Heading new challenges on intellectual property regulation -Deloitte Abogados

Important changes to Spanish intellectual property (IP) regulations have developed since the beginning of 2012. These include the removal of the levy that compensated rights holders for the making of private copies of their works, and the approval of the first rules against illegal downloads, introducing an administrative proceeding for taking down infringing websites. These developments are the start of a potential deep reviewing process of IP regulation to adapt the prevailing legislation to the challenges posed by the rise of new technologies. Some of the keys points of this review process are outlined below.


The past months have been particularly intense for the IP industry; not just because of important news, such as Megaupload’s takedown by the FBI, but also due to the amendments and developments to industry regulations that have been ongoing since the new Spanish Government took office last December.

On December 30th, 2011, the Government passed two rules introducing important developments on IP regulation. Private copying levy

Royal Decree-Law 20/2011 (December 30th, 2011) on urgent budgetary, tax and financial measures to correct the deficit includes, among others, the removal of the existing private copying levy, by virtue of which (as required by Directive 2001/29/EC of the European Parliament and the Council, on the harmonisation of certain aspects of copyright and related rights in the information society) a compensation payable to authors and other copyright holders was established to offset them for the allowed possibility of users making private copies of copyrighted works and other protected performances.

Despite being described by the law as ‘fair’, this compensation levied every equipment, device or system suitable for making copies. It has been surrounded by controversy since its inception, not just because of the huge social rejection it generated, but also because last year’s ruling by the European Court of Justice in the famous Padawan case made it clear that the non-differentiated application of copy levy provision to any equipment, device or system clearly infringed EU law, irrespective of whether they were actually intended to make private copies or not, and without reflecting the actual harm produced by those products.

In this context, the Spanish Government seems to have chosen the fastest track, removing the compensation as of January 1st, 2012, and succinctly referring to a developing regulation that will replace it with a payment directly charged from the National Budget (which raises several additional concerns), but not providing any transitory provision. This has so far caused quite a few problems for manufacturers, distributors and copyright-collecting societies in 2012.


The ‘Sinde-Wert Act’

At the same time, the Government also passed Royal Decree 1889/2011 (December 30th, 2012) regulating the operation of the IP Commission. This Decree sets out the regulatory development of the 43rd final provision of the Sustainable Economy Act, popularly known as the ‘Sinde-Wert Act’ (assigning its authorship to the former Spanish Culture Ministry, Ms Ángeles González-Sinde, and the current one, Mr José Ignacio Wert, who has speed-up the implementation process). This Act includes, for the first time in Spain, the measures to be taken against those websites infringing IP rights. It also sets the administrative procedure (although with a symbolic judicial intervention) for taking down those websites that facilitate illegal copyrighted content.

With the abovementioned Royal Decree already in force, it is now possible to denounce Internet services providers suspected of being in breach of IP rights (from a purely administrative perspective), so that section two of the IP Commission carries out a procedure that could end in the taking down (within two months) of those services and websites offering infringing content. This controversial rule has been brewing for the past two years, and has had to overcome a lot of social, political, parliamentary and constitutional obstacles before becoming a legal text intended to mitigate the uncontrolled flow of illegal downloads in Spain. This Royal Decree does not prejudice possible civil or, if applicable, criminal actions before competent courts.


New challenges

These new regulations are a reflection of the social changes we are witnessing. It is undeniable that new technologies are permeating our lives, changing the ways we work, have fun and communicate with others. The law must fit social reality, and now more than ever there is the need for an accurate legal response to the times we live in. It urges, therefore, a deep full review of our Copyright Act, which, although based on a relatively young text of 1987, has partly become outdated as a result of the quick development experienced by information technologies. Among the items to be included in the Parliament’s agenda for this review process are the adaptation of the law to the current methods and ways of exploiting contents, the approach of a new model of collective management of IP rights, new ways of remuneration and compensation to rights holders. Only by addressing a reform according to the times we live in will we earn the appropriate tools to answer the questions that the digital economy demands.

Norman Heckh is a Director and Ignacio Cárdenas is a Senior Lawyer at Deloitte Abogados y Asesores Tributarios. They can be contacted at nheckh@deloitte.es and icardenas@deloitte.es