[Ecommerce] German Mediator Recommends Copyright Levy on Computers

[Joy Spencer]

Updated February 5, 2003

German Mediator Recommends Copyright Levy on Computers

By BRANDON MITCHENER
Staff Reporter of THE WALL STREET JOURNAL

(See Corrections & Amplifications item below.)

BRUSSELS -- A German Patent Office mediator Tuesday asked 
personal-computer makers to pay copyright owners €12 ($13) for every new 
PC they sell as compensation for private digital copying, raising the 
likelihood of a court battle over the royalties.

PC industry representatives immediately signaled their intention to 
challenge the nonbinding recommendation, which marks the latest chapter 
in a year-old fight between hardware manufacturers and collecting 
societies representing copyright owners worried by a significant 
increase in private copying.

"Fujitsu Siemens and the rest of the industry presumably will reject the 
suggestion," and the case will head to court, said Thomas Vinje, a 
partner with law firm Morrison & Foerster LLP in Brussels, who 
represents Fujitsu Ltd. of Japan, one of the two parent companies of 
German computer maker Fujitsu-Siemens Computers.

Fujitsu-Siemens Computers, whose other parent is Siemens AG of Germany, 
is at the center of the dispute following demands by German reprography 
rights society VG Wort. VG Wort wasn't available to comment.

Germany is the first country in Europe where a collecting society has 
attempted to impose a copyright levy -- a kind of royalty collection -- 
on new PCs. Collecting societies also are trying to impose levies on the 
sale of printers, scanners and other devices that can be used to make 
digital copies. Some countries already have extended copyright levies to 
blank compact discs, recordable digital videodiscs and CD writers.

No such levies exist in the U.S., the United Kingdom, Luxembourg or 
Ireland, although most European countries long have imposed special 
copyright fees on the sale of blank audio and video cassettes, and find 
it only natural that these levies also be imposed on digital media. 
Collecting societies, which drum up money on behalf of publishers and 
individual artists and authors, say such levies are justified as a means 
of compensating copyright holders for the use of their work on the 
assumption that many people use PCs to save and copy works that normally 
would be subject to royalties. Collecting societies pay artists, authors 
and publishers in the form of a periodic check or transfer.

European consumer organizations have been fighting the levies on the 
grounds that they raise prices and are based on a mere presumption that 
people are using computers to copy protected works. An official with 
Bitkom, an organization representing 1,300 information-technology 
companies in Germany, said the recommendation would cost the country's 
consumers an extra €70 million a year.

While the German mediator's recommendation would cost the industry less 
than the €30 per computer initially sought by VG Wort, hardware makers 
such as Fujitsu-Siemens and Hewlett-Packard Co. say the addition of even 
€12 to the price of a new PC is enough to drive many manufacturers into 
losses unless they can pass on the extra cost to consumers -- a feat 
that they say is unlikely.

Corrections & Amplifications:

Thomas Vinje, a partner with law firm Morrison & Foerster LLP in 
Brussels, represents Fujitsu Ltd., one of the two parent companies of 
German computer manufacturer Fujitsu Siemens Computers. This article 
about copyright levies on personal computers incorrectly stated that he 
represented the German joint venture.

Write to Brandon Mitchener at brandon.mitchener@wsj.com