CJEU confirmed that private copying compensations include cloud storage too

The European Court has ruled recently in the Case C‑433/20 Austro-Mechana Gesellschaft zur Wahrnehmung mechanisch-musikalischer Urheberrechte Gesellschaft mbH v Strato AG.

This case has the following background:

Austro-Mechana is a copyright collecting society which, acting in its own name but in a fiduciary capacity in the interest and on behalf of the rightholders, exercises, inter alia, the statutory rights to the remuneration that is due under Paragraph 42b(1) of the Law on Copyright, in the version applicable to the dispute in the main proceedings.

Austro-Mechana applied to the Commercial Court, Vienna, Austria for an order to allow it to invoice for, and take payment of remuneration in respect of, ‘storage media of any kind’, on the ground that Strato provides its business and private customers with a service known as ‘HiDrive’, by which it makes cloud computing storage space available to them.

Strato contested the application on the ground that no remuneration was due in respect of cloud computing services. That company stated that it had already paid the required copyright fee in Germany, the Member State in which its servers are hosted, that fee having been incorporated in the price of the servers by their manufacturer or importer. It added that users in Austria had also already paid a levy for the making of private copies (‘the private copying levy’) on the terminal equipment necessary to upload content to the cloud.

By judgment of 25 February 2020, the Commercial Court, Vienna dismissed Austro-Mechana’s application, holding that Strato does not make storage media available to its customers, but provides them with an online storage service.

Austro-Mechana appealed against that judgment to the Higher Regional Court, Vienna, Austria, which observes, referring to the judgment of 29 November 2017, VCAST (C‑265/16, EU:C:2017:913), that it is not entirely clear whether the storage of content in the context of cloud computing comes within the scope of Article 5(2)(b) of Directive 2001/29.

In those circumstances, the Higher Regional Court, Vienna decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:

‘(1) Is the expression “on any medium” in Article 5(2)(b) of Directive [2001/29] to be interpreted as meaning that it also includes servers owned by third parties which make available to natural persons (customers) for private use (and for ends that are neither directly nor indirectly commercial) storage space on those servers which those customers use for reproduction by storage (“cloud computing”)?

(2) If so: is the provision cited in Question 1 to be interpreted as meaning that it is applicable to national legislation under which the author is entitled to equitable remuneration (remuneration for exploitation of the right of reproduction on storage media), in the case:

–   where a work (which has been broadcast, made available to the public or recorded on a storage medium produced for commercial purposes) is by its nature likely to be reproduced for personal or private use by being stored “on a storage medium of any kind which is suitable for such reproduction and, in the course of a commercial activity, is placed on the market in national territory”,

–    and where the storage method used in that context is that described in Question 1?’

The Court’s decision:

1.  Article 5(2)(b) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that the expression ‘reproductions on any medium’, referred to in that provision, covers the saving, for private purposes, of copies of works protected by copyright on a server in which storage space is made available to a user by the provider of a cloud computing service.

2.  Article 5(2)(b) of Directive 2001/29 must be interpreted as not precluding national legislation that has transposed the exception referred to in that provision and that does not make the providers of storage services in the context of cloud computing subject to the payment of fair compensation in respect of the unauthorised saving of copies of copyright-protected works by natural persons, who are users of those services, for private use and for ends that are neither directly nor indirectly commercial, in so far as that legislation provides for the payment of fair compensation to the rightholders.