In principle, the author of a work protected by copyright has an exclusive right to reproduce or copy it. In Austria, however, anyone has the right to make copies of such works for private use. Originally, the legislator had scenarios in mind where people recorded music from the radio with their stereo system and a blank tape cassette, or recorded films via a video recorder.

Collecting societies collect a levy as compensation for this private copying right. Formerly called the blank tape levy, this levy has since been extended to other storage media by the courts and by legislative amendments due to changes of user behaviour. It is therefore now referred to as the storage media levy. This also covers computer hard disks and storage media on mobile devices such as cell phones. After all, the majority of private copies are now made digitally.

The levy applies to storage media of any kind that is distributed commercially in Austria. It follows from this that only the sale of physical data carriers should be subject to the levy. Accordingly, cloud storage would not be subject to a levy. Also in practice, collecting societies have not claimed a levy on virtual server storage so far and have not published a tariff for it.

CJEU Case C-433/20 - Austro-Mechana

The collecting society Austro-Mechana now has brought a test case in this regard and filed an action against a German cloud storage provider. According to Austro-Mechana, the provision of storage space in the cloud from Germany to Austria also constitutes a "distribution of storage media in Austria" and is therefore subject to the levy. And even if this were not the case, a levy for cloud storage would still have to be paid on the basis of the applicable EU legal situation - regardless of the wording of the Austrian law.

The first instance, the Commercial Court of Vienna, had still rejected these claims with reference to the Austrian legal situation and the legislative history of the relevant provision. The court of appeal, the Vienna Higher Regional Court, has now referred the issue to the European Court of Justice for a decision.

Yesterday, the Advocate General delivered his opinion in this case:

The Advocate General's Opinion

In his opinion (available here: https://curia.europa.eu/juris/document/document.jsf?text=&docid=246488&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=1343859), the Advocate General states that reproductions in the cloud are also covered by the private copying exception. After all, the exception is to be interpreted in a technology-neutral manner.

Furthermore, the national legislator has a wide margin of discretion as to how this copyright levy is to be collected. Where a chain of devices is used to create a private copy, the legislator is free to impose the levy on only one device in the chain. Therefore, there is no obligation to introduce an additional levy for cloud services. Rather, caution must be exercised when introducing new levies, as otherwise there is a risk of overcompensating the right holders. Finally, it should be assumed that where a national levy system is in place, such existing system already provides for the required "fair compensation" for right holders.

This supports the decision of the Austrian legislator to apply the levy obligation to the distribution of physical data carriers, only. Further outlook

The European Court of Justice will deliver its judgment in the coming months, which will be binding on national courts. The Advocate General's Opinion is not binding on the CJEU, but is purely a recommendation. In the majority of cases, however, the ECJ follows the Advocate General's opinion.

Conclusion

The topic of storage media remuneration has thus been enriched by another facet.

In essence, the Advocate General confirms the path taken by the Austrian legislator, which applies the levy solely to storage media physically placed on the market in the territory of the Republic of Austria.Final clarification will come from the CJEU's ruling in the coming months.

DORDA, specifically Axel Anderl, Bernhard Heinzl and Ida Woltran, represents the defendant in the proceedings, i.e. the cloud service provider.