In the light of the principle of strict interpretation of provisions of a directive which derogate from a general principle established by that directive, the different exceptions and limitations provided for in Article 5(2) of Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted strictly. Such an interpretation requires that that provision concerning the conditions for the application of the exceptions and limitations to the reproduction right be understood as meaning that it admittedly prohibits copyright holders from relying on their exclusive right to authorise or prohibit reproductions with regard to persons who make private copies of their works; however, it precludes that provision from being understood as requiring, beyond that limitation which is provided for expressly, copyright holders to tolerate infringements of their rights which may accompany the making of private copies.

As regards the private copying exception provided for in Article 5(2)(b) of Directive 2001/29 on the harmonisation of certain aspects of copyright and related rights in the information society, EU law, in particular that provision, read in conjunction with paragraph 5 of that article, must be interpreted as precluding national legislation which does not distinguish the situation in which the source from which a reproduction for private use is made is lawful from that in which that source is unlawful. The fact that no applicable technological measures, for the purposes of Article 6 of that directive, to combat the making of unlawful private copies exist is not capable of calling that finding into question.

Although the Member States have the option of introducing the different exceptions provided for in Article 5 of that directive, in accordance with their legal traditions, once they have made the choice of introducing a certain exception, it must be applied coherently, so that it cannot undermine the objectives which Directive 2001/29 pursues with the aim of ensuring the proper functioning of the internal market. If the Member States had the option of adopting legislation which also allowed reproductions for private use to be made from an unlawful source, the result of that would clearly be detrimental to the proper functioning of the internal market.

Furthermore, when it is applied, such legislation may infringe certain conditions laid down by Article 5(5) of Directive 2001/29. First, to accept that such reproductions may be made from an unlawful source would encourage the circulation of counterfeited or pirated works, thus inevitably reducing the volume of sales or of other lawful transactions relating to the protected works, with the result that a normal exploitation of those works would be adversely affected. Secondly, the application of such national legislation may unreasonably prejudice copyright holders.

Lastly, as regards the fair compensation paid to rightholders, a levy system, which does not, as regards the calculation of the fair compensation payable to its recipients, distinguish the situation in which the source from which a reproduction for private use has been made is lawful from that in which that source is unlawful, does not respect the fair balance between the rights and interests of authors, who are the recipients of the fair compensation, on the one hand, and those of users of protected subject-matter, on the other. Under such a system, the harm caused, and therefore the amount of the fair compensation payable to the recipients, is calculated on the basis of the criterion of the harm caused to authors both by reproductions for private use which are made from a lawful source and by reproductions made from an unlawful source. The sum thus calculated is then, ultimately, passed on in the price paid by users of protected subject-matter at the time when equipment, devices and media which enable private copies to be made are made available to them.

(see paras 34, 35, 38-40, 45, 46, 53-55, 58, operative part 1)