The CJEU confirmed the application of the Private Copying Exception to the Cloud
The Court of Justice of the European Union has recently pronounced itself, on the application of the private copying exception with respect to unauthorised reproductions of copyright protected works which are stored through cloud computing and storage services. In the Case C-433/20, the Viennese Higher Regional Court referred a preliminary ruling to the Court of Justice, relating to a dispute that arose between a copyright collecting society and a provider of cloud storage services.
It was primarily clarified by the Court of Justice that the act of merely saving copies of works onto the cloud constitutes a reproduction of the copyright protected work, which is an exclusive right of the copyright owner.
Concept of ‘any medium’
The private copying exception, stipulated in Article 5(2)(b) of Directive 2001/29 (the ‘Directive’) refers to ‘reproductions on any medium’ madeby natural persons. The CJEU confirmed the importance of technological neutrality, to ensure the flexible application of the Directive. The fact that reproductions are stored by the user on a provider’s server on the cloud, rather than on a physical medium owned by that same user, is immaterial for the purposes of this exception’s application. Therefore, the Court of Justice held that the private copying exception applies to copies of works on a server in storage space made available to a user by the provider of a cloud computing service.
Payment of ‘fair compensation’
The CJEU also had to assess whether Member State legislation could, in the implementation of this private copying exception, not require the provider of storage on the cloud to pay rightholders ‘fair compensation’ for the unauthorised saving made by the provider’s users.
The private copying exception is subject to the condition that rightholders receive fair compensation. The compensation is fair if it reflects the harm caused to the rightholder as a consequence of the unauthorised reproduction of the protected work.
The Directive does not establish a fair compensation system but binds Member States to implement such a compensation system. Thus, it is in the Member States’ discretion to determine who must pay the compensation, the amount of compensation due, and how the payment is to be effected.
The Court of Justice provided additional guidance, admitting that although in principle, it should be the natural person making the reproduction for private use that should pay this compensation to the rightholder, in practice, this may be exceedingly difficult to enforce. It suggested that Member States may establish a private copying levy against entities who actually have the digital reproduction equipment, devices and media, and make them available to private users or provide these private users copying services. This private copying levy would ultimately be covered in the service fees paid by the private users to the providers.
With this in view, the CJEU ruled that the national implementation of the private copying exception need not subject the providers of cloud storage services to the payment of fair compensation, as long this payment is made in other some way.
Thus, this ruling has steered the focus towards national legislators, whose duty it now appears is to implement a ‘fair compensation system’ for rightholders who suffer harm through the private use and reproduction of their works on the cloud or on any other medium.
 Austro-Mechana Gesellschaft zur Wahrnehmung mechanisch-musikalischer Urheberrechte Gesellschaft mbH v Strato AG