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The 'Three-Step Test' in European Copyright Law - Problems and Solutions

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 Queen Mary University of London, School of Law
Legal Studies Research Paper No. 31/2009

THE “THREE-STEP TEST” IN EUROPEAN

COPYRIGHT LAW – PROBLEMS AND
SOLUTIONS

Jonathan Griffiths

Electronic copy available at: http://ssrn.com/abstract=1476968

 THE “THREE-STEP TEST” IN EUROPEAN COPYRIGHT LAW – PROBLEMS AND
SOLUTIONS *

Jonathan Griffiths

School of Law
Queen Mary University of London

The appropriate scope and function of limitations and exceptions in copyright law is a
controversial issue. 1 Significant proposals for harmonised and mandatory exceptions are
under discussion at international level 2 and difficult cases concerning the application of
existing exceptions in new conditions arise regularly in national courts. 3 Technological
change lies at the heart of this controversy. In response to such change, adjustments have
been made to the rights protected under international copyright treaties. However, until
recently, exceptions have received relatively little attention. This focus is now shifting. Authors
and copyright owners argue that forms of use that have traditionally fallen outside their
control, such as private and personal use, should be brought within the scope of copyright. By
contrast, users and advocates of the public domain claim that progressive expansion of the
powers granted to copyright owners threatens the traditional scope of free, or relatively free,
uses of copyright works. In this context, the so-called “three-step test” has attracted
considerable attention from copyright policy makers, courts and scholars. 4

In international copyright law, the “three-step test” restricts the ability of states to introduce,
and maintain, exceptions to the exclusive rights of authors and other right-holders. Under its
well-known terms, exceptions are only permitted (1) in certain special cases; (2) which do not
result in a conflict with the normal exploitation of a work and (3) which do not unreasonably
prejudice the legitimate interests of the author (or other right-holder). 5 Originating in the 1967
Stockholm Conference revision of the Berne Convention, this formula now forms an integral
part of several international agreements 6 concerning copyright and related rights 7 and has
been applied as a constraint on the availability of exceptions to the exercise of other forms of

*
* This article is based upon presentations made at the Society for Legal Scholars Annual Conference (IP Section)
2007, the Centre for Media & Communications Law Annual Conference, University of Melbourne, 2008 and the
Queen Mary University of London Postgraduate IP Colloquia 2009. I am grateful to the participants at those events
for their useful critique and suggestions and to Lionel Bently, Graeme Dinwoodie Christophe Geiger, Reto Hilty and
colleagues in the MPI/QM working group on the Declaration on a Balanced Interpretation of the ‘Three-Step Test’ in
Copyright Law for stimulating discussions about the “three-step test”. They are certainly not responsible for the views
expressed here.
1
The term “exceptions” is used throughout this article to designate provisions referred to variously in national laws as
“exceptions”, “limitations”, “permitted acts”, “defences” etc. This choice is not intended to advertise a preference for
an approach under which “exceptions” are to be viewed, and interpreted, as strictly limited, “exceptional”, incursions
into an author or other right-holder’s right. For discussion of naming conventions and politics in this respect, see A
Kur, “Of Oceans, Islands and Inland Water – How Much Room for Exceptions and Limitations under the Three-Step
Test?” in Max Planck Institute for Intellectual Property, Competition & Tax Law Research Paper Series No. 08-04
(available at SSRN: http://ssrn.com/abstract=1317707).
2
See, for example, PB Hugenholtz & R Okediji, Conceiving an International Instrument on Limitations and
Exceptions to Copyright (Open Society Institute, 2008); A Kur, “Of Oceans, Islands and Inland Water – How Much
Room for Exceptions and Limitations under the Three-Step Test?” in Max Planck Institute for Intellectual Property,
Competition & Tax Law Research Paper Series No. 08-04 (available at SSRN: http://ssrn.com/abstract=1317707) ; C
Geiger, “Implementing an International Instrument for Interpreting Copyright Limitations and Exceptions” [2009] IIC
(forthcoming); J Sullivan, Study on Copyright Limitations and Exceptions for the Visually Impaired, WIPO Doc.
SCCR/15/7, February 20th 2007; K Crews, Study on Copyright Limitations and Exceptions for Libraries and Archives,
WIPO Doc SCCR/17/2, August 26th, 2008.
3 th
See, for example, Perfect 10 Inc v Amazon.com Inc 508 F.3d 1146 (9 Cir, 2007); Infopaq International AS v
th
Danske Dagblades Forening (C-5/08) 16 July 2009 (ECJ) and the cases discussed at 2 & 3 below. .
4
For detailed discussion of the history and interpretation of the “three-step test”, see M Senftleben, Copyright,
Limitations and the Three-Step Test (Kluwer Law International, 2004); S Ricketson & J Ginsburg, International
Copyright & Neighbouring Rights: the Berne Convention and Beyond (OUP, 2006), 13.03 ff.
5
The “test”’s third condition refers to the “legitimate interests of the author” under the Berne Convention and WIPO
Treaties. However, under TRIPS, it refers to “the legitimate interests of the right holder”.
6
See, for example, TRIPS, Art 13; WIPO Copyright Treaty, Art 10; WIPO Performances and Phonograms Treaty, Art
16.
7
In this article, unless there is a specific need to make a distinction between “authors’ rights” and “neighbouring or
related rights”, the term “copyright” is used to describe both forms of right.

Electronic copy available at: http://ssrn.com/abstract=1476968

intellectual property right at international level. 8 The “test” has also recently come to play a
significant role in domestic copyright laws, not only through its role as a restriction on
legislative freedom, 9 but also as a result of the transposition of its terms, either directly or
indirectly, into national laws themselves. 10 Where the “test” has been incorporated in national
law, courts have been obliged to test the compatibility of existing legislative exceptions with
the “three-step test” in particular concrete circumstances. In European courts, in particular,
national judges have increasingly been required to apply the “test” in this manner.

This development is considered in this article, which analyses a number of decisions from
European national courts in the context of current debates concerning the scope and
interpretation of the “three-step test”. Following a brief explanation of the development of the
“three-step test” in European copyright law, it looks more closely at a series of cases in which
the “test” has been applied by national courts – sometimes in a manner that significantly
restricts the scope of national exceptions and sometimes more flexibly. It is argued that,
viewed as a whole, these cases reveal significant problems. While a “flexible” or “balanced”
approach to the interpretation of the “test”, as advocated recently by a number of copyright
scholars (including the author of this article), would certainly alleviate some of these
problems, it is suggested that one core problem with the “three-step test” will be more difficult
to solve. It is argued (i) that the “test” has no settled meaning and is therefore currently
incapable of functioning as a useful legal tool and (ii) that it may, in any event, be
fundamentally unsuited to the role of providing an analytical framework for the resolution of
disputes concerning the scope of copyright exceptions. This latter problem will remain
whether the test is interpreted restrictively or liberally. As a result, claims by some scholars
that a flexibly-interpreted “three-step test” could function as a valuable mechanism for
introducing flexibility into closed copyright systems (such as that established under the
harmonisation Directives in Europe) are argued here to be misconceived.

1 The “three-step test” in European copyright legislation

Since the early 1990s, the Community legislature has issued a series of harmonisation
measures in the area of copyright law. Some of these instruments make explicit reference to
the “three-step test”. The Software Directive 11 includes a provision requiring member states
to exempt certain forms of software decompilation from the scope of the rights granted to
copyright owners. 12 Any such exception:

“…may not be interpreted in such a way as to allow its application to be used in a

manner which unreasonably prejudices the right holder’s legitimate interests or
conflicts with a normal exploitation of the computer program.” 13

This provision makes reference only to the second and third steps of the “test”. It is to be
assumed that the first step (“certain special cases”) was considered to be satisfied through
the conditions placed on the scope of the exception by the legislature itself. A similar partial
transposition of the “three-step test” is also to be found in the Rental Right Directive, 14
establishing harmonised protection for related (“neighbouring”) rights at Community level, 15

8
See TRIPS Agreement; Art 17 (trade marks); Art 30 (patents) and Art 26(2) (designs). For discussion of the
interpretation of the TRIPS provisions relating to patent and trade mark laws, see M Senftleben, “Towards a
Horizontal Standard for Limiting Intellectual Property Rights? WTO Panel Reports Shed Light on the Three-Step test
in Copyright Law and Related tests in Patent and Trademark Law” (2006) IIC 407.
9
For example, in response to the enhanced role given to the “three-step test” under the Information Society Directive,
the United Kingdom legislature restricted certain previously available exceptions under the Copyright Designs &
Patents Act 1988 (ss 67 & 72).
10
See, for example, Australia (Copyright Act 1968 (as amended), s 200AB) and China (Copyright Act (China), Art 21.
11
Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs.
12
Arts 6(1) & (2).
13
Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs, Art 6(3).
14
Council Directive 92/100/EEC of 19 November 1992 on rental right and on certain rights related to copyright in the
field of intellectual property (codified by Directive 2006/115/EC).
15
This provision lists acceptable exceptions (Art 10(1) & (2)), but specifies that such exceptions “…shall be applied
only in certain special cases which do not conflict with a normal exploitation of the subject matter and do not
unreasonably prejudice the legitimate interests of the rightholder” (Art 10(3)).

