Tuesday 16 July 2013

Shifting formats - the IPO’s draft private copying exception

[Originally published 16 July 2013, based on the draft circulated for technical review.  Updated 14 April 2014 to take account of the amendments contained in the draft Personal Copies for Private Use Regulations laid before Parliament on 27 March 2014.]

The draft private copying exception (PDF) released for consultation on 7 June 2013 is one of the UK Intellectual Property Office’s flagship copyright reforms following the Hargreaves Review.  In his final report (PDF) in May 2011 Professor Ian Hargreaves focused on the lack of a format-shifting exception as particularly threatening to the legitimacy of copyright.  He identified:

“a growing mismatch between what is allowed under copyright exceptions, and the reasonable expectations and behaviour of most people. Digital technology has enabled use and reuse of material by private individuals in ways that they do not feel are wrong – such as sharing music tracks with immediate family members, or transferring a track from a CD to play in the car. It is difficult for anyone to understand why it is legal to lend a friend a book, but not a digital music file. The picture is confused by the way some online content is now sold with permissions to format shift (iTunes tracks) or to “lend” files (Amazon ebooks) at no extra cost.  This puts the law into confusion and disrepute. It is not a tenable state of affairs.”
If respect for copyright is to be restored, the proposed new private copying exception has to shoulder much of the work. 

It has to succeed on several fronts.  The audience for many aspects of copyright is copyright professionals.  However, since the private copying exception will determine what everyday users of PCs, laptops, tablets and mobile devices can and cannot do with music and movies that they purchase, its audience is the general public.

As such the exception needs to be clear, certain and sensible.  For clarity, it should not require special expertise in copyright law to understand the exception and its practical implications.  For certainty, there should be as few as possible areas of doubt about what is and is not permitted.  As to being sensible, there should be a minimum of arbitrary distinctions.  Not only should the user be able readily to understand which particular activities fall on one or other side of the line, but the reasons why the line is drawn where it is should be coherent and readily apparent.  In general terms the boundaries should accord with the reasonable expectations of users, albeit it must be conceded that there are legitimate areas of disagreement as to where the boundaries should lie.

If the exception does not pass these tests, not only will an opportunity to set copyright back on the road to legitimacy have been lost, but further damage to copyright will be done as another specimen of obscurity, arbitrariness and remoteness from reality is added to the list.  In an age when policymakers demand that users should be exhorted to respect copyright, it behoves our legislators to write laws that those users can readily understand and which, when they have understood them, make sense.

This article evaluates the published draft of the exception [now the draft Statutory Instrument laid before Parliament] with those criteria in mind.  We invoke a hypothetical user, Bruce, and try to decide which of his everyday format-shifting activities would or would not be permitted by the proposed new S28B of the 1988 Copyright Designs and Patents Act. 
For the most part the article avoids hotly contested issues about how broad or narrow the exception should be, whether its implementation without a corresponding copyright levy is or is not compliant with the EU Copyright Directive, and whether the whole thing is undermined anyway by the prohibition on circumvention of technical measures. 
The reader can make up his or her own mind whether the draft exception passes the tests of clarity, certainty and sensible boundaries.  To the extent that it may not, we should spare a modicum of sympathy for the Intellectual Property Office since some uncertainty is the inevitable result of lack of certainty in the EU Copyright Directive, which constrains the UK government's freedom of action. 
What follows is the tentative result of wrestling with the short but not entirely simple text of 28B.  Others may well have different views on how 28B is meant to apply.  It would certainly be welcome to discover that I have overcomplicated the thing and that it really doesn’t take the 4,000 words of this piece to analyse it.  But I am not optimistic.
In any event at present 28B is draft legislation, open to consultation until 17 July 2013.  The draft will quite likely be amended before anything is put before Parliament.  [Indeed the SI laid before Parliament is quite significantly amended.]

28B divides logically into two steps.  The first step is to identify whether Bruce has suitable source material at hand.  28B defines this as a copy of a copyright work lawfully acquired by Bruce and which he holds on a permanent basis (for example it is not a copy that is rented to the individual for a specified period or borrowed from a library).  [Eligible source material is now to be called an "individual's own copy". That is a copy which Bruce has lawfully acquired on a permanent basis, is not an infringing copy and has not itself been made under a copyright exception. Lawfully acquired on a permanent basis specifically includes a purchase, a gift, or a download resulting from a purchase or a gift (other than a download enabling no more than temporary access to the copy); but does not include a borrowed, rented, broadcast or streamed copy. None of this will now apply to computer programs, which are excluded entirely from 28B.]

