By 3 March 2008 Ruling the Supreme Court in the case LATGAA v. Trajektorija (3K-3-4/2008) upheld the extended copyright levies on all blank media introduced to Lithuania (regardless of whether it was imported from outside of the EU, or introduced from the other EU country, and irrespective of the purpose for which the media is intended or used).

Sadly, the Lithuanian Supreme Court has blatantly ignored the social and economic burden of this decision, as well as misinterpreted the EU Copyright Directive 2001/29/EC. Moreover, the Court may have stepped into the territory of the European Court of Justice, as well as the Constitutional Court, when undertaking the interpretation of the EU Copyright Directive 2001/29/EC, as well as arguing about the role of the Governmental regulations compared to the law.

The Court assumed that the EU Copyright directive requires „fair compensation“ in all cases where the „right to private copy is provided“, thereby ignoring the express guidance of the Directive on the discretionary nature of the fair compensation: „When determining the form, detailed arrangements and possible level of such fair compensation, account should be taken of the particular circumstances of each case. When evaluating these circumstances, a valuable criterion would be the possible harm to the rightholders resulting from the act in question. In cases where rightholders have already received payment in some other form, for instance as part of a licence fee, no specific or separate payment may be due. The level of fair compensation should take full account of the degree of use of technological protection measures referred to in this Directive. In certain situations where the prejudice to the rightholder would be minimal, no obligation for payment may arise.” (Item 35 of the Preamble of the EU Copyright Directive 2001/29/EC; emphasis added). Unfortunately, the scope of the prejudice to the rightholder through the private copying in Lithuania (which has one of the most restrictive private copying regimes in the EU), as well as the practice of the levy-free EU countries was completely ignored by the Court.

Moreover, the Court failed with the duty to refer the case to the European Court of Justice, which has the sole discretion of interpreting the EU directives.

The Court also assumed that the Government has rightfully imposed the levies on all blank media introduced into the country, regardless of whether they are intended for personal purposes (the law itself is moot on this issue). Even though it was accepted that media may be used for non-personal purposes (such as broadcasting, needs of the hearing/vision impaired, public administration, public security, scientific research), the general levying of all media with limited right to refund was upheld.

Curiously, the Court sidestepped practical aspects of collecting the copyright levies, thus leaving the door open for further litigation. The Court recognized that there are no rules on how the levies shall be reported and paid in case the levied media are brought into the country from the other EU country (and no customs procedures are performed), although failed to acknowledge lack of such rules as an implication of the import-only nature of the levies. In the intra-EU situation the Court suggested that the parties (i.e. collecting society, as well as wholesaler) shall deal with this by means of a contract (if this was not already obvious). Also, no mention was made with respect to the double-levying of the media in several EU countries and accompanying distortions of competition. Surprisingly, instead, the Court found “inequality” for the entities importing the blank media from outside of the EU and domestic blank media manufacturers! It is difficult for us to grasp any such “inequality” when there are no media manufacturers in Lithuania, and entities bringing in the blank media into the country have clear freedom to seek the suppliers inside or outside of the EU based on sole economic criteria!

Altogether, the decision failed to conclude the dispute on the fairness of compensation for the private copying exception, instead imposing the general social burden. On the other hand the general burden is somewhat offset by the recent reduction of the scope of copyright levies (excluding the hard disk and flash memory media).