Electronic copy available at: http://ssrn.com/abstract=1476968

and the Database Directive, 16 which, inter alia, harmonised the application of copyright to
databases within the European Community. However, the most significant (and certainly the
most “horizontal”) expansion of the role of the “three-step test” was effected by the
Information Society Directive, 17 which requires member states to provide copyright-holders
with exclusive rights of reproduction, 18 communication to the public, 19 making available to the
public, 20 and distribution. 21 It also provides an exhaustive list of permissible exceptions to
those rights. 22 Under Article 5(5), any such exception:

“…shall only be applied in certain special cases which do not conflict with a normal
exploitation of the work or other subject-matter and do not unreasonably prejudice the
legitimate interests of the rightholder” 23

This provision, following the extensive and rather disparate list of permissible exceptions set
out in Articles 5(2)-(4), appears to introduce a generalised, rational harmonising standard
against which all national exceptions are to be measured. 24 This impression, it will be argued
below, is entirely illusory.

One important question concerning the structural function of Article 5(5) of the Information
Society remains unanswered. Is it addressed only to legislatures in the member states or is at
also addressed to national courts? If the former, the provision functions purely as an
instruction to legislatures to ensure that, in implementing national exceptions within the scope
of Article 5(5), they must ensure compliance with the “three-step test”. If, on the other hand, it
is addressed directly to national courts, it would appear to have a much more powerful role,
obliging the judiciary to ensure that the application of an exception in national law in specific
disputes complies at all times with the “three-step test”. 25 Indeed, if this reading is correct, it is
possible that Article 5(5) may even require the disapplication of domestic exceptions (in whole
or in part) where their application would breach the “three-step test” in any particular case. It
is not easy to discern which of these two possible readings of Article 5(5) is correct. 26 Nothing
in the travaux préparatoires points decisively in either direction. In favour of the more
restricted reading of Article 5(5), 27 it can be noted that there is a difference between the
wording of Article 5(5) (“shall only be applied”) and the version of the “three-step test”

16
Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of
databases.
17
Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of
certain aspects of copyright and related rights in the information society.
18
Art 2.
19
Art 3(1) (under which authors are provided with the exclusive right to authorise or prohibit any communication to
the public of a work, including the making available of a work to the public).
20
For authors, Art 3(1), ibid. Under Art 3(2), holders of related rights are provided with the exclusive right to authorise
or prohibit the making available of a work to the public.
21
Art 4 provides a distribution right for authors of copyright works only.
22
Art 5. Art 5(1) provides for a single mandatory exception for certain temporary acts of reproduction which are
transient or incidental and an integral and essential part of a technological process (for interpretation, see Infopaq
th
International AS v Danske Dagblades Forening (C-5/08), 16 July 2009 (ECJ).
23
The recitals to the Directive indicate that Article 5(5) may place greater restraints on exceptions in the digital
environment “When applying the exceptions and limitations provided for in this Directive, they should be exercised in
accordance with international obligations. Such exceptions and limitations may not be applied in a way which
prejudices the legitimate interests of the rightholder or which conflicts with the normal exploitation of his work or other
subject-matter. The provision of such exceptions or limitations by Member States should, in particular, duly reflect the
increased economic impact that such exceptions or limitations may have in the context of the new electronic
environment. Therefore, the scope of certain exceptions or limitations may have to be even more limited when it
comes to certain new uses of copyright works and other subject-matter” (Recital 44).
24
The obligation for European copyright law to comply with the “three-step test” as a matter of international law is
th
reiterated in the EC Commission’s Green Paper – Copyright in the Knowledge Economy COM (2008) 466 final, 16
July 2008, 4-5, 19-20. For criticism of the role played by the “three-step test” under Article 5(5), see G Westkamp,
“The ‘Three-step Test’ and Copyright Limitations in Europe: European Copyright Law between Approximation and
National Decision Making” [2008] Journal of the Copyright Society of the USA 1.
25
For the Spanish position, see R Xalabarder, “Fair Use in Spain: the EUCD Aftermath” in G Ghidini and L Genovesi
(eds) Intellectual Property & Market Power: ATRIP Papers 2006-7, 811.
26
T Dreier, “The Role of the ECJ for the Development of Copyright in the European Communities”, (2007) 54 Journal
of the Copyright Society of the USA 183, 224; C Geiger, “From Berne to National Law, via the Copyright Directive:
the Dangerous Mutations of the Three-Step Test” [2007] EIPR 486, 488-9.
27
Commentators favouring an interpretation under which Art 5(5) is directed at the legislature only are R Burrell & A
Coleman, Copyright Exceptions: the Digital Impact (CUP, 2005) 298; PB Hugenholtz & R Okediji, Conceiving an
International Instrument on Limitations and Exceptions to Copyright (Open Society Institute,2008), 18; S Dusollier,
“L’Encadrement des Exceptions au Droit d’Auteur par le Test des Trois Etapes [2005] IRDI 212.

3
contained in the Software Directive, which explicitly states that the decompilation exception
may not be “interpreted” incompatibly with the first and second steps of the test. 28 A number
of Member States have taken the view that Article 5(5) is directed solely at national
legislatures and, accordingly, in implementing the Information Society Directive, have made
no explicit reference to the “three-step test” in national law. 29 On the other hand, in support of
the argument that Article 5(5) imposes a direct obligation on national courts, 30 it has been
argued that the terms of Article 5(5) of the Information Society Directive (“shall only be
applied”) contrast with the text of Articles 5(2) to 5(4) of the same Directive, which state that
member states “may provide” certain exceptions or limitations. 31 A number of member states
have in fact implemented Article 5(5) directly into the body of their national laws. 32 In any
event, the significance of this debate about the intended addressee of Article 5(5) is
diminished by the fact that, in a number of member states, courts have in any event begun to
make reference to the supposed impact of the “three-step test” in specific cases, whether
obliged to do so or not and whether national legislation makes explicit reference to the “test”
or not. 33 Indeed, in some instances, reference to the “test” by national courts predates the
implementation of the Information Society Directive. In such cases, courts have generally
applied the “test” in ostensible satisfaction of the requirements of international copyright law –
usually Article 9(2) of the Berne Convention or Article 13 of the TRIPS Agreement.

Below, a number of examples of the application of the “three-step test” by European national
courts are examined. 34 These demonstrate the divergent approaches that have been taken to
its application and, for the purpose of analysis, are grouped into two categories – cases in
which the “test” has been applied in a manner that imposes strict restraints on the scope and
application of national exceptions and cases in which a significantly more flexible approach
has been adopted by national courts.

