The background
The TAR ruling constitutes a new chapter in a judicial saga concerning the rules for benefitting from exemptions from paying the compensation for private copying in Italy. The issue concerns the payment of a flat-rate levy – or levy for private copying, pursuant to art. 71 septies ss. copyright law – which must be paid by all producers or importers in Italy, who sell devices or media suitable for the reproduction of audio and / or video content. These are obviously very important sums, which are collected by the SIAE (the Italian Society of Authors and Publishers, or the largest collecting on the Italian territory), which then provides for the breakdowns in favour of the owners of copyright and related rights. The Italian legislation provided and provides that producers and importers can take advantage of an exemption from the payment of the fee, in all those cases in which in abstract or in concrete the devices and / or media sold are not usable for audio and / or video reproduction. However, for some time there has been a very strong contrast between the category of manufacturers and importers of devices and supports on the one hand, and the SIAE (also representing the category of rights holders) on the other, regarding the legitimacy of the rules governing the application of the exemption. The interested parties, in addition to complaining about the substantial injustice of the flat-rate levy, challenged the role assigned by the legislation to the SIAE which, despite being a party to the matter, had the power to negotiate and conclude protocols for the application of the exemptions. The EU Court of Justice ruled on this point, holding that this role of the SIAE was incompatible with Community rules, for violation of the principle of non-discrimination. Following the decision of the EU Court of Justice, the Council of State i.e. the Supreme Italian Administrative Court, annulled the relevant legislation, so that in 2019 the Ministry for Cultural Heritage completely re-disciplined the matter, providing for a different and more contained role for the SIAE. According to this new regulation, SIAE can no longer conclude exemption protocols, being solely responsible for issuing preventive opinions at the request of the interested party, and for identifying the documentation that the latter must file in order to benefit from the exemption rules. However, even this new discipline was considered flawed by various manufacturers and importers of devices and supports, who argued – inter alia – that it would have assigned to the SIAE again a non-impartial and unequal role. The TAR, with the decision of October 7, 2020, judged the complaints unfounded, but it is to be expected that this decision will only constitute the first stage of a new judicial path.

Applicable legislation
For some time now in Italy – as in other European countries, although not all – the exception to copyright for private copying has been applied. According to the rules natural persons are entitled to make copies of audio and / or video works but only for personal and non-profit use and only for non-commercial purposes. In response to said exception, a lump-sum compensation (compensation for private copying) is due to the holders of copyright and related rights, which is levied by SIAE against those who carry out import, production and marketing of devices and media suitable for audio and video recording in Italy. The previous legislation (art. 4 of the Technical Annex of the decree of the Minister for Cultural Heritage of June 30, 2009) provided that the SIAE could promote protocols for a more effective application of the provisions “also for the purpose of providing objective and subjective exemptions, such as, for example, in the event of the professional use of devices and media or in respect of certain devices for video games. Those application protocols shall be adopted in agreement with the persons obliged to pay the compensation for private copying, or their trade associations”. Following an appeal, the legislation was brought to the attention of the EU Court of Justice which – by decision of September 22, 2016, in case C-110/15 – held that the Italian legislation did not comply with EU rules, as it “subjects exemption from payment of the private copying levy for producers and importers of devices and media intended for use clearly unrelated to private copying to the conclusion of agreements between an entity which has a legal monopoly on the representation of the interests of authors of works, and those liable to pay compensation, or their trade associations, and, on the other hand, provides that the reimbursement of such a levy, where it has been unduly paid, may be requested only by the final user of those devices and media.” As mentioned, following this decision of the EU Court of Justice, the Council of State annulled the aforementioned art. 4 of the Technical Annex to Legislative Decree December 30, 2009. The Ministry for Cultural Heritage therefore issued in 2019 a series of new provisions aimed at re-regulating the matter (provisions which, however, have already been replaced by new decrees, including in particular the decree of the Ministry of June 30, 2020 and the directorial decree of September 4, 2020, without any significant changes having been introduced). The new provisions aim to overcome the complaints that led to the cancellation of the previous legislation, thus providing that the system of granting protocols is replaced by a series of exemptions ex ante, determined by clear and transparent criteria. However, SIAE continues to carry out some specific activities concerning the proceedings related to the exemption, especially in cases different from those typified by art. 2 of the decree of June 18, 2019 (today replaced by the decree of June 30, 2020, of identical content). According to art. 2 in question, in fact, in general the remuneration is not due in the case of use of recording devices and media manifestly unrelated to the making of copies of phonograms and videos for private use, including exclusively professional use. The regulation also provides for some typical exemptions, namely: a) for recording devices and media exported to other countries; b) for recording devices and media used exclusively for carrying out professional instrumental diagnostics in the medical field; c) for recording devices and media, including video game consoles, in which the duplication function of phonograms and videos is not present or has been technically inhibited; d) for recording devices and media used exclusively for the professional activity of duplicating phonograms and videos; e) for recording devices and media sold, also through central purchasing bodies, to public administrations. In this context, the SIAE continues to play a role, since it is the entity which has to be contacted to obtain the identification of the documentation proving the requisite of being manifestly unrelated to private copying in cases other than the above listed ones (which also includes professional use). Furthermore, in all cases the producers and / or importers must quarterly file a declaration with the SIAE containing the analytical indication of the data of exempted sales together with the relative documentation for the performance of the control activities, which may also include the indication of the unique identification numbers of devices and media, as well as the filing of sales invoices. Finally, it is possible to request a prior opinion from SIAE on the applicability of an exemption in a specific case.

