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Regulations implementing the amended system for the payment of fair compensation for private copying enter into force

Spanish law on copyright fair compensation

28 November 2019

In November 2018, the Spanish legislator passed Royal Decree 1398/2018, which implemented the current system for fair compensation for private copying based on establishing an amount payable by manufacturers, importers and distributors of equipment, devices and material media for reproduction. The Royal Decree entered into force on 2 January 2019. This article summarises and examines the key provisions of the Royal Decree.

Background to the 2018 Decree

In June 2016, the Court of Justice of the European Union (CJEU) held that the system in force in Spain for the payment of fair compensation for private copying funded by the general state budget, was contrary to Directive 2001/29/EC in that the Spanish system was not capable of guaranteeing that the cost of fair compensation was ultimately borne solely by the users of private copies. Accordingly, the Spanish legislator passed Royal Decree-Act 12/2017, which amended article 25 of the Spanish Copyright Act, regulating fair compensation for private copying. Under the 2017 Decree, the Spanish Government had one year to implement the amendment.

The 2018 Decree fulfilled the mandate conferred in the 2017 Decree.

Obligation to pay Fair Compensation for private copying and procedure for making the payment

Under the Spanish Copyright Act, the reproduction of already released works exclusively for private use, rather than professional or business use, with no direct or indirect commercial purpose, generates the obligation to pay Fair Compensation. Such payment is designed to constitute proper compensation for the copyright holders for the harm caused by reproductions carried out under the legal limit of private copying.

Debtors and creditors of Fair Compensation

The debtors obliged to pay Fair Compensation are (i) manufacturers in Spain, where acting as commercial distributors, and (ii) acquirers outside of Spain (importers), for commercial distribution or use within Spain, of equipment, devices and material media suitable for making reproductions of copyright protected works.

Meanwhile, the creditors of Fair Compensation are the authors of books or similar publications, together with editors, producers of phonograms and videos and the artists who perform the works.

As for the amount of Fair Compensation, it depends on the equipment or material media in question. In the case of equipment, the amount varies from 0.33 cents/unit for CD recorders to 6.54 euros/unit for external disks (SSD and HDD). In the case of media, the amount varies between 0.08 euros/unit for recordable CDs and 0.28 euros/unit for recordable DVDs.

In accordance with the 2018 Decree, debtors and distributors of equipment or media subject to the payment of Fair Compensation have to include separately on the invoices issued to their customers (i) the price of the equipment or media, and (ii) the amount of Fair Compensation applicable to said equipment/media. In order to strengthen this obligation, the 2018 Decree prohibits distributors from accepting supplies of equipment or media from their suppliers unless invoiced in the manner indicated.

Communication to the collecting entity of the list of equipment or media subject to the payment of Fair Compensation

Within 30 calendar days following the end of each quarter, the debtors are obliged to present to the collecting entity, Ventanilla Única, a list of the units of equipment, devices and media in relation to which the obligation to pay Fair Compensation arose in that quarter. From that list, the amounts corresponding to units destined for export from Spain and those that are exempted from payment of Fair Compensation must be deducted. The same obligation to notify Ventanilla Única applies to distributors.

Payment of Fair Compensation

After making the necessary checks of the quarterly lists received, the collecting entities have to issue an invoice in the name of the debtor (or jointly liable party) which is notified in unified form via the Ventanilla Única. The debtor (or jointly liable party) then has one month, as of receipt of the invoice in question, to pay Fair Compensation. The 2018 Decree  also establishes mechanisms for the refund of any Fair Compensation unduly paid or for supplementary invoices when, due to an error, equipment or materials subject to payment of Fair Compensation were not declared (or were exempted).

Exemption and refund of the payment of Fair Compensation

Finally, under the 2018 Decree, in the event equipment or media are acquired by persons to be used exclusively for professional purposes (i.e. not for private copying), then:

  1. No Fair Compensation shall be payable when the equipment or material media is purchased; or
  2. such persons may apply for a refund for the amount of Fair Compensation paid.

Both the exemption procedure - which is subject to a prior certificate being obtained - and the refund procedure, are duly regulated by the 2018 Decree.

In both procedures it is essential to demonstrate by formal means that the equipment or material media will not be used to make private copies (which generates the obligation to pay Fair Compensation).

Key Take-Away Points

The 2018 Decree:

  • Implements the procedure for the payment of Fair Compensation for private copying and provides  legal certainty.
  • Imposes the obligation for debtors and distributors of equipment or material media that are subject to the payment of Fair Compensation to break down the price of the product and the amount of Fair Compensation in their invoices.
  • Regulates the scenarios in which there is an exemption from the payment of Fair Compensation and the procedure to be followed. In addition, it sets out the procedure for the refund of Fair Compensation when appropriate.