2 National courts - The “three-step test” as a restrictive standard

Perhaps the best-known, and most widely-criticised, example of the adoption of a strict
standard is provided by the decision of the French Supreme Court in the Mulholland Drive

28
See M Hart, “The Copyright in the Information Society Directive: an Overview” [2002] EIPR 58. Hart points out that
the final version of Art 5(5) differs from the wording originally proposed, which followed Art 6(3) of the Software
Directive.
29
These include Germany, Austria, Denmark, Sweden, the United Kingdom and Finland . For comprehensive
analysis, see G Westkamp, The Implementation of Directive 2001/29/EC in the Member States, Brussels: European
Commission 2007, http://ec.europa.eu/internal_market/copyright/docs/studies/infosoc-study-annex_en.pdf
and, for discussion, see F Gotzen, “Copyright in Europe: Quo Vadis? Some Conclusions after Implementation of the
Information Society Directive” (2007) 211 Revue Internationale du Droit d’Auteur 2, 28. Johnson has argued that, if
Article 5(5) had been intended to impose post-legislative constraints upon domestic courts, there would have been no
need for the UK Parliament to have amended ss 67 & 72 in order to ensure compatibility with the “three-step test” (P
Johnson, “One Small Step or One Giant Leap” [2004] EIPR 264, 267.
30
Commentators favouring an interpretation of Art 5(5) as directed at courts include H Cohen Jehoram, “Restrictions
on Copyright and their Abuse” [2005] EIPR 359, 363-4; H Cohen Jehoram, “Is there a Hidden Agenda behind the
General Non-Implementation of the Three-Step Test” [2009] EIPR 408; C. Geiger, "The Private Copy Exception, an
Area of Freedom (Temporarily) Preserved in the Digital Environment" [2006] IIC 80, 80; J Oliver, “Copyright in the
WTO: The Panel Decision on the Three-Step Test”, (2002) 25 Columbia Journal of Law & the Arts 119-170, 139;.
31
J Oliver, “Copyright in the WTO: The Panel Decision on the Three-Step Test”, (2002) 25 Columbia Journal of Law
& the Arts 119-170, 138-9.
32
For example, France, Greece, Spain, Belgium, the Netherlands, Finland. Such implementations have taken
different forms. For comprehensive analysis, see G Westkamp, The Implementation of Directive 2001/29/EC in the
Member States, Brussels: European Commission 2007,
http://ec.europa.eu/internal_market/copyright/docs/studies/infosoc-study-annex_en.pdf.
33
See Sections 2 & 3 below. To date, courts in the United Kingdom have made only background reference to the
“three-step test” in considering the application of the defences to infringement under the CDPA 1988 (see, for
example, Hyde Park Residence Ltd v. Yelland [2000] 3 W.L.R. 215 (CA), para 55 (per Aldous LJ); Fraser-Woodward
Limited v British Broadcasting Corporation [2005] EWHC 472, para 55 (per Mann J).
34
These cases are not the only examples of the application of the “three-step test” by national courts in Europe.
However, they are of particular interest to English speakers because reports, or at least notes, of the decisions are
available in English. See also Nederlandse Dagblad Pers v NL, District Court The Hague, 2 March 2005, AMI 2005/3,
p. 103-107, noted J. Seignette, 2005 Computerrecht 143, K Koelman 2005 AMI 103. See also the cases listed at M
Senftleben, Copyright, Limitations and the Three-Step Test (Kluwer Law International, 2004) 280, n 1370. For brief
notes of Spanish cases making reference to the “Three-Step Test”, see R Xalabarder, “Fair Use in Spain: the EUCD
Aftermath” in G Ghidini and L Genovesi (eds) Intellectual Property & Market Power: ATRIP Papers 2006-7, 811, 817-
819. Outside Europe, see also Guillermo Luis Vélez Murillo, Proceso 29188, Corte Suprema de Justicia Sala de
Casacion Penal, Colombia.

4
case. 35 This case was brought by a purchaser of a DVD copy of David Lynch’s film,
Mulholland Drive who wanted to transfer the film into VHS format in order to watch it at his
mother’s house. Technological protection measures (TPMs) on the DVD prevented him from
doing so. Consequently, he brought proceedings, arguing, inter alia, that the private copy
exception under Art L 122-5 of the French IP Code gave him a right to make private copies of
the copyright works contained on the DVD and that the denial of his ability to make such
copies violated this right. The Paris Court of Appeals upheld this claim, holding that Art L 122-
5 provided a positive right of access for users of copyright works. However, this decision was
reversed by the French Supreme Court, which held that the private copy exception under
French copyright law is not a positive right and must be construed in accordance with the
“three-step test” under Article 9(2) of the Berne Convention. 36 This being so, it held that, in
the digital environment, the existence of an exception permitting the making of private copies
of DVDs would impair the normal exploitation of the copyright work and would, accordingly,
violate the second step of the “test”. The Supreme Court considered that an impairment of the
normal exploitation of the work would arise because there was an increased risk of piracy in
the digital environment and because DVD distribution was highly significant for the movie
industry. In coming to this decision, it effectively disapplied the statutory private use
exception (which was not, at that time, technology-specific) in the digital context.

The Dutch courts have also applied the “three-step test” in a manner that constrains the
scope of national exceptions in the face of technological development. Two significant
judgments in cases concerning, respectively, electronic internal press reviews in government
ministries 37 (“Ministry Press Reviews”) and private copying from illegal sources 38 (“Private
Copying from Illegal Sources”) are noted and discussed by Senftleben. 39 In Ministry Press
Reviews, the District Court of the Hague considered whether the practice of unauthorised
scanning and reproduction of press articles for internal electronic communication in ministries
was covered by statutory exceptions under the Dutch code (notably the exception for press
reviews). The court decided that it was unnecessary to consider whether these activities fell
within the detailed terms of the relevant statutory exceptions because, in any event, the use
did not satisfy the “three-step test” as set out in Article 5(5) of the Information Society
Directive. Given the growing importance of digital news sources and the impact of electronic
press reviews on this market, the Ministries’ activities were held to endanger a normal
exploitation of the relevant works and unreasonably to prejudice the publisher’s legitimate
interests in digital commercialisation. 40 In the more recent Private Copying from Illegal
Sources case, the same court considered whether private copying from an illegal source fell
within the terms of the provision of the Dutch Code concerning private copying. 41 Despite
suggestions from the drafting history that the nature of the source for private copying was
irrelevant, and without detailed explanation, the Court concluded that private copying from an
illegal source was “in conflict with the three-step test” as set out in Article 5(5) of the Directive
and was not therefore within the scope of the statutory exception. 42

A further example of the “three-step test” being applied in a restrictive manner is provided by
the decision of the Brussels Court of First Instance in Google Inc v Copiepresse SCRL. 43 The
claimant, a copyright management society acting on behalf of a number of newspaper
publishers, sued Google for infringement of copyright arising as a result of its French

35
Mulholland Drive, French Supreme Court, February 28, 2006, (2006) 37 I.I.C. 760, reversing Paris Court of Appeal,
April 22, 2005, (2006) 37 IIC 112; For discussion, see C Geiger, “The Answer to the Machine Should not be the
Machine: Safeguarding the Private Copy Exception in the Digital Environment” [2008] EIPR 121; C. Geiger, “The
Three-Step Test, a Threat to a Balanced Copyright Law?” (2006) 37 IIC 683; W Maxwell & J Massaloux, “French
Copyright Law Reform: French Supreme Court Upholds Legality of DVD Anti-Copy Measures” [2006] Ent LR 145.
36
At the time of the decision, the Directive (and therefore Article 5(5)) had not yet been implemented in French law.
However, the deadline for implementation had passed. Accordingly, the Court held itself to be bound to interpret
national law in conformity with the Directive so as far as possible.
37
Rechtbank Den Haag, March 2, 2005, case no 192880, LJN AS 8778, Computerrecht 2005, 143 (comment, K
Koelman).
38
Rechtbank den Haag, June 25, 2008, case no 246698, LJN BD5690, [2009] AMI 146 (comment CB van der Net).
See also D Stols, “Netherlands – Copying – Home Copying” [2008] Ent LR N48.
39
M Senftleben, “Fair Use in the Netherlands – a Renaissance?” [2009] AMI 1.
40
Paras 16-18. See M Senftleben, “Fair Use in the Netherlands – a Renaissance?” [2009] AMI 1,3
41
Art 16c.
42
Para 4.4.3. See M Senftleben, “Fair Use in the Netherlands – a Renaissance?” [2009] AMI 1,3.
43
Court of First Instance of Brussels, 13 February 2007 [2007] ECDR 5.

