On November 29, the Court of Justice of the European Union issued a new ruling in response to a preliminary ruling on intellectual property, which may raise questions when reading it due to the way in which the national court raised the issue, but which we will attempt to clarify in this post.
The preliminary ruling was requested in May 2016 by the Tribunale di Torino, in a legal dispute between the English company VCAST Limited and Italian society RTI Inc..
VCAST's activity consisted (and we say “consisted” because it has been suspended) of providing its customers with a television broadcast video recording system, including Italian broadcasts by RTI, without the consent of the copyright holders. Using this system, users could record television programs that interested them, either specific broadcasts or entire time slots. The VCAST system recorded the selected broadcast in the cloud storage space chosen by the user. It is important to note three points here:
- The storage space was provided by another cloud provider, not by VCAST., which did not actually offer a storage service. This seems to indicate that VCAST did not store the content of the broadcasts on its servers at any time.
- RTI emissions which VCAST recorded through its system and at the request of its users were freely accessible, on an open broadcast basis, and VCAST captured the signals through its own antennas.
- The VCAST service was not limited to Italian territory.: its users did not need to be within RTI's broadcast territory to access the service.
VCAST presented three possible models for monetizing this service: a free formula financed by advertising, and two premium formulas at two levels, paid for by the user.
VCAST sued RTI before the Court of Turin. (we assume that after RTI made an out-of-court request) with the intention of obtaining a ruling declaring that their activity was lawful. As a curious note, we should mention that our Intellectual Property Law in Spain does not expressly contemplate this type of action (known as negatory action) but it does, for example, the Patent Law in industrial property law, in Article 121. VCAST's main argument was that its actions were protected by the private copying limit provided for in Article 5.2 b) of the Directive 2001/29 on the harmonization of certain aspects of copyright and related rights in the information society (duly transposed into Italian national law).
RTI filed a counterclaim against VCAST's lawsuit. and obtained precautionary measures whereby the Tribunale di Torino prohibited VCAST from continuing its activity. The Tribunale, with doubts about the application of the limit in Article 5.2 b) of the Directive, referred a question on this matter to the Court of Justice of the European Union for a preliminary ruling.
Let's see what Article 5.2 b) of Directive 2001/29 says:
“Member States may provide for exceptions or limitations to the reproduction right referred to in Article 2 in the following cases:
b) in relation to reproductions on any medium made by a natural person for private use and without direct or indirect commercial purposes, provided that the rightholders receive equitable compensation, taking into account whether or not the technological measures referred to in Article 6 apply to the work or performance in question.
First of all, there are several issues that, upon reading the judgment and the Advocate General's conclusions for the first time, stand out when analyzing the argument put forward by VCAST, but which can be explained.
From the preliminary ruling requested, it appears that VCAST is assuming that it reproduces the recorded works, when this is not the case (since VCAST does not store the content itself, but rather a third party does so.The real argument of VCAST (put forward, in our opinion, with little clarity by the Tribunale di Torino in the preliminary ruling) is that the reproduction carried out by its users is covered by the private copying limit.
In his conclusions, the Advocate General understands VCAST's argument regarding the private copying limit, as a third-party service provider, and admits its applicability, in abstract terms, to cloud storage services (paragraphs 26 and 28):
“The fact that the intervention of a third party in the reproduction may be carried out in return for remuneration does not invalidate this statement, since the requirement of non-commercial purposes laid down in Article 5(2)(b) of Directive 2001/29 refers not to the possible involvement of a third party, but to the use of the copy by the beneficiary of the exception [...]
Therefore, in my opinion, there is nothing to suggest that Article 5(2)(b) of Directive 2001/29 precludes reproduction carried out under the exception provided for in that article from being carried out in cloud storage space.
The Advocate General reiterates the need, previously confirmed by the Court of Justice in ACI Adam and in Copydan Båndkopi, among other rulings, that the origin of the work reproduced privately must be lawful for the limitation to be applicable. This means that The end user may not reproduce without the consent of the owner, invoking the right to private copying, when their access to the work comes from an illegal source.. According to the Advocate General, it is not necessary, “that this access necessarily involves the purchase of a physical medium containing the work. It may take place in the context of communicating the work to the public.”. And here's the crux of the matter.
The key question, therefore, is whether VCAST was unlawfully communicating RTI's works to the public., on the basis that it was unauthorized; in order to assess whether the subsequent reproduction carried out by its users falls within the scope of private copying. And, in our opinion, this should have been the preliminary ruling, so that the Court of Justice could have addressed the issue more clearly.
This is where, once again, the famous figure of the “new audience” in the analysis of public communication, as that audience other than the one intended by the author for the original communication of the work (SGAE o ITV Broadcasting, among many other judgments). As the Advocate General explains in paragraph 45 of his Opinion, “Every Internet user worldwide could request and receive, in their cloud storage space, a replay of a television broadcast that they would not have had access to without the VCAST service.”. To this we must add that the technical means used by VCAST to publicly communicate the works was different from that initially used by RTI, which is understood by the Court of Justice as a clear factor in assessing the existence of public communication (despite the apparent relaxation of this criterion in the recent judgment AKM).
Thus, the Advocate General proposed that the Court of Justice should resolve the preliminary ruling by confirming that An activity such as that of VCAST cannot be covered by the private copying limit in Article 5.2(b) of Directive 2001/29, given that VCAST made RTI's content available without consent and, therefore, the reproduction of that content by users was not carried out from a lawful source..
The Court of Justice has followed the recommendations of the Advocate General., thereby resolving the preliminary question raised by the Tribunale di Torino, and expressly stating that:
- “The aforementioned transmissions therefore constitute communications to the public that are different [as planned by the owner], and each of them must therefore receive authorization from the holders of the rights in question.” (paragraph 49).
- “Therefore, such a remote recording service cannot benefit from Article 5(2)(b) of Directive 2001/29.” (paragraph 52).
You can read the full ruling here.
Y here the conclusions of the Advocate General.
