1. Dr Estelle Derclaye, Associate Professor and Reader in Intellectual Property Law, University of Nottingham IPI/BLACA seminar, 21/10/2009

2.  The three step test Legislation Case law Literature Remedies to problems  Related issue: lawful copy requirement and its impact on exceptions and the test Case law Literature Relationship with three step test 2

3.  Articles L 122-5, penultimate paragraph (author’s rights) and L 211-3 final paragraph (neighbouring rights):  “The exceptions enumerated in these articles cannot conflict with a normal exploitation of the work or other subject-matter and do not unreasonably prejudice the legitimate interests of the right holder”  Also re decompilation exception for computer programs (art. L 122-6-1-V) and all (all those of Directive) exceptions to the database sui generis right (art. L 342-3) 3

4.  Court of Cassation 28 February 2006 - Mullholland drive case:  “The private copying exception cannot prevent right holders from applying TPMs on the medium on which the work is embodied when such copying could as a result conflict with a normal exploitation of the work. (…) 4

5.  This normal exploitation must take into account the economic impact that such copy can have in the context of the digital environment. The conflict with the normal exploitation of the work must be evaluated in respect of the risks inherent to the new digital environment regarding the safeguard of authors’ rights and the economic importance that the exploitation of the work, in DVD format, represents for the recoupment of cinematographic production costs.” 5

6.  1) Normal exploitation not defined => see WTO ruling in EU v US? Namely one needs to examine the exploitation forms which generally generate some revenue for the right holders as well as those which in all probability are susceptible to be important in the future  A normal exploitation is one that aims to recoup the costs of production. But problem: in-depth studies needed in order to measure normal exploitation in the sense that the expression has in the test 6

7.  Senftleben: a conflict with normal exploitation should only occur when the “authors are deprived of an actual or potential market of considerable economic or practical importance”  2) Applies only step 2 not step 3  3) Simply requires a risk not a prejudice => arbitrariness 7

8.  Exceptions must be interpreted strictly (paragraphs 56 and 57) but arguably that does not include the three step test. But maybe, implicitly, it reinforces the use of the test as the test restricts exceptions  Nothing else in judgment  AG interpreted test strictly if not restrictively but clearly “obiter” 8

9.  Vast majority of French commentators regrets the inclusion of the test in the act  1) The test in Berne Convention is not intended to courts but to the legislature  The test has normally already been applied or factored into each exception  2) The three conditions can be interpreted very differently (as the Mullholland Drive case shows) => leads to legal uncertainty in favour of right holders to the disadvantage of users 9

10.  A use a priori covered by an exception may a posteriori be revisited by the judge making the lawfulness of the use unpredictable => all the more inadmissible because sanction is 3 years imprisonment + a 300,000 € fine  3) Test can lead to judicial elimination of an exception introduced by the legislature => problem of separation of powers 10

11.  4) Importation of fair dealing/use in France but ‘reverse fair use’ => perverse: it applies not to the rights but to the exceptions, so that it judicially extends the exclusive right  Some positive comments…  1) Burden of proof is on the right holder i.e. s/he must prove that the exception does not meet the test  2) Must be interpreted strictly as it is an exception to an exception - ? It’s a return to the principle so should be broadly interpreted 11

12.  What can be done to redress the imbalance? Courts could:  1) use human rights  2) not follow the Court of Cassation as does not apply third step  Geiger: third step is important: allows examination of justification(s) underlying the exception; right holders should not have the right to control all uses of their works as certain prejudices are justified as take into account values considered superior to the right holders’ interest(s) 12

13.  Lucas: go back to test’s purpose: not conceived as a machine to render all exceptions fragile but as a safeguard, i.e. to limit capacity of states to use of the freedom to provide exceptions without reason  The declaration on the three step test 13

14.  The introduction of the test in Software and Database Directives => no fuss at the time maybe because no litigation occurred  In Software Directive – “or” not “and”  How would the ECJ interpret the test? As having to be introduced into national law or not? 14

15.  Should the exceptions be subject to the user having had access to a lawful copy of the work to benefit from exception?  Court of Cassation, 30 May 2006 (MP v Aurélien D.) set aside decision and remanded to CA Aix-en-Provence:  1) the defendant did not prove he made the reproductions after having had the permission from the right holders, so that the copies have an unlawful character. 15

16.  2) private copying exception does not apply because cannot apply for the lending of CD-ROMs to friends because no control over the use and diffusion that will be made of them by friends.  Decision alarming in two respects:  1) When an exception is provided, by definition, the person who wants to benefit from it does not have to ask the permission of the right holder! 16

17.  The court may have wanted to say that the exception does not apply if the copy in question is not lawful, but then it should have said that and not what it said, which potentially renders all the exceptions moot.  2) reverses well-settled case law that holds that friends are considered part of the legal concept of ‘family circle’ comprised in the concept of ‘private’. 17

18.  Certain authors think it is or should be. Common sense: objective of the private copying exception is not to help indelicate citizens  But others say that this adds to the law; indeed French bill included the requirement but it was dropped Levy always (whether copy used was lawful or not) compensates the loss of monies of the right holder resulting from domestic use 18

19.  Unlike Software and Database Directive, Infosoc Directive does not subject the benefit of exceptions to lawful copy Perhaps it is better that the French legislature finally did not impose this requirement because of the complexities of determining what a lawful copy is. 19

20.  To comply with the test, should the person who wishes to exercise an exception have access to a lawful copy?  If the test is based on fair dealing or fair use, there is no case law applying the factors which requires that the copy used is lawful. Although one could use the factor of the impact on the market for the work as a potential candidate. 20

21. Estelle.derclaye@nottingham.ac.uk ederclaye@hotmail.com 21