English Court takes step towards making private copying illegal again

We are doomed to fight last decade’s battles again

This has been a bad week for logic and reason. Or a good week for insane rulings, depending on your take on life. Last year we had a series of copyright reforms, including an exception for private copying; but now the British music industry has managed to get the High Court to move forward towards removing this protection and make it illegal once more to rip your own CDs. Behold the case of British Academy of Songwriters, Composers And Authors & Ors, R (On the Application Of) v Secretary of State for Business, Innovation And Skills [2015] EWHC 1723 (BASCA v BIS for short).

For context, last year the Copyright and Rights in Performances (Personal Copies for Private Use) Regulations 2014 was introduced by the Secretary of State, a reform that created a new exception in UK law (adding s28B of the CDPA) that allows consumers to create a private copy of their legally purchased work for non-commercial purposes. This was done after it was suggested by the Hargreaves Review, and after long consultation process. Previous to the reforms, the lack of private copying exception in the UK has been a source of amusement for people not familiar with copyright. Whenever I explained to non-IP people that ripping CDs was illegal in the UK, the statement was met with a mix of shock and contempt. Needless to say, it seems natural for most people to think that it is perfectly acceptable to be able to legally create copies of your own media. But we know that some in the music industry have long since abandoned rational thought, and the idea of the private copying was a step too far. It had to be stopped.

A number of music associations, including the British Academy of Songwriters, Composers and Authors (BASCA) and the Musician’s Union, initiated legal proceedings against the Secretary of State for Business, Innovation and Skills asking for judicial review of the decision to create the private copying exception. Their argument is quite simple: Art 5.2(b) of the EU Copyright Directive 2001/29/EC (EUCD) allows member states to create a private copying exception on the condition that “the rightholders receive fair compensation”. The new exception to UK copyright law creates a private coying right, but does not allow for proper compensation. Therefore, UK private copying contravenes EU law. There are many other legal issues discussed in the lengthy ruling, but the above seems to be at the heart of the decision.

This is actually quite an elegant argument in its simplicity. Evil and misguided, but elegant.

The defendants claimed that the government was justified in their decision to create the private copying exception because of economic and technical issues that were highlighted by the various reports and consultations. They also argued that private copying will have no negative harm, and according to the evidence the exception would result in “minimal or zero lost sales”, which minimises the conflict with EU law.

The decision then rests almost entirely on an assessment of the harm that can arise from the implementation of the new exception for private copying without compensation. The most interesting part of the decision is precisely an analysis of the existing evidence on the harms of private copying. As far as I can tell, this is the balance of the evidence presented.

On the side of the music industry, we have (I can’t find links to either):

• Motion Picture Association of America LECA Report.
• The Compass Lexecon / FTI Summary report.

On the side of the defendants we have (amongst others):

• The Hargreaves Review.
• The Rogers Review.
• The IPO report on Private Copying.
• The IPO impact assessment.

Just on a very shallow reading, it seems like the evidence in favour of the government’s argument is overwhelming, namely that private copying will have no negative effect. Moreover, it is difficult to ascertain the strength of the claimant’s evidence as these are not online that I could find, but the way in which they are cited in the ruling makes for quite a hilarious read. Take the Compass Lexecon Report. Green J cites it as saying the following:

“172. The Claimants adduced in support of this analysis a report by Compass Lexecon/FTI Consulting which concluded that, in a world of viable enforcement, consumers would be willing to pay in the order of £9 more for a CD which would permit them to make unlimited licensed copies than for a CD for which they were permitted to make no copies. The experts translated this into a £2.4 billion loss in revenue for the period 2006-2012. The experts also concluded that consumers would be willing to pay £0.72 more to make one licensed copy of a CD. When the total number of CDs sold between 2006-2012, together with the likely number of digital copies that consumers would be expected to make of those CDs, was taken into account the experts assessed the potential value that consumers would be prepared to pay for such copying as between £100 million and £624 million. The Defendant criticised this analysis as being exaggerated, unworldly and wholly unreflective of the real market. I shall refer to the Defendant’s test as the “lost sales” test; and to the Claimant’s test as the “licensing test”.”