The second step is to consider what use Bruce can make of that source material.  In general terms he can use the source material to make a further cop[ies]y of the work provided that the further cop[ies]y [are]is made for Bruce’s private use for ends that are neither directly nor indirectly commercial. Bruce cannot transfer the further cop[ies]y to another person[, other than on a private and temporary basis]; and if he transfers the source material to another person [(other than on a private and temporary basis)] without destroying the further cop[ies]y, that is an infringement. [A further copy made under 28B is now to be called a "personal copy"]
That may sound fairly simple.  However subtle complications arise when we try to apply it to the multiplicity of real world scenarios, including some specifically mentioned by the Hargreaves Report.

For the sake of relative simplicity we have not addressed the effect (if any) of contractual prohibitions, and have ignored the effect of any TPM restriction. [28B will render a contract term unenforceable to the extent that it purports to prevent or restrict the making of a copy which would under 28B would not infringe copyright. TPMs will remain effective.] 
Source material
First, consider the source material that Bruce must have in order to be able to use 28B.  Would source material that Bruce acquired in any of the following ways qualify?

[Remember that none of this applies to computer programs and the source material cannot itself have been made under an exception from copyright.]

(a)  Bruce purchased a genuine CD
Definitely OK.  28B can be used where the individual has ‘acquired’ a copy lawfully on a permanent basis.  Purchasing a genuine CD is the paradigm case.  28B could also be used if Bruce had received the genuine CD as a gift, either new or second-hand, or had bought it second hand. But Bruce could not use 28B if he had rented the CD or borrowed it from a library, from his sister or from a friend. [But not computer programs. Computer programs have their own regime of copyright exceptions under the EU Software Directive. See sections 50A to 50C of the 1988 Copyright Act.]  

(b)  Bruce purchased an infringing CD
Copyright is infringed by the person who made the infringing CD; and also by the person who sold it if he knew or has reason to believe it was infringing.  Bruce did not infringe copyright by merely purchasing it.  So from Bruce’s perspective as a matter of copyright law he may have acquired it lawfully, even though it was an infringing copy.  This might suggest that he can use it as source material for making a 28B copy.

Contrary to that, in its December 2012 response to consultation the government said that the exception would be limited to use by people who already own a lawful copy of a work; and that the exception would permit copying only by a lawful owner of an original copy.
But differently again, in its recommendation in the same document the government said the exception would allow a lawful owner or buyer of a copy of a work to reproduce that copy for their personal use. 

Lawfully acquiring a copy and lawfully acquiring a lawful copy differ significantly from each other.  It is not obvious from the consultation history which the government intends. [Now clarified.  28B now makes clear that the source material cannot be an infringing copy.] 
As to the merits of each approach, on the one hand why should someone be able to make use of 28B to make another copy of something which already infringes?  On the other hand, why should the consumer be at risk of infringement simply because the original copy turns out to be infringing?  The consumer is poorly placed to know with any certainty whether what s/he has purchased is genuine or infringing.  That is especially the case with secondhand CDs, but can also apply to apparently genuine original CDs.  (It can happen that a well known label sold through reputable retailers turns out to be unlicensed.)  Would it be fair to the consumer that his or her ability to use the exception depends on something that will often be out of her knowledge and control? Should the exception be inapplicable only where it was obvious to the consumer that s/he was acquiring an infringing item? [It will make no difference if Bruce has no means of knowing that the source material is an infringing copy.]

It is also unclear whether private copying from an infringing source copy is permitted under the EU Copyright Directive, with which this exception must comply.  Whether the private copy exception under the Directive can apply to unlawful source copies is the subject of a currently pending reference to the EU Court of Justice, in ACI Adam and Others Case C-435/12.  [Decided 10 April 2014.]
(c)  Bruce borrowed a copied CD from a friend
No.  A borrowed CD, whether copied or genuine, is not held permanently.  The exception could be used to make a private use copy only from a copy held on a permanent basis.  [No change.]

(d)  Bruce received a copied CD as a gift
If the copy for some reason does not infringe, then OK.  Bruce holds it on a permanent basis.  If it does infringe, then the position is the same as scenario (b): unclear. [Now clarified. As in (b), an infringing copy cannot be used as source material for 28B.]

(e)  Bruce purchased a permanent legitimate copy of a song by download over the internet. 
OK, or at least so the government appears to intend.   It mentioned eBooks in the December 2012 impact assessment.  In the Dec 2012 consultation paper it said “This would include downloaded digital content that has been purchased to keep (or licensed in an analogous way) such as eBooks” (Consultation note 41).

