The Court of Justice of the European Union has stated that the digital canon operating in Spain and applied to all digital playback equipment as compensation to creators for private copying is not in line with EU legislation.
The Court in Luxembourg ruled that the application of ‘private copying levy’ to play media purchased by companies and professionals for purposes other than private copying is not in conformity with EU law. The Court outlawed any digital canon being imposed indiscriminately on all equipment and materials for reproduction.
Howeber, it left it up to the Provincial Court in Barcelona to determine whether the Spanish canon was being imposed indiscriminately.
The decision came in response to an action brought by the Sociedad General de Autores (SGAE) against the company PADAWAN. The SGAE were demanding a lump sum compensation payment of €16,759.25 for storage devices marketed by PADAWAN between September 2002 and September 2004.
Spanish law allows the reproduction for private use, without authorization from the author, of works already published. However, it also provides for a lump sum compensation for rights holders, via an indiscriminate levy (the digital canon) on equipment, devices and digital reproduction materials. Manufacturers, importers or distributors have to pay this fee to the management entities of intellectual property rights.
The case ended up before the Audiencia Provincial de Barcelona, which then asked the Court of Justice of the EU if the Spanish tax system complies with regulations. The Court noted that the answer depends upon the SGAE’s right to claim the compensation that would apply in all storage devices marketed by PADAWAN or only on those presumably intended for private copying.