5
language “Google.News” service, which automatically searched websites carrying current
news, extracted articles from those websites and reproduced them. The claimant argued that
this activity infringed the copyright holders’ exclusive right to control the reproduction and
communication to the public of the articles. The defendant relied, inter alia, upon the Belgian
statutory limitations for quotation and news reporting and supported its argument by reference
to the right of freedom of expression protected under Article 10 of the European Convention
on Human Rights. The Court of First Instance of Brussels held that Google’s activities were
not covered by the statutory limitations and that Article 10, ECHR, did not preclude this
conclusion. In support of its decision, it stated that:

“Article 5(5) of Directive 2001/29 provides that the exceptions and limitations provided
for shall only be applied in certain special cases which do not conflict with a normal
exploitation of the work or other subject-matter and do not unreasonably prejudice the
legitimate interests of the rightholder (three-stage test), which seems to confirm the
restrictive nature of the exceptions…" 44

The fact that the “test” had not been explicitly transposed into Belgian law was not considered
to be relevant because, even where not directly implemented, it served as an interpretative
guideline for courts and tribunals.

All these cases can be regarded as exemplifying a strict approach to the “three-step test”. In
Mulholland Drive, the risk of economic harm to right-holders was, alone, sufficient for the
private use exception to be disapplied in the case of DVD distribution. No attempt to balance
that risk against any other relevant factors was made by the court. The approach to the
“three-step test” in Ministry Press Reviews and Private Copying from Illegal Sources appears
to have been similar. In Google, the “three-step test” served simply as a reinforcement of the
traditionally narrow interpretative approach traditionally taken to exceptions in some European
jurisdictions.

This approach could be argued to be in line with the dominant interpretation of the “three-step
test” at international level, which derives from the decision of the WTO Panel in the Fairness
in Music Licensing case, 45 in which the EU brought proceedings against the United States,
arguing that § 110(5) of the United States Copyright Act violated the “three-step test” as
incorporated into Article 13 of the TRIPS Agreement. In its report on that case, the Panel
handed down the most detailed interpretation of the “three-step test” to date. This can be
characterised as “restrictive” in a number of respects. First, in the Panel’s view, the three
steps of the test are considered to be cumulative conditions. That is, an exception or limitation
failing to surmount any of the three hurdles established under the test will necessarily violate
the “test” – regardless of the existence or otherwise of compelling competing public interests.
Secondly, the Panel interpreted the “certain special cases” requirement imposed by the “test”
as permitting only exceptions that are both narrow 46 in scope and clearly defined. 47 Thirdly, it
held that exceptions or limitations are to be regarded as conflicting with the normal
exploitation of a work whenever they permit uses of a work that are capable of competing
economically with the ways in which a right-holder normally extracts value from that work and
thereby deprive the right-holder of significant or tangible commercial gains. In this respect, it

44
Ibid, para 120.
45
Panel Report, 15th June 2000, WT/DS/160/R. For discussion, see LR Helfer, “World Music on a U.S. Stage: A
Berne/TRIPs and Economic Analysis of the Fairness in Music Licensing Act” 80 BU LRev 93 (2000); J Ginsburg,
“Toward Supranational Copyright Law? The WTO Panel Decision and the ‘Three-Step Test’ for Copyright
Exceptions” (2001) 187 RIDA 2; M Senftleben, “Towards a Horizontal Standard for Limiting Intellectual Property
Rights? WTO Panel Reports Shed Light on the Three-Step test in Copyright Law and Related tests in Patent and
Trademark Law” (2006) IIC 407; M Ficsor, “How Much of What? The ‘Three-Step Test’ and its Application in Two
Recent WTO Dispute Settlement Cases” (2002) RIDA 111; J Oliver, “Copyright in the WTO: the Panel Decision on
the Three-Step Test” 25 Colum JL & Arts 119 (2001); G Dinwoodie, “The Development and Incorporation of
International Norms and the Formation of Copyright Law” 62 Ohio State LJ 733 (2001); P Johnson, “One Small Step
or One Giant Leap” [2004] EIPR 264; D Brennan, “The Three-Step Test Frenzy – Why the TRIPS Panel Decision
might be Considered Per Incuriam” [2002] IPQ 213.
46
“…[A]n exception or limitation must be limited in its field of application or exceptional in its scope. In other words,
an exception or limitation should be narrow in quantitative as well as in a qualitative sense. This suggests a narrow
scope as well as an exceptional or distinctive objective.” (para 6.109).
47
“…[A]n exception or limitation in national law must be clearly defined. However, there is no need to identify
explicitly each and every possible situation to which the exception could apply, provided that the scope of the
exception is known and particularised. This guarantees a sufficient degree of legal certainty.” (para 6.109).

6
held that any form of exploitation that had the capacity to acquire considerable economic or
practical importance in future was to be taken into account. 48 While the reasoning of the
French, Dutch or Belgian courts outlined in the decisions outlined above is nowhere near as
detailed as that of the WTO Panel in the § 110(5) case, the similarities of approach are clear.
In the French and Dutch cases, potential loss of income arising as a result of digital modes of
exploitation was sufficient alone to place a user’s activities outside the scope of a statutory
exception and in the Belgian case, the “test” is perceived as a general presumption against
the application of an exception in specific circumstances.

3 National courts – the “three-step test” as a flexible standard

The restrictive view of the “three-step test” outlined above contrasts sharply with a much more
flexible approach adopted in some other European national courts. Two particularly clear
examples of this latter approach are provided by the decision of the German Supreme Court
in Re the Supply of Photocopies of Newspaper Articles by a Public Library 49 and the decision
of the Swiss Federal Court in ProLitteris v Aargauer Zeitung AG 50 . In addition, in a striking
decision concerning Google’s caching activities (“Google – Caching”), the Barcelona Court of
Appeal appears to have employed the “three-step test” in an extremely liberal manner closely
resembling the open-ended fair use doctrine in US copyright law. 51

Prior to the implementation of Article 5(5), a number of judgments of the German courts had
made reference to the “three-step test” as a relevant international norm in the interpretation of
copyright exceptions. 52 In Re the Supply of Photocopies of Newspaper Articles by a Public
Library, 53 the defendant was a public body responsible for the operation of a scientific library.
The library had an electronic catalogue and sent copies of articles from scientific periodicals
to users on request. It charged a fee for this service and advertised throughout the world. A
representative body for publishers and booksellers claimed that the library’s activities
infringed the reproduction and distribution rights of the authors of the articles at issue. In
response, the defendant argued that its activities were covered by the personal/private use
exceptions under the German Copyright Act, which permitted some forms of personal/private
use to be carried out by third parties on a user’s behalf. 54 The Supreme Court held that the
library’s activities were covered by the exception. However, it also held that, as a result of
technological advances in the communication of catalogues and copies, the library’s copying
service had begun to make more intensive use of works than previously and, therefore, had a
greater capacity to compete with the distributors of the original periodicals. In such
circumstances, it was held that, while the library’s activities were permissible under the
exception, the authors of the copied works had a statutory right to a reasonable fee for the
use of their work. 55 The court imposed this statutory right by analogy with other provisions of
the German Copyright Act covering the lending of works by public libraries and the use of
certain works in broadcasting. 56 In identifying the authors’ entitlement to reasonable
compensation for the library’s activities, the Supreme Court placed explicit reliance on the
“three-step test” as set out in Art 9(2) Berne Convention and Art 13 TRIPS. 57 It held that, in
order for national copyright law to be interpreted compatibly with the third step of the “test”,
authors had to be remunerated in return for the uses covered by the exception:

48
Ibid, 6.183.
49
[2000] ECC 237.
50
(2008) 39 IIC 990. for discussion, see C Geiger, “Rethinking Copyright Limitations in the Information Society – the
Swiss Supreme Court Leads the Way” (2008) IIC 943.
51
This case is not reported in English, but is discussed by Kur in A Kur, “Of Oceans, Islands and Inland Water – How
Much Room for Exceptions and Limitations under the Three-Step Test?” in Max Planck Institute for Intellectual
Property, Competition & Tax Law Research Paper Series No. 08-04 (available at SSRN:
http://ssrn.com/abstract=1317707) 34.
52
See discussion by T Dreier in “Regulating Competition by way of Copyright Limitations and Exceptions” in
Copyright Law – a Handbook of Contemporary Research (Edward Elgar, 2007) 232.
53
Case I ZR 118/96 (Before the Bundesgerichtshof, German Federal Supreme Court), 25 February 1999 [2000] ECC
237.
54
Art 53.
55
[2000] ECC 237, para 60. The general levy on copying equipment media for private, personal use in general was
not considered to be sufficient for this purpose (para 50).
56
Art 27(2), (3), Art 49(1), Art 45a(2), Art 54h(1), Copyright Act 1965.
57
And on Art 14 of the German Constitution (the right to property).