However the actual wording of the exception may not be quite so clear.  Unlike acquiring a CD, downloading involves making a new copy.  Does ‘acquiring’ include making a new copy? Since the government apparently intends that it should, it would be as well to put this beyond doubt.
In any event the exception does not apply to rented or streamed materials. [Now clarified.  Bruce will be able to use a copy acquired by means of a non-infringing download resulting from a purchase or a gift (other than a download enabling no more than temporary access to the copy). Bruce will not be able to use borrowed, rented, broadcast or streamed source materials.]

Use scenarios
Let us assume that Bruce is equipped with a permanent copy that he can use as source material under S28B.  We will assume that it is a genuine purchased CD (not unlawfully copied, not an unlawful parallel import from outside the EEA).  Would any of the following acts be permitted under S28B?

(a)  Bruce copies the CD to the hard drive of his PC. 
OK, so long as he makes the copy for his private use for ends that are neither directly nor indirectly commercial.  However, whether he has made the copy for his private use turns out to be quite a tricky question.  Some uses involve further copies being generated.  Others do not (or at least only transient copies).  How does 28B apply to each situation? 

28B legitimises only a copy made for Bruce’s own private use.  So the key question appears to be what was Bruce’s purpose when he made the copy?  That appears to depend at least in part on what was in his head at the time he made the copy (there may be room for arguments about whether the test is subjective, objective or hybrid – we will assume that Bruce’s intention has some relevance).  However surrounding circumstances would offer some pretty big clues to the purpose.  [28B now fleshes out the concept of private use with some examples. It includes private use facilitated by:

- making a copy as a back-up copy
- making a copy for the purposes of format-shifting
- making a copy for the purposes of storage (including in an electronic storage area accessed by means of the internet or similar means which is accessible only by the individual (and the person responsible for the storage area).]

Here are some sub-scenarios:
(i)   Bruce copied the CD into a folder accessible only to himself.

OK. That would be consistent with Bruce’s professed private use purpose.
(ii)  Bruce copied the CD into a public P2P sharing folder on his hard drive.

Probably not OK.  Since it is accessible by members of the public Bruce would have an uphill task convincing anyone that the copy was made for his private use. 

(iii)  Bruce copied the CD into a folder accessible to a small circle of others (such as family members) on his home network. 

If Bruce did this with so as to enable others on his home network to make their own permanent copies, that is beyond Bruce’s own private use and would not be legitimised by 28B.  [No change. Although Bruce will be able to 'daisy-chain' (see below) only he will be able to make further personal copies.]

If Bruce did it so as to enable others on his home network independently to play and listen to the tracks in the folder, that is probably not legitimised by 28B, since their playing and listening to the tracks would be private use by them, but not by Bruce.

If Bruce did it with the intention only of listening to the tracks himself, that might be OK since that is Bruce's own private use.  However Bruce could be challenged as to why, if that was his intention, he put the tracks in a folder accessible to others.

Establishing Bruce’s true intention could be very difficult.  It might depend at least partly on his technical sophistication, such as whether he knew that others could access the folder to which he copied the CD.  That might be especially the case if some other member of the family set up the network and configured his computer. 

(iv)  Bruce copied the CD into a folder accessible only to himself, but with the intention of playing the tracks from the folder through his home loudspeakers via a streaming device.

Unclear.  If Bruce intended to listen through personal headphones that would clearly be his private use.  Playing the tracks through his home loudspeakers means that other domestic and family members can listen to the music that Bruce is playing.  Is this also Bruce’s private use? 

The concept of private use as understood in EU law is wide enough to cover domestic and family use.  Is that what 28B means?  If so does the fact that the playing is under Bruce’s control mean that it counts as Bruce’s private use, as required by 28B?  28B itself offers no illumination, other than that using the word 'private' rather than 'personal' use may suggest that this is OK. (Confusingly however, the IPO uses the term 'personal use' in its commentary on the draft exception).

If it is not OK, then the reasonable user could well regard the results as arbitrary.  It would be permissible to buy a CD and play it to friends and family on a music system at home; but not permissible to copy the CD to a computer or an MP3 player and play that copy to the same audience through the same music system.  [No change. None of the supporting documents or the Impact Assessment shed definitive light on this scenario, although the tenor of the rejected Impact Assessment Option 2 may suggest that the answer is 'Not OK'.]