The proceedings before the TAR and the decision
In the case decided by the TAR, the plaintiffs – companies producing and importing devices and supports, as well as their trade associations – took legal action stating that the new regulations issued by the Ministry of Cultural Heritage would in any case create a dominant position for the benefit of SIAE, and it would be vitiated by illogicality and excessive burdensomeness. With regard to the first profile in particular, the exercise of the right to exemption would be illegitimately subordinated, in non-typed cases, to a prior “authorization” by SIAE. Therefore, a discretionary power to recognize or not the right of the exemption itself would remain to the SIAE. This would de facto annul the general criteria for the exemption set forth by art. 4, paragraph 1, of the Technical Annex. However, the position represented by the applicants was not shared by the TAR, which considered the reconstruction of the regulatory framework on which the complaints were based erroneous. According to the TAR the new legislation would not assign to the SIAE any power of exemption, which was instead predetermined by law. SIAE’s role would be limited to identifying the documentation the interested party must file, in the cases in which the exemption is not among those typified. In other words, while in the case of the devices addressed by letters a) to d) of art. 2 of the decree, the exemption applies ex ante without the need for SIAE to identify the documentation to be provided as proof of the applicability of the exemption. In other cases, however, it was necessary provide effective proof that on the one hand the devices and supports are not made available to private users and that on the other hand they are clearly reserved for uses other than that of making private copies. The burden of proof falls on the interested party, with the consequence that the pre-identification of the suitable documentation by exchange of correspondence with the SIAE aims to facilitate the fulfillment of the burden itself. In any case, said pre-identification falls within the special powers and functions assigned to SIAE pursuant to art. 182bis law on copyright.

Conclusions
The TAR’s decision enhances the changes made by the new discipline to the role of the SIAE which passes from the subject granting the exemption to the subject responsible for carrying out procedural activities related to the exemption. However, it is interesting to note that the TAR referred to art. 182bis of the copyright law, and consequently to the powers and special supervisory functions that the SIAE still enjoys, which seem to belong to a out-dated system, in which the SIAE was a public economic body with para-publicistic functions, perhaps no longer entirely adapted to the current configuration of the copyright system in Italy. It must be said that the collecting societies have been clearly recognized as operators without special powers and functions and as stake holders of specific interests (those of copyright and related rights holders). As such they are necessarily subject to the principle of “equality of arms” in comparison with other stakeholders, including end users and professional users. In addition, the Italian framework of public authorities also includes the Communications Regulatory Authority (AGCOM), to which competing and, in respect to those assigned to the SIAE, prevailing competences are conferred and whose role could be strengthened, given its major independence from private interests and impartiality.

Simona Lavagnini