7
 “…Permission for reproduction by a copying service without compensation in the form
of a reasonable fee did not unreasonably prejudice the legitimate interests of authors,
given the circumstances which previously prevailed. In view of the far more limited
technical facilities at that time for library use, supplying copies did not, until very
recently, have the importance it now has as a means of supplying end users with
copies of even the very latest periodical publications within the shortest possible time.
Consequently it was justifiable to treat the supply of copies as a use of less
importance following on from publication and to exempt it under section 53 of the
Copyright Act from the author's right of prohibition, without giving him a right to a fee
appropriate for this method of use of the work….” 58

The Supreme Court’s focus on the third step of the test allows it to “balance” the interests of
authors and users in a manner that is likely to seem rather radical to lawyers from jurisdictions
in which the judicial creation of a statutory licence by analogy would be regarded as
constitutionally improper.

A more recent decision of the Swiss courts adopts a similar approach even though
Switzerland is not a member of the European Union or European Economic Area. In the
decision of the Federal Court in ProLitteris v Aargauer Zeitung AG, 59 a question concerning
the appropriate scope of the private use exception in the digital environment was decided by
reference to the “three-step test”. 60 In ProLitteris, a newspaper group challenged the right of a
collecting society (established to receive remuneration for the reproduction of literary and
artistic works) to collect fees from certain press review agencies, which produced electronic
compilations of articles from newspapers and journals (paper and web-based) for commercial
and public authority clients. The clients of the press review agencies specified keywords
against which the agencies’ employees searched to produce the reviews. 61 The fees were
only legally payable to the defendant collecting society under the provisions of the Swiss
Federal Act on Copyright and Related Rights if the agencies’ activities fell within that Act’s
statutory exception for private use. 62 Effectively, therefore, the newspaper group’s claim
challenged the application of the private use exception to the agencies. The Federal Court
held that, prima facie, the private use exception under Art 19(1) of the Federal Act was broad
enough to cover the activities of the press review agencies – in the case of both paper and
electronic distribution. Under Art 19(2) of the Act, a person entitled to make private use of a
work is also entitled to have those copies made by a third party (the agency). The Federal
Court considered that, prima facie, this permission extended to cover a situation in which an
ultimate user does not specify the exact copies to be made, but provides a set of keywords
upon which an agency’s choices are based.

Having come to this conclusion, the Court considered the newspaper group’s argument that
the “”three-step test” precluded the application of the exceptions in this context because the
activities of the agencies were equivalent to those of a competing publisher. It concluded that
the first step of the “three-step test” did not prohibit the extension of the private use exception
in this case because it served only to preclude generalised and poorly targeted exceptions. In
this instance, there was no difficulty because the court was simply applying an existing
exception to a case in which a third party made a copy of a work on behalf of a person
entitled to make private use him or herself. The second step of the “test” required the court to
examine the reasonableness of potential markets for the exploitation of the copyright works in
question. 63 In this instance, the normal exploitation of a newspaper was the sale and use of
online editions and electronic papers. 64 The newspaper group’s claim that the activities of the
press agencies had led to a decline in print runs and a loss of readers was, according to the

58
[2000] ECC 237. para 47.
59
(2008) 39 IIC 990.
60
By reference to the Berne Convention, Art 9(2); the TRIPS Agreement, Art 13 and the WIPO Copyright Treaty, Art
10.
61 th
See now Infopaq International AS v Danske Dagblades Forening (C-5/08), 16 July 2009 (ECJ).
62
Art 19(1)(c); Art 20(2) & (4).
63
(2008) 39 IIC 990, para 6.1.
64
Ibid, para 6.2.

8
Court, unsubstantiated. There was therefore no infringement of the second step. At the third
step:

“…a reasonableness examination is to be applied in a narrower sense. An

intervention in the legitimate interests of the rightholder is unlawful if it cannot
reasonably be expected of him. The impairment cannot reasonably be expected if the
interests of the third party do not outweigh those of the rightholder. The payment of a
reasonable fee can mitigate the infringement of legitimate interests caused by a
limitation so as to avoid an infringement of the third step of the test.” 65

The Court also pointed out that it was uncertain exactly whose interests were at issue at the
third step because the various versions of the “three-step test” at international level were
differently drafted. 66 It concluded that, as some versions of the “test” made specific reference
to the interests of authors at the third step, 67 it was not appropriate to make the third step
assessment from the perspective of parties holding rights to economic exploitation alone.
Having settled this fundamental question of interpretation, the Federal Court held that an
interpretation of the private use exception that extended the provision to cover the activities of
electronic press agencies would not violate the third step of the “three-step test”, as long as
right-holder and author interests were balanced with those of third parties. In a world
characterised by an “increasingly dense and unstructured flood of data”, 68 individual persons
and small businesses were inevitably reliant on specialist information intermediaries. In such
circumstances, the legitimate interests of right-holders would not unreasonably be prejudiced
if they were to be granted a right to remuneration rather than an exclusive right to prohibit the
contested activities. Such a right to remuneration took into account both the interests of
individual authors and newspaper publishers. In fact, individual authors would be better off
with a remuneration right rather than an exclusive right because, if the right-holder were
granted an exclusive right, they would probably not receive a fee. However, they would be
entitled to statutory remuneration if copying were permitted under the private use provision. In
this instance, therefore, the interests of the author corresponded with those of the general
public and, as a result, the third step was not infringed.

There are similarities between the reasoning applied in Re the Supply of Photocopies of
Newspaper Articles by a Public Library and ProLitteris v Aargauer Zeitung AG. Both concern
the application of a private use exception in the context of new reproduction technologies and
both come to a similar conclusion – that private use is permissible in a new technological
environment as long as statutory remuneration is paid. The interpretation of the “three-step
test” in these cases is both more detailed and more flexible than in Mulholland Drive and
Google. Flexibility is apparent in a number of respects. First, the potential loss of a licensable
market does not automatically preclude the application of an exception. Secondly, in both
cases, the interests of authors and users, as well as those of economic right-holders is taken
into account and, thirdly, the device of a statutory licence is employed to effect a compromise
between the competing interests of affected parties.

The decision of the Barcelona Court of Appeals in Google – Caching appears even more
remarkable in its use of the “three-step test”. 69 This case concerned the caching of content by
Google in the operation of its search engine service. Right-holders argued that the exemption
of Google’s activities from liability for copyright infringement would violate the “three-step
test”, which had been explicitly incorporated in the Spanish copyright legislation. 70 The court,
however, refused to accept this argument, finding for the defendant and, most radically,
holding that the “three-step test” not only regulates the scope of existing statutory exceptions,
but also functions to impose boundaries on a right-holder’s exclusive rights. In coming to this
conclusion, it made explicit comparison with the “fair use” doctrine in the United States and

65
Ibid, para 6.1.
66
Ibid. For further discussion, see 6 below.
67
See n [x] above.
68
(2008) 39 IIC 990, para 6.3.
69
This case is not reported in English, but is discussed by Kur in A Kur, “Of Oceans, Islands and Inland Water – How
Much Room for Exceptions and Limitations under the Three-Step Test?” in Max Planck Institute for Intellectual
Property, Competition & Tax Law Research Paper Series No. 08-04 (available at SSRN:
http://ssrn.com/abstract=1317707) 34.
70
TRLPI, Art 40bis.

9
referred to the four factors set out in s 107 of the US Copyright Act to the facts of the case
before it.

4 Problems presented by the “three-step test” – and certain solutions

The cases discussed above reveal strongly divergent approaches to the application of the
“three-step test”. To some degree, these differences undoubtedly derive from the varying
copyright cultures of the respective jurisdictions. In France, for example, a dominant historical
tradition has favoured a narrow interpretation of exceptions to an author’s right. 71 Mulholland
Drive clearly falls within that tradition. German copyright courts, by contrast, have a long
history of explicitly balancing the interests of authors, right-holders and users by reference to
abstract principle and through the use of compulsory licensing. 72 The Swiss case may, in
turn, have been influenced by earlier German decisions, including Re the Supply of
Photocopies of Newspaper Articles by a Public Library itself. Nevertheless, whatever their
basis in national copyright tradition, there are good reasons for preferring the more flexible
approach employed in the German, Swiss and Spanish cases to that demonstrated in
Mulholland Park, Ministry Press Reviews, Private Copying from Illegal Sources and Google v
Copiepresse.