(b)  Bruce copies the copy that he made in scenario (a) from his hard drive to his portable device (e.g. MP3 player, mobile phone or USB stick)
This 'daisy-chaining' is a very common scenario.  The Gowers Report back in 2006 recognised the importance of daisy-chaining for format shifting: "The exception would only allow one copy per ‘format’, but it would also have to recognise that transfer between formats may require intermediate steps (or formats) to be taken." (para 4.76)

If the copy made from the CD to the hard drive in scenario (a) was legitimised by 28B, this further copy made from it is probably also legitimate if made for Bruce’s private use.  But 28B does not spell this out beyond question. 
Since we are assuming that Bruce legitimately made the copy on his hard drive under 28B, he has lawfully acquired that copy (if we are right that lawfully acquiring includes lawfully making a new copy).  Under 28B he is entitled to keep the hard drive copy permanently unless and until he transfers the original CD to another person.
On that basis Bruce can probably ‘daisy chain’ 28B to make successive copies from the CD to his hard drive and then from his hard drive to his portable device, so long as both copies are for his own private use.  He could presumably keep both copies and continue to sync between them.

Assuming this to be the government's intention, it would be better if 28B made completely clear that daisy chaining is permitted.  [Clarified.  Bruce can make a personal copy under 28B from an existing personal copy that Bruce (but no-one else) has already made under 28B.] 

If Bruce intends to use the portable device to play the tracks in the presence of others in his private sphere, such as in his car (the example given by Hargreaves), then the same uncertainties about private use arise as with the hard drive copy. [No change.]

(c)   Bruce copies the copy that he made in scenario (a) from his hard drive to his private cloud storage area
OK, if daisy-chaining is permissible.  28B places no restriction on the place in which the 28B copy is stored – only that it be made for his private use for ends that are neither directly nor indirectly commercial.  On the face of it that would include a private cloud account.  Since storing the copy in that account involves making a new copy, the ability to daisy-chain is important in order to bring the cloud copy within 28B.  [Daisy-chaining will be OK. See above.]

Cloud storage is specifically addressed in 28B(3).  The drafters appear to have been concerned that storing in the cloud could amount to a transfer of a copy to another person, and thus trigger the infringement provisions of 28B(2).  They have therefore provided that nothing in 28B(2) prevents an individual from storing a further copy made under 28B in an electronic storage facility accessed by means of the internet or similar means, where that facility is provided for his sole private use. 
While specific provision for cloud storage is probably necessary from the point of view of clarity, this sub-section is problematic.   First ‘storing a further copy made pursuant to [28B]’ is an odd phrase in his context, since the act of storing a copy in the cloud necessarily entails the making of an additional copy. Is the section referring to that further copy, to a pre-existing further copy (e.g. made by copying from CD to computer hard drive) or to both? 

The uncertainty is compounded by the reference to 28B(2), since that deals with transferring “the copy”.  That most obviously means the transfer of a pre-existing copy – such as when Bruce gives a USB stick containing a copy to his sister.  On that understanding storage in the cloud would not be a transfer of ‘the copy’ at all, since it involves the making of a new copy in the cloud.  Yet 28B(3) seems to suggest that this process could be understood as a transfer of "the copy". 
If “transfers the copy” is indeed broad enough to include a transfer process that creates an additional copy, that introduces further complications into the operation of 28B(2), since more copies will come into existence than 28B(2) appears to contemplate. [Re-drafted and clarified.  Bruce's copy on his hard drive made from his CD is a personal copy under 28B.  He can make a further personal copy from that and store it in his private cloud storage.  However this only applies if the storage area is accessible only by Bruce and the person responsible for the storage area. Shared storage areas will not count.]

(d)  Bruce copies the copy that he made in scenario (a) from his hard drive to his sister’s portable device for her.
No.  The second act of copying (from hard drive to his sister’s device) would not be for his own private use.  [No change.]

(e)  Bruce copies to his own MP3 player with the intention of lending the MP3 player to his sister.
No, at least if Bruce’s purpose in doing this was that his sister should be able to listen to the tracks.  The copy was not made for Bruce’s private use, but that of his sister.  The same would apply if Bruce copied to a USB stick with the intention of lending it to her.  [No change.]

(f)    Bruce, having copied to his own MP3 player for his own private use, later decides to lend the MP3 player to his sister.
Probably OK?  Since the later decision to lend the MP3 player was not Bruce’s original purpose, that does not prevent the copy being originally legitimate under 28B.  There is nothing in 28B to suggest that it becomes illegitimate if Bruce's intention changes later.  As Bruce is only loaning the MP3 player, it is not caught by the prohibition on transferring (otherwise than on a private and temporary basis) the 28B copy to another person.  The same would apply to a USB stick. [No change.] 

It would be a separate question whether, when the sister listens to the tracks stored on the borrowed device, she infringes copyright.  Probably not (so long as she does so in private circles), but that may be affected by the outcome of a currently pending reference to the CJEU in the Meltwater litigation. 