What decade are these people operating in? Of course the above is completely “exaggerated, unworldly and wholly unreflective of the real market”! Honestly, we are living in 2015, CD sales are nosediving because of the rise of digital music, both in downloads and streaming formats. In fact, streaming services are now officially making more money than physical copies, yet here we have a legal decision about music that mentions the word CD or CDs 53 times, but mentions iTunes 18 times, and does not even mention streaming once! This is a ruling that is operating in a bizarre evidence-free time bubble, stuck somewhere in 2001 (and I am being kind here, as you will see).

The decision has an entire section dismissing the mountain of evidence presented by the government, even using the term “evidence” in scare quotes, and using mostly the above two studies. It also seems to have taken the music industry’s arguments at heart in a strange analysis of the current state of affairs in the music business. To me the faulty logic and the refusal to analyse the current state of the music market is exemplified by this paragraph:

“Historical, pre-digitalisation sales: Next, it is submitted that the Defendant omitted, in the Updated Impact Assessment, to consider a possibly material category of loss. This is copying based upon purchases made historically, pre-digitalisation. The point was made by consultees during the consultation process that this was a category of harm for which compensation was required. This covered for instance purchases of vinyl records from (at least) the 1960s onwards; and CDs from the 1980s onwards. The copyrighted work deployed in the course of argument to illustrate the Claimants’ point (because it was no doubt speculated that it would appeal to the Court) was Pink Floyd’s “Dark Side of the Moon” released in March 1973. When this was first released there was, of course, no material scope for purchasers to copy the album (save possibly by playing it and simultaneously recording it through the air onto a tape cassette, generating a passable but tinny sounding rendition) and hence the basis upon which it could be said that there was pricing-in of subsequent copying was absent. However, “old vinyl” records were now very popular not least because record players were now sold with in-built copying facilities (such as USB ports etc). Dark Side of the Moon could now be copied extensively from old records with excellent results.”

Take a second to think about the above paragraph. One of the reasons why we should not have a private copying exception in the UK is because there are people who might digitise old media, such as vinyl purchased from the 60s. There follows a discussion where the judge admits to very much liking the argument from the claimants that back in the 70s there was no way in which to copy The Dark Side of the Moon, but now this is possible again because of USB copying, hence the popularity of old records. This is an almost comical example of a bad decision based on a nostalgic reading of the music industry of yore, trying to turn back the clock to the 70s and over-estimating the effect of old media and physical copies to the music market. Yes, a judge just cited the fact that someone might make a digital copy of an old Pink Floyd album as a deciding factor relating to consumer rights in 2015. This is beyond parody.

Weapons of mass copying

As if that was not enough, the judge castigated the defendants for their failure to account for their own outdated reading of the music industry.

“The Claimants also adduced evidence to the effect that between 1983 and 2000 about 1,506,741,000 CDs where shipped into the UK with a trade value exceeding £7 billion and that it was during this period that copying became more prevalent. They accordingly submitted that in any evaluation of the extent to which pricing-in could capture all relevant “harm” an assessment had to be made of the modern copying of old vinyl records and CDs where, on no proper basis, could it be said that pricing-in occurred. However, there was no evidence that such as assessment had ever occurred.”

As we have stated, the ruling completely fails to understand the current state of the market, and the fact that physical copies are on the way out for the mass market. The judge seems completely stuck on the possibility of people making private copies of old CDs and vinyl records published pre-digital age. Anecdotally, I have spent a lot on my new vinyl collection, purchasing music that I already own on CD, and that I also have ripped into digital music and MP3s. According to the logic behind the ruling, if I wanted to make a digital copy of my records, I should buy a new version! The funny thing is that many vinyl records also come with a link to download the album, or even with a CD. Sectors of the industry are ahead of their lawyers.

The ruling ends with the decision by Green J that the Secretary of State was indeed in breach of European law when creating the private copying exception, and therefore the request for judicial review has been accepted. Unlike some reports I’ve read, the ruling does not mean that private copying is now illegal, or that s28B CDPA has been repealed. It means that the judge will listen to submissions about what is the next step, this could mean that the government will change the law, or it could amend existing legislation to allow for compensation of some sort. The parties may also ask for some issues of law to be referred to the Court of Justice of the European Union. We’ll have to keep a close eye on what will happen next.

Incidentally, I just ripped a CD just yesterday! Strangeways, here we come.