British Academy of Songwriters, Composers And Authors & Ors, R (On the Application Of) v Secretary of State for Business, Innovation And Skills

A Member State may introduce a narrowly defined private-copying exception under Article 5(2)(b) of the Copyright Directive without a compensation scheme where resulting harm to rightholders is minimal. The Member State may adopt a lost-sales measure of harm rather than a hypothetical licensing-fee measure, subject to EU-law limits and judicial supervision.

Judicial review of the economic evidence is relatively intensive but remains supervisory. The decision-maker may rely on economic inference and judgment, but the evidence must rationally support the specific conclusion that residual harm is de minimis. A strong predisposition does not amount to predetermination if the decision-maker remains open to persuasion.

The claimants, representing songwriters, musicians and the UK music industry, challenged the Secretary of State’s decision to introduce section 28B of the Copyright, Designs and Patents Act 1988. The provision permitted individuals to make personal, non-commercial copies of lawfully acquired works, including format-shifting, back-up and certain cloud storage, without compensation to rightholders.

The claim alleged errors concerning the meaning of harm, the pricing-in theory, the adequacy of the evidence, consultation and predetermination. The intervener separately alleged that the measure constituted unnotified State aid under Articles 107 and 108(3) TFEU.

1. Claim allowed in principle. The decision to introduce section 28B without a compensation mechanism was unlawful because the evidence did not justify the conclusion that residual harm would be minimal or zero. The court deferred final relief and invited submissions on the next steps, including a possible reference to the Court of Justice.
2. The intensity of review depended on the issue. Questions of law, direct effect, predetermination and State aid were for the court to determine on the merits. Fact-finding and economic evaluation attracted a modest margin of appreciation, but required careful and relatively intensive review.
3. The court accepted that Article 5(2)(b) allowed a compensation-free exception where harm was de minimis. It also accepted that a compensation mechanism would be futile where no compensable harm existed. The meaning of harm was an autonomous EU-law concept, not defined by domestic remedies. The Secretary of State was entitled to use lost duplicate sales as the relevant metric. The competing licensing-fee approach was not legally compelled.
4. The pricing-in theory was a rational and respectable economic theory. Its adoption was within the Secretary of State’s discretion. The court did not decide that the theory was economically correct in every circumstance, nor did it require price discrimination as a necessary condition.
5. The critical defect was evidential. The evidence showed, at most, that pricing-in occurred to some extent. It did not establish that pricing-in was sufficiently extensive to reduce residual harm below the de minimis threshold. The research concerning music was ambiguous and raised unanswered questions. Research concerning films, books and software did not address whether any remaining harm was minimal. Relevant surveys and price comparisons were not conducted, criticisms of existing data were not properly followed up, and historical pre-digitalisation purchases were not investigated.
6. The consultation was not unlawfully predetermined. The Secretary of State was entitled to begin with a strong predisposition against levies and to consult on alternatives, including doing nothing. The evidence did not show that the final decision-maker had closed his mind.
7. The State-aid challenge failed. The alleged benefit to technology firms lacked a sufficiently direct, formal and certain connection with State resources. It was also inherent in a general legislative measure pursuing other policy objectives.