment of all the national stakeholders; (iii) account had to be taken of the recent decisions of the Court of Justice of the European Union (CJEU); (iv) as argued by the Portuguese Association for the Defence of the Consumer, which lobbied against the bill, the bill was considered obsolete, ineffective and disproportionate, failing to achieve a clear distinction between legitimate and illegal copies and receiving insufficient debate and finally (v) account had to be taken of the rectitude and efficiency of the law, which imposes a levy independently of the use that is made of the equipment by the consumers and the potential effects of such a decision on the development of digital economy, an area in which Portugal lags behind other EU countries.
Despite the veto, the AR confirmed its vote by an absolute majority of MPs. As a result, the PR was forced to promulgate the law, but not without restating his disagreement in the accompanying message sent to the AR.
Analysis
Law 49/2015, of 5 June, came into force on 5 July 2015. It updates the list of products that are levied. In particular, devices with capability to store digital copies, including MP3 players, USB sticks, memory cards and internal and external hard drives (even when part of a mobile phone or a set-top box) will start to be levied.
The storage capacity and primary function of the equipment were taken into account in determining the levies, which range from €0.5 to €20.00. The table establishing the levied equipment and the value of the levies will be reviewed every two years.
The responsibility for payment lies with the first acquirer of a device. Responsibility for the collection and delivery lies with the manufacturers and importers. If the annual collected levies are above €15 million, the additional collected value shall be allocated to a cultural development fund managed by the state. This adds to the obligation to which AGECOP (the collective society for the management of private copy) is subject to of retaining 20% of the collected amounts for investment in cultural activities and in the promotion of public awareness and research of copyright-related matters.
After accounting for costs of collection and distribution (up to 20%), AGECOP will distribute the residual sums as follows: in remunerations arising from photocopies, 50% for collecting societies representing authors and 50% for collecting societies representing publishers; in remuneration arising from supports typically used for the reproduction of audio and audiovisual works, 40% for collecting societies representing authors, 30% for collecting societies representing artists and performers and 30% for collecting societies representing music and video producers. No reasoning was presented to justify the different percentages attributed to authors on the one side and artists, performers and music and video producers on the other.
The bill also imposes higher standards of governance, financial management, transparency and reporting obligations to AGECOP and its associated Collective Management Organizations (CMOs). Among these obligations is the need for AGECOP to include in its bylaws the criteria for the distribution of the equitable remuneration between the members of its associates, including the methods of distribution and payment to beneficiaries that are not registered in the CMOs. These criteria must take into account, inter alia, studies conducted by the CMOs in respect of the nature of the works reproduced as well as the private copying behaviour of the Portuguese population. These studies, the distributed incomes and the criteria used for the distribution must be published annually.
Finally, the law reforms the list of exemptions from private copying remuneration. In addition to equipment used to support people with a disability and to equipment acquired by audiovisual communication bodies or by producers of phonograms or videograms for their own productions, the bill exempts equipment and media for export as well as equipment and media acquired by natural or legal persons in the following cases: where their main activity is the protection of movable cultural heritage; professional use; acts intended exclusively for clinical use, public missions of defence, justice, internal security and scientific research, as well as the guarantee of accessibility for disabled people. The reference to legal persons is disturbing, as it seems to widen the scope of the private copying exception in an inadmissible way taking into account the wording of Article 5(2)(b) of the InfoSoc Directive.
Independently of theoretical discussions on the need to compensate authors as a result of private copying, the fact is that, if a compensation scheme is established, it does not make sense to ignore devices that are used widely for such a purpose. In a law that aims to be up to date, the non-inclusion of cloud services seems to be the most striking omission. Still, if observed by the legislative power, the obligation to review the levies' table of charges every two years will avoid similar omissions.
Unfortunately, the approved decree does not amend the Author's Right and Neighbouring Rights Code. Accordingly the opportunity to clarify that the private copy must result from a lawful copy (see CJEU, ACI Adam, C-435/12, EU:C:2014:254) was missed. This would be of particular importance as courts in Portugal have interpreted the private copying clause in an extensive manner (see João Pedro Quintais, ‘Dr Strangelaw, or how Portugal learned to stop worrying and love P2P’, JIPLP (2013) 8 (3)).
Further, the timing of the law is open to criticism. On the one hand, it comes too late, as equipment used for private copying did not generate fair compensation for authors for more than ten years. Arguably, the increase in the use of licensed copies via streaming services and e-markets has reduced private copying activities and it is therefore up for discussion if the prejudice to the right holder is nowadays more than minimal. In addition, with the pending revision of the EU copyright framework, it is possible that this issue will need to be reopened.
Practical significance
After successive attempts and more than a decade since the previous amendment to the private copying law, the Portuguese legislation finally takes into account those devices that are more commonly used for private copying. This will contribute to reverse the decline in the collection and distribution of private copying compensation.
Additionally, the transparency of the system will increase as a result of the obligations imposed to AGECOP and its associates. In particular, the studies on private copying may bring to light new and thought-provoking information.
Finally, it will be interesting to analyse a year from now whether the prices of the levied equipment suffered any increase, considering that this was one of the major arguments raised by consumer associations and general public opposing the revision of the law.
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