As has been noted by many commentators, a restrictive approach to the “three-step test”
risks paralysing the development of copyright exceptions and harming the public interest in
the digital environment. 73 To the extent that the “test” is interpreted as a general presumption
against the extension of exceptions, it may forestall the adoption of viable solutions to the
problems presented to copyright law by communications technologies. 74 More specifically, the
interpretation of the “test” favoured by the WTO Panel presents a real threat to the future of
free copyright uses. Koelman has described the problem clearly – explaining that if the three
conditions of the “test” are interpreted as cumulative requirements and if the second step is
itself interpreted restrictively as precluding most interventions into a right-holder’s market,
there is a danger that the prohibition upon all conflict with the “normal exploitation” of a work
will assume undesirable “show-stopping” status. Whenever an excepted use deprives a right-
holder of a realisable commercial gain (current or potential), the second step will be infringed
and the application of the exception will necessarily be curtailed – regardless of any
competing public interest consideration that the exception at issue may serve. 75 Where the
“test” functions in this manner, as Ginsburg has noted

“…there is a risk that even traditionally privileged uses, such as scholarship or

parody, could be deemed “normal exploitations,” assuming copyright owners could
develop a low transaction cost method of charging for them.” 76

Furthermore, as a broader range of means of exploitation of copyright works becomes

technically feasible, the scope of the potential “normal exploitation” of a copyright work
correspondingly increases and, if a restrictive approach to the second step is adopted, the
discretion of states (and courts) to maintain appropriately fashioned exceptions is diminished.
This is a development noted by Senftleben:

71
However, see Buren (2005) IIC 869; C Geiger, “Creating Copyright Limitations Without Legal Basis: The Buren
Decision, a Liberation?” (2005) IIC 842.
72 th
See, for example, Kirchen- und Schulgebrauch, Federal Constitutional Court, 7 July 1971; [1972] IIC 395.
73
See, for example, C Geiger, “From Berne to National Law, via the Copyright Directive: the Dangerous Mutations of
the Three-Step Test” [2007] EIPR 486; K Koelman, “Fixing the ‘Three-Step Test’ [2006] EIPR 407; C Geiger, J
Griffiths & R Hilty, “Towards a Balanced Interpretation of the ‘Three-Step Test’ in Copyright Law [2008] EIPR 489.
74
Would, for example, a strict interpretation of the “three-step test” endanger the form of compromise that currently
seems possible in respect of the Google Books service? See C Turner, “Google Library Project Settlement
Agreement” (2009) Ent LR 183.
75
Koelman, ibid, 410. while the WTO Panel was, of course, reviewing the exception under US law at an abstract
level, the same dangers will apply when a court applies the “test” in a concrete dispute between parties.
76
J Ginsburg, “Toward Supranational Copyright Law? The WTO Panel Decision and the ‘Three-Step Test’ for
Copyright Exceptions” (2001) 187 RIDA 2, 14.

10
 “The new possibilities offered by digital technology could lead to the understanding
that a normal exploitation, defined as a reference to all forms of exploitation of
considerable economic or practical importance, encompasses nearly all ways of
using and enjoying works of the intellect.” 77

As noted by the Swiss Federal Court, in a world characterised by an “increasingly dense and
unstructured flood of data”, 78 it seems foolish to tie the hands of policy-makers and judges in
advance. The assimilation of the “three-step test” with the traditional droit d’auteur doctrine of
narrow interpretation apparent in Google also seems particularly unwise at a time when there
is an increasing realisation that the traditional preference for a narrow interpretation of all
exceptions to an author’s rights may no longer be appropriate. 79

Faced with these potential difficulties, commentators have advanced proposals for the
rephrasing of the “three-step test” in more flexible or “balanced” form. 80 Suthersanen, for
example, has argued, that the “three-step test” should be redrafted to recognise explicitly the
public interest in the use of copyright works. 81 Koelman has suggested that the “three-step
test” would be better able to respond appropriately to technological and cultural development
if its “steps” were converted into “factors” to be considered together, rather than as cumulative
prohibitions. 82 A similar re-writing proposal has been advanced by Daniel Gervais:

“If one can agree with the premise that fair use reflects an appropriate set of criteria
to balance the rights of copyright holders and the needs and interests of users, I
suggest it could serve as a basis to build the copyright of the future. To do this, we
must internationalise the test by combining it with the Berne three-step test.” 83

Koelman has also argued that, in line with the version of the “three-step test” applied in patent
law under Art 30 TRIPS, the second step could be "softened" by the incorporation of a
condition of reasonableness. 84

However, the practical difficulties of achieving any form of solution based on a rewriting of the
“test” are obvious. Copyright reform is a slow and acrimonious process. Accordingly, many
commentators have argued that the problems arising from the apparent inflexibilities of the
“test” can better be resolved through the adoption of an appropriate interpretation of its
existing terms. 85 Several scholars have, for example, suggested ways of softening the
potential impact of the second step of the “test” and, thereby, avoiding the potential pitfalls
noted above. It has been argued that a “conflict with normal exploitation” should only arise
when uses covered by an exception make very substantial incursions into a copyright owner’s
potential market. 86 Such an interpretation would reduce the “show-stopping” qualities of the

77
M Senftleben, Copyright, Limitations and the Three-Step Test (Kluwer Law International, 2004) 181.
78
(2008) 39 IIC 990, para 6.3.
79
See, for example, Bild-Kunst v Focus [2005] ECDR 6 (BGH, Federal Supreme Court, Germany), para 10. Although
th
cf now Infopaq International AS v Danske Dagblades Forening (C-5/08) 16 July 2009 (ECJ)., para 56-58.
80
See, for example, K J Koelman, “Fixing the Three-Step Test” [2006] EIPR 407; H Sun, “Overcoming the Achilles
Heel of Copyright Law” (2007) Northwestern Journal of Technology & Intellectual Property 265; D Gervais, “Towards
a New Core International Copyright Norm: the Reverse Three-Step Test”, (2005) 9 Marquette IP Law Review 1
81
“With regard to providing a new three-step rule, it is proposed that the present Article 13 of the TRIPs Agreement
be extended as shown: Members shall confine limitations or exceptions to exclusive rights to certain special cases
which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests
of the right holder, taking note of the need to maintain a balance between the rights owners and the larger public
interest.” U Suthersanen, “Human Rights and International Copyright Law” in J Griffiths & U Suthersanen (eds)
Copyright and Free Speech (OUP, 2005), 121.
82
“Fixing the Three-Step Test” [2006] EIPR 407, 410.
83
D Gervais, “Towards a New Core International Core International Copyright Norm: The Reverse Three-Step Test”
(2005) 9 Marquette Intellectual Property Law Review 1, 29 (footnotes omitted).
84
“Fixing the Three-Step Test” [2006] EIPR 407, 410.
85
See, for example, R Wright, “The "Three-Step Test" and the Wider Public Interest: Towards a More Inclusive
Interpretation [2009] Journal of World Intellectual Property (forthcoming); H He, “Seeking a Balanced Interpretation of
the Three-Step Test: an Adjusted Structure in View of Divergent Approaches” [2009] IIC 274.
86
. See, for example, M Senftleben, Copyright, Limitations and the Three-Step Test (Kluwer Law International, 2004):
“A conflict with a normal exploitation arises if the authors are deprived of an actual or potential market of considerable
economic or practical importance. The circle of those actual or potential markets is solely formed by those
possibilities of marketing a work which typically constitute a major source of income and, consequently, belong to the
economic core of copyright.” (at 226); M Senftleben, “Towards a Horizontal Standard for Limiting Intellectual Property
Rights? – WTO Panel Reports Shed Light on the Three-Step Test in Copyright Law and Related Tests in Patent and

