Copyright levies are in essence a tax on producers or sellers of devices used by consumers to transfer media from one medium (such as a CD) to another (such as an MP3 player), imposed by those countries such as Netherlands, Finland and others where consumers are legally entitled to transfer media between devices for their private use. Copyright holders are then compensated with the proceeds of the levy for the “infringement” of their copyright.

The Copyright Directive 2001/29/EC allows EU Member States to introduce a levy for this transfer. In the UK, Germany and some other Member States there is no legal right to transfer media between devices, and no levy.

When envisaged, the copyright levy is charged to producers or sellers of devices, who will then pass on the cost of the levy to the consumer through the overall sale price, as it is impossible to identify and collect the levy from the consumers themselves.

The key issue

The case that came before the Court of Justice concerned a distance selling situation, where the consumer is based in a country imposing a levy (here, the Netherlands) and the seller of the device is based in a country not imposing a levy (here, Germany).

The Dutch levy authority argued that it was the German seller who should pay the Dutch levy. The seller, however, refused to pay up, arguing that it was the responsibility of the Dutch consumer to pay, as it was in his or her name (under the sale contract and shipping order) that the goods were imported from Germany into the Netherlands (i.e. the consumer was the “importer”).

Referral to the Court of Justice of the European Union

The Dutch Supreme Court therefore put the following questions to the Court of Justice (re-phrased for succinctness):

1. Who pays the copyright levy? The Court confirmed the existing principle that consumers should ultimately pay the levy but, due to the complications of targeting them directly, it should be paid by manufacturers or suppliers of the copying devices – who can then pass on the cost.

2. In a distance selling scenario, how must  the Copyright Directive to be interpreted? Should it still be collected from a supplier even if he is based in a Member State without a levy?

The Court responded that Member States that have a levy must “guarantee” the recovery of the levy for copyright holders. It is therefore for the courts of the Member State to seek an interpretation of national law that enables it to obtain the levy from the importing supplier. It is of no bearing that they are established in another Member State.


It is thought that this case may be an inconvenience for those Member States and their courts that have introduced a copyright levy. Whilst the Court stated that Member States must do all that they can to enforce levies, it has not stated how they should do that where (as here) the person whom it wishes to enforce the levy against is based in a Member State where no levy exists – and over which its national courts will have no jurisdiction.

Further, the statement that Member States must “guarantee” copyright holders compensation from the levy is a strong one. Normally, one might seek payment of guaranteed sums from the guarantor if the principal is unwilling or unable to pay.

What’s next?

Tthe Commission stated its desire to see greater harmonisation amongst Member States as to levies, with comprehensive legislation at EU level by 2012. This most likely means harmonising the levy systems of those Member States that choose to impose a levy rather than imposing a levy system on all Member States, but rather.

As far as the UK is concerned, Professor Hargreaves advised the UK government against the introduction of a levy in the UK. It is anticipated that manufacturers or importers supplying to the UK consumer have less to fear from this judgment and the EU system of levies than those in other jurisdictions.