(g)  Bruce, having copied a CD to a USB stick for his private use, then gives the USB stick to his sister.
No.  Although the USB stick copy was made legitimately under 28B, under 28B2(a) Bruce infringes copyright if he transfers that copy to another person otherwise than on a private and temporary basis.  That previously legitimate 28B copy becomes an infringing copy.

(h)  Bruce, without making any copy of it, gives a genuine purchased CD to his sister.
OK.  Under general copyright law Bruce is entitled to transfer to someone else a physical copy that was previously put into circulation in the EEA by or with the consent of the rightsholder (the principle of ‘exhaustion of rights’). [No change.]

(i)    Bruce, having copied a genuine purchased CD onto a USB stick for his brother, then gives the CD to his sister.
Copying the CD is outside 28B as it is for Bruce’s brother.  That copy therefore infringes.  Bruce can give the genuine CD to his sister since exhaustion of rights still applies to the CD. [No change.]

(j)    Bruce, having copied a genuine purchased CD onto a USB stick for his private use, then gives the CD to his sister.
OK, but only if Bruce first destroys the copy on the USB stick.  If not, he infringes copyright by transferring the CD to another person.  However it is the copy on the USB stick, not the CD, which is then regarded as an infringing copy.  Thus the same result is achieved as if a copy was made outside 28B. [No change.]

(k)  Bruce purchases a copy by download to his MP3 player, then lends the MP3 player to his sister.
OK.  28B does not come into play since no 'further copy' is made.  Private loan is unlikely to be an act restricted by copyright and, since the device itself is lent, no new copy is made.  See (f) above as to whether Bruce's sister would infringe when listening to the tracks.  [No change.]

The same would apply to a copy downloaded to any other device, including a storage device such as a USB stick.

(l)    Bruce purchases a copy by download to a USB stick, then sells the USB stick containing the original copy by online auction.
No, at least for the moment.  28B does not come into play since no 'further copy' is made.  Selling the USB stick infringes the copyright owner’s exclusive distribution right.  At present exhaustion of the distribution right applies only to physical copies (such as CDs) put into circulation by or with the consent of the rightsowner, not to a download made by a customer.  However it is possible that this may change in the future, should the CJEU expand its finding in UsedSoft so as to apply to non-computer programs.  This is a highly controversial issue. [No change.]

(m)    Bruce purchases a copy by download to a USB stick, makes a further copy from the download onto his hard drive for his private use, then sells the USB stick containing the original copy by online auction.
By making a further copy for his private use Bruce brings 28B into play.  Does that make the situation any different from where he has made no further copy at all? 

If Bruce does not destroy the further copy, then selling the USB stick by public sale is an infringement and, as in (j) above, the further copy will be treated as an infringing copy.  That is clear. 

What if Bruce does destroy the further copy?  Here things gets quite obscure, even controversial.   First, as explained above it may not be clear whether a download is a ‘lawfully acquired’ copy. [Now clarified to include a download.] If it is, then 28B(2)(b) states that copyright is infringed where an individual who has made a further copy within 28B permanently transfers the copy from which it is made, without destroying the further copy. 
The casual reader might think that it follows that if Bruce destroys the further copy, then transferring the copy from which it is made does not infringe copyright.  If 28B(2(b) does mean that, that would seem in effect to extend UsedSoft to non-software.  [No. See below.]]

Another view is that 28B provides a limited exception from infringement for certain further copies; that 28B(2)(b) describes a particular circumstance in which the exception is disapplied, and how in that circumstance the otherwise exempt further copy is to be treated as infringing (which it would have been if it had not fallen within 28B in the first place).  On that basis 28B(2)(b) says nothing about the underlying issue of whether transferring a downloaded copy of a non-computer program benefits from exhaustion of rights (as in UsedSoft) or not.  That may at some point come before the CJEU.  The section appears to accommodate either possibility. [The Government in its Response to the Technical Review states that 28B creates an exception only to the reproduction right and does not create any exception to the distribution right or the right of communication of works to the public. Nothing in those provisions creates a new right to re-sell copies, where that right does not already exist.]


  1. Thanks for the analysis. Do you know if there has been any progress on this since July 2013? One further thought that doesn't seem to have been addressed is that of joint ownership: if I own a CD jointly with my wife, are we both entitled to make copies, or is neither of us? What if I gifted fractional shares in my CD collection to each member of my family as tenants in common (while ensuring the CD is accessible to all of them)? What if I included my next-door neighbours (again making provisions for shared possession)?

    1. Interesting questions about joint ownership, which I confess I have not considered! The government has said that it will lay the final versions of all the Hargreaves exceptions, including this one, before Parliament for debate this month.


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