11
second step and allow the third to retain a significant role in securing an appropriate “balance”
between the respective interests of author, copyright owner and user. It has also been
suggested that the concept of “normal” exploitation should be interpreted “normatively”. From
this perspective, a “normal” form of exploitation would be one that accords with the norms, or
fundamental values, underlying copyright law. Such norms could be either economic or non-
economic. As Ginsburg has written in connection with the decision of the WTO Panel on §
110(5) of the United States Copyright Act:

“[T]he case before the WTO Panel did not present significant normative difficulties,
since the pork barrel exception at issue did not further speech, scholarship, or other
creative activities often fostered by copyright exceptions…Should a controversy
requiring examination of a speech- or scholarship-motivated exception under the
three-step test come before a WTO Panel, or, for that matter, a member state court,
that institution should consider whether, as a normative matter, there is a “market” for
criticism and similar kind of uses that the copyright owner should control.” 87

Other proposals have sought to reduce the impact of the “show-stopper” status of the second
step of the “test” by other means. It has, for example, been suggested that a reverse reading
of the “test” could emphasise the flexible proportionality enquiry inherent in the third step 88
and that the three elements of the “test” could, even without redrafting, be regarded as
“factors” rather than “steps” to be surmounted in turn. 89

Against this background of concern about the role that the “three-step test” has come to play,
a group of European copyright scholars have published a “Declaration on a Balanced
Interpretation of the ‘Three-Step Test” in Copyright Law’”. 90 Building on a number of the
arguments sketched above, the Declaration aims to promote a reading of the “three-step test”
as a relatively flexible standard precluding unreasonable encroachments upon an author’s
rights, but not interfering unduly with the ability of legislatures and courts to respond
reasonably to the challenges presented by shifting commercial and technological contexts. 91
The Declaration emphasises that the “test” must function as an indivisible entity 92 and that,

Trademark Law” [2006] IIC 407: “In view of the objective to leave sufficient ambit of operation for the following
legitimate interests criterion, however, the [normal exploitation] analysis should be confined to those forms of
exploitation which yield the lion’s share of income. In other words, a ‘normal exploitation’ should be construed to
comprise only the economic core of all forms of exploitation.” (at 437).
87
J Ginsburg, “Toward Supranational Copyright Law? The WTO Panel Decision and the ‘Three-Step Test’ for
Copyright Exceptions” (2001) 187 RIDA 2, 14. See, also, R Wright, “The "Three-Step Test" and the Wider Public
Interest: Towards a More Inclusive Interpretation [2009] Journal of World Intellectual Property (forthcoming).
88
See C. Geiger, “The Three-Step Test, a Threat to a Balanced Copyright Law?” (2006) 37 IIC 683; C Geiger, “The
Role of the Three-Step Test in the Adaptation of Copyright Law to the Information Society”, UNESCO e-Copyright
Bulletin, January-March 2007; PB Hugenholtz & R Okediji, Conceiving an International Instrument on Limitations and
Exceptions to Copyright (Open Society Institute,2008) 21.
89
See C Geiger “The Three-Step Test - a Threat to Balanced Copyright Law” [2006] IIC 683.
90
Following workshops organised under the auspices of the Max Planck Institute for Intellectual Property,
Competition and Tax Law and the School of Law at Queen Mary, University of London. For the text of the
Declaration, see “Declaration on a Balanced Interpretation of the ‘Three-Step Test’ in Copyright Law” (2008) 39 IIC
707; See also C Geiger, J Griffiths & R Hilty, “Towards a Balanced Interpretation of the ‘Three-Step Test’ in Copyright
Law [2008] EIPR 489. Translations of the Declaration have been published in a number of jurisdictions. See [2008]
GRUR International 822 (Germany); [2008] Propr Intell 399 (France); [2008] Auteurs et Médias 516 (Belgium); (2007-
8) 28 Actas de Derecho Industrial y Derecho de Autor 1509 (Spain); [2008] Direito da Sociedade da Informação XXX
(Portugal); (2008) 35 Revista Trimestral de Direito Civil 239 (Brazil) [2009] AMI 8 (Holland); (2009) Diritto
Informazione e Informatica 159 (Italy); Digital Content Association of Japan, "Research on the
introduction of fair-use provisions into Japanese copyright law", Annual Report of the
Digital Content Association of Japan, 2009, 69. The Declaration is discussed in H He, “Seeking a Balanced
Interpretation of the Three-Step Test: an Adjusted Structure in View of Divergent Approaches” [2009] IIC 274; R
Wright, “The "Three-Step Test" and the Wider Public Interest: Towards a More Inclusive Interpretation [2009] Journal
of World Intellectual Property (forthcoming); W Patry, “The Declaration on the Three-Step Test” The Patry Copyright
rd
Blog, 23 July 2008, http://williampatry.blogspot.com/2008/07/declaration-on-three-step-test.html; see M Ficsor, “The
‘Three-Step Test’ – De Lege Lata – De Lege Ferenda”, paper delivered at the Fordham International Intellectual
Property Law and Policy Conference, Cambridge 2009, http://iplj.net/blog/page/2.
91
See also in this sense the conclusions of the Institute for Information Law of the University of Amsterdam, “Study
on the Implementation and Effect in Member States’ Laws of Directive 2001/29/EC on the Harmonisation of Certain
Aspects of Copyright and Related Rights in the Information Society”, Final Report, Amsterdam, February 2007, at
168: “The European legislator could consider clarifying that national lawmakers and, where relevant, national courts
apply the three-step test in a flexible and forward looking manner”.
92
See also A Kur, “Of Oceans, Islands and Inland Water – How Much Room for Exceptions and Limitations under
the Three-Step Test?” in Max Planck Institute for Intellectual Property, Competition & Tax Law Research Paper

12
accordingly, one particular “step” must not predominate. It also makes it clear that the “test”
does not require courts to interpret exceptions and limitations narrowly, but that such
provisions must be interpreted according to their objectives and purposes. The Declaration
also notes that the first step of the “test” does not preclude legislatures from introducing, or
retaining “open-ended” limitations and exceptions, so long as the scope of such provisions is
reasonably foreseeable. In addition to emphasising the need to preserve flexibility at
legislative level, the Declaration confirms that the first step of the “three-step test” does not,
as a matter of principle, prevent courts from extending existing statutory exceptions to similar
factual situations or from creating new limitations or exceptions in jurisdictions in which they
are constitutionally able to do so. As noted above, difficulties arise when the “three-step test”
is interpreted in a manner that absolutely privileges the economic interests of right-holders
over the interests of users and broader public interests. Accordingly, with respect to the
second step of the “test”, the Declaration states that exceptions or limitations should not be
held to conflict with the normal exploitation of a protected work or other subject-matter where
they serve important competing considerations – notably in counteracting unreasonable
constraints on competition. Furthermore, in assessing the legitimacy of an exception or
limitation more generally under the “test”, law-makers (i) must take into account the interests
of original authors and performers as well as economic right-holders and (ii) must pay respect
to important third party and public interests, including interests supported by human rights and
fundamental freedoms, interests in competition and interests in scientific progress and
cultural, social or economic development.

5 Beyond a flexible interpretation of the “test” – a solution too far

As communication technologies and potential methods for providing reward and incentive for
creators are changing so rapidly, it seems unwise to pre-set policy balances in a manner that
automatically favours copyright owners. Equally, it seems unjustifiable for users of copyright-
protected works to be treated less well than users of patented technology. 93 Accordingly, the
case for viewing the “three-step test” as a relatively flexible constraint – along the lines
proposed in the Declaration discussed above - seems strong. However, some commentators
have pressed the arguments in favour of a flexible interpretation of the “test” further by
arguing that – appropriately interpreted – the “test” itself has the capacity to provide a
framework that will secure copyright law’s ability to adapt appropriately to rapidly changing
conditions. Such arguments generally take two forms. In the more frequently advanced
variant, it is suggested that the terms of the “three-step test” could be applied as a
generalised, open-ended exception, rather like the fair use doctrine under the United States’
Copyright Act. 94 More radically, it has also sometimes been argued that the “test” could be
employed not only to delimit the scope of the exceptions to a claim for copyright infringement,
but also to circumscribe the range of activities recognised as infringements of copyright in the
first place. 95 Under this approach, the use of a copyright work would only be regarded as an
infringement if it was in conflict with the normal exploitation of a work or unreasonably
prejudiced the interests of a right-holder.

