Legal Eye: Europe's copyright controversy

Rumblings from the EU about the controversial copyright levy suggest this thorny issue is being taken seriously. But can a resolution be found that suits everyone, asks lawyer Neville Cordell.

The European Commission is to consult on changes to the copyright levy, a surcharge on devices that hold music or video to compensate artists for potential piracy.

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The EC move is being heralded as the end to a feud between consumer electronics companies and rights owners that dates back to the 1960s. But can a consensus ever be reached when the very principle of the law, and its implementation, is so inconsistent?

At the moment, in 22 out of 27 European member states, manufacturers are forced to pay an extra fee or copyright levy on the sale of products that might allow consumers to copy protected content such as books, music and films.

Each EU state can decide whether or not to impose the levy. If a member state's copyright laws allow for private copying of already-bought material, the Copyright Directive 2001/29 demands that "adequate compensation" be made to the rights holder.

That has generally been understood to mean that countries with private copying exceptions should have copyright levies. But there has been no standard application of levies, either on the rates applied or items levied.

The UK is one of the few countries without a levy. In January 2008, the government published plans for reform of UK copyright law. It proposed the potential introduction of a private right to copy but rejected the notion that this right should be accompanied by an obligation to introduce a levy.

Even where states do impose a levy, the amount varies enormously from country to country and can add as much as 100 per cent to the cost of a camera, printer or recording device.

The growth of convergent technology devices such as the iPhone - which offer internet access, storage and voice functionality - has brought a number of manufacturers such as Nokia, Motorola and Sony Ericsson into the debate.

And it's not difficult to see why they are aggrieved. The levy is controversial in its underlying assumption that all such devices are used for illegal copying.

This grievance, coupled with the huge variations in the implementation of the levy, has prompted a number of consumer electronics companies to sign a letter to EU internal markets commissioner Charlie McCreevy saying they were willing to "explore new ways forward" to resolve their differences with copyright owners and their fee-collecting societies.

McCreevy has made it clear that he has no intention of abandoning the copyright levy. The purpose of the consultation is to lead solutions to remove the discrepancies caused by diverse application of copyright levies in Europe.

EU copyright levy:
Key issues

1. A European levy on certain products is designed to compensate rights owners for private copying.

2. The copyright levy is applied inconsistently in EU countries.

3. Moves are afoot to harmonise the use of the levy.

4. Concerns focus on the impact of copyright levies on manufacturer profit margins and consumer spending.

While this is a big step, it's one that's been much proposed before but never followed through. In 2006, McCreevy tried to harmonise the system and bring all member states under one framework for the charging and collecting of levies.

Although the EC came close to passing new guidelines, it didn't come to fruition because of pressure from French delegates and from lobbying by the music and film industries. So what are the chances of it happening now?

What manufacturers are most concerned about is that charges to compensate copyright owners could cost the technology industry as much as €1.5bn per year, with mobile phone levies alone accounting for €500m annually.

In the UK especially, where compensation is not offered to content owners, it could mean an enormous dent in profit margins at a time when consumers are tightening belts in the face of economic uncertainty.

A blanket requirement applied inconsistently is always liable to cause confusion and resentment. In an age of digital distribution, a new type of flexible framework needs to be found that adequately recompenses artists but which does not impose an unreasonable financial burden on companies such as Apple, Nokia and Sony Ericsson.

Whether this latest round of consultation will square that circle remains to be seen. But what is certain is that the feud is far from over and, if anything, with the advent of new forms of digital convergence, could just be beginning again.

DLA Piper is the world's largest global legal services organisation with more than 3,700 lawyers across 64 offices and 25 countries. Its award-winning technology, media and commercial practice employs 70 partners specialising in IT, telecomms, media, sport and IP law. Experts in convergence between the technology, communications and media sectors, it advises some of the world's leading multinational entertainment, media, sport and technology companies.