European CSPs must not be subjected to private copying levies, warns CIF

In a draft report on private copying levies for the European Parliament’s Legal Affairs Committee, French MEP Francoise Castex said that copying within the cloud environment should be subject to levies. In the report it states, “Private copies of protected works made using cloud computing technology may have the same purpose of those made using traditional and/or digital recording media and materials.” The report goes on to say that these copies should be taken into account by the private copying compensation mechanisms.

Echoing views from industry body Open Forum Europe, CIF has warned against such a levy on the grounds that it would damage the European cloud industry, and by extension, limit the projected economic benefits of cloud that are set to be enjoyed by the continent over the coming decade.

Andy Burton, CIF’s Founder, said: “Cloud computing has proven, and will continue to prove, to be an important catalyst for economic growth both here in the UK and across Europe: the European Commission estimates that cloud computing will add €1,000 billion to EU GDP by 2020. But subjecting cloud services to additional levies will add an additional and, in our view, unnecessary layer of bureaucracy that will in effect dampen its transformative effects. These levies will see increased costs for end users, making it more difficult for European CSPs to compete with their American counterparts.”
Conor Ward, partner at Hogan Lovells and Chair of CILF, stated: “Castex’ proposals seem to work from the premise that all content hosted in the cloud has been produced for commercial distribution. In truth, the vast majority of content is used for professional or personal purposes, and importantly, not traditionally protected by copyright. This frankly out-dated, broad-brush approach would, for example, see a levy improperly imposed on emails and personal photographs.

“It is also difficult to see how a levy would work in practice. Whilst copyright levies currently apply in some Member States, they relate to tangible storage media and devices sold in the relevant countries. How would a levy apply where cloud storage is spread across jurisdictions including those, like the UK and Ireland that currently do apply levies?

Furthermore, legitimate users are increasingly permitted by the licences granted to them, to store copyrighted material on multiple devices and in cloud storage so there is a real risk that rightsholders will be doubly compensated. In this context, private copying levies are a sledgehammer to crack a possible nut,” he continued.

Julian Heathcote Hobbins, General Counsel at the Federation Against Software Theft (FAST) and member of CILF, added: “From memory, the computer software industry, even from a rights holders’ perspective has never been in favour of the concept of ‘blank tape’ levies and I fail to see why that view should change especially as business models continue to evolve at a pace. Levies are too broad an instrument limiting rights holder flexibility and being an analogue measure in an era of products, whereas a cloud services environment enables more accurate allocations through commercial agreements. Copyright law will continue to adapt for this technology driven age. Levies on cloud are certainly not the place to start.”