Senftleben has argued that the conditions of the “three-step test” could, if interpreted in an
open-ended manner, provide valuable flexibility to courts considering the application of

Series No. 08-04 (available at SSRN: http://ssrn.com/abstract=1317707), 41. For criticism of the Declaration on this
point, see M Ficsor, “The ‘Three-Step Test’ – De Lege Lata – De Lege Ferenda”, paper delivered at the Fordham
International Intellectual Property Law and Policy Conference, Cambridge 2009, http://iplj.net/blog/page/2.
93
Under Art 30, TRIPS Agreement, “Members may provide limited exceptions to the exclusive rights conferred by a
patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent ….” (italics
added).
94
Copyright Act 1976, s 107. See, for example, M Senftleben, Copyright, Limitations and the Three-Step Test: an
Analysis of the Three-Step Test in International and EC Copyright Law (Kluwer Law International, 2004) 281; C
Geiger, “The Role of the Three-Step Test in the Adaptation of Copyright Law to the Information Society”, UNESCO e-
Copyright Bulletin, January-March 2007; C Geiger, “Flexibilising Copyright – Remedies to the Privatisation of
information by Copyright Law” (2008) IIC 178, 192-197.
95
For arguments to this effect, see D Gervais, “Towards a New Core International Copyright Norm: the Reverse
Three-Step Test”, (2005) 9 Marquette IP Law Review 1; A Christie, “Fine-tuning the System: the Role of Limitations”,
st rd
paper delivered at ATRIP Congress, 21 -23 July, 2008. The suggested approach appears to bear similarities to that
adopted by the Court of Appeal of Barcelona in Google – Caching, see “National courts – the “three-step test” as a
flexible standard” above.

13
copyright exceptions in novel circumstances. 96 In Copyright, Limitations and the Three-Step
Test, his leading monograph on the history and interpretation of the “test”, he noted its
positive potential:

“In times of upheavals within the copyright system, [the “test”] provides a set of rules
which is not affected by shifts within the matrix due to its abstract nature and allows
therefore the recalibration of copyright’s balance…” 97

More recently, he has presented the “three-step test” as a potential solution to the problem of
the “corrosive impact” of Article 5(5) of the Information Society Directive in European national
laws. 98 Drawing on the experience of the Dutch courts, he has argued that Article 5(5)
represents a “worst-case scenario”, with none of the certainty of the traditional “closed-list” of
exceptions to be found in many European jurisdictions and none of the flexibility of fair use.
As a result, under Article 5(5), a user of copyright works cannot ever be sure that his or her
activities will fall within the terms of an exception in national law because the scope of the
exception will always be subject to the uncertain conditions of the “three-step test”. He
suggests that the deployment of the terms of the “three-step test” as an open-ended “fair use”
- type provision would allow courts to fashion more appropriate responses to questions
concerning the application of statutory exceptions in changed circumstances. Liberated from
its role as a secondary check on an exhaustive list of exceptions, he sees the “test” as a
positive “flexible framework”:

“…[T]he time seems ripe to turn to a productive use of the three-step test. Instead of
employing the test as a straitjacket of copyright limitations, modern copyright
legislation should seek to encourage its use as a refined proportionality test that
allows both the restriction and the broadening of limitations in accordance with the
individual circumstances of a given case. The adoption of a fair use system that rests
on the flexible, open criteria of a conflict with a normal exploitation and an
unreasonable prejudice to legitimate interests would pave the way for this more
flexible and balanced application of the test.” 99

Christie has also noted the potential of the flexible conditions of the “three-step test” to
function as a form of open-ended but principled guide for decision-makers. He has argued
that the “test” should no longer function simply as a constraint upon the scope of existing
exceptions, but should be liberated and allowed to serve as an explicit, open-ended,
“maximalist” exception. 100 In such a form, the “test” would no longer function as a secondary
constraint, but as a form of “safety net” beyond the explicitly defined statutory exceptions and,
as a consequence, would delimit the legitimate scope of a copyright owner’s exclusive rights.
This position is similar to Senftleben’s, although the suggestion that the scope of a copyright
owner’s exclusive rights should be subject to the conditions of the “three-step test” is arguably
more radical. In this respect, the argument is similar to that advanced by Gervais, who has
also suggested using the “test”:

“…as the basis to determine the appropriate scope of copyright and, by way of
consequence, the appropriate exceptions. That scope should extend to the control of
only commercially significant forms of normal exploitation, the normalcy of
exploitation being measured dynamically in light of changing technological
possibilities and societal norms.” 101

96
M Senftleben, “Fair Use in the Netherlands – a Renaissance?” [2009] AMI 1.
97
M Senftleben, Copyright, Limitations and the Three-Step Test: an Analysis of the Three-Step Test in International
and EC Copyright Law (Kluwer Law International, 2004) 35.
98
M Senftleben, “Fair Use in the Netherlands – a Renaissance?” [2009] AMI 1,2.
99
Ibid, 7.
100 st rd
A Christie, “Fine-tuning the System: the Role of Limitations”, paper delivered at ATRIP Congress, 21 -23 July,
2008.
101
D Gervais, “Towards a New Core International Copyright Norm: the Reverse Three-Step Test”, (2005) 9
Marquette IP Law Review 1, 32.

14
The attraction of these proposals is obvious. They would inject valuable flexibility into
copyright systems which do not have open-ended fair use-type exceptions and would
counteract the in-built obsolescence of systems based upon explicitly defined statutory
exceptions. At the same time, in relying upon the established terms of the “three-step test”,
these proposals retain a connection with the author- and owner- protective norms of current
international copyright agreements and, as such, appear to avoid the obvious disadvantages
of cultural specificity and alleged incompatibility with international norms suffered by the fair
use doctrine itself. 102 Nevertheless, these apparent attractions must be strongly resisted. It is
one thing to suggest that the “test” does not preclude a “balanced” approach to copyright
exceptions, but it is quite another to suggest that it is capable of providing a valuable
framework for resolving the competing claims of authors, copyright owners and users of
copyright works. Such proposals ignore the most important lesson to be drawn from the
decisions of the European national courts discussed above.

Viewed together, the cases outlined in sections 2 and 3 above present a very strong
impression of inconsistency. The same formula is applied in remarkably different ways in
different national courts. An optimist, pointing to the distinct copyright traditions in the
respective jurisdictions, may argue that such variations in approach are unsurprising at this
relatively early stage of the formula’s integration into European copyright law. It may even be
suggested that the national courts are functioning as valuable “laboratories” for the testing of
varying approaches to the “test”. However, in this case, this relaxed position cannot easily be
maintained. The gulf between the application of the “test” in different contexts is so great that
it is difficult to escape the impression that the “test” has been employed simply as a
legitimizing cloak for pre-formulated judicial preference. If the proposals outlined above were
to be acted upon, there seems a real risk that decision-making would become yet more
inconsistent and unprincipled. The real problem with the “three-step test” is that it is uncertain
in current meaning and scope and, even more seriously, may well be fundamentally unsuited
to the function of detailed regulation of competing interests in concrete disputes.

6 What “test”? - the real problem with the “three-step test”

Current uncertainties concerning the scope and meaning of the “three-step test” have been
widely noted. 103 Questions exist both as to the overall reach of the “test” and as to the
meaning of its individual elements. In respect of the “test”’s scope, it is, for example,
commonly held that the three steps of the “test” are cumulative conditions and that a failure to
surmount any of the steps invalidates an exception. 104 However, even this fundamental
assumption has recently been questioned, particularly in respect of more recent iterations of

102
For discussion of arguments that the fair use doctrine may itself infringe the “three-step test”. See, for example,
See, for example, R Okediji, “Toward an International Fair Use Doctrine” (2000) 39 Columbia Journal of
Transnational Law” 75 (partic 116-30); H Cohen Jehoram, “Restrictions on Copyright and Their Abuse” [2005] EIPR
359 (“If ever the antiquated American ‘fair use’ would be contested for a TRIPs Panel, its fate would, I think, be
sealed.” 362); G Dworkin, “Copyright, The Public Interest and Freedom of Speech: A UK Copyright Lawyer’s
Perspective” in Copyright and Free Speech, J Griffiths & U Suthersanen (eds), (OUP, 2005) 153, 162 (“…[I]t is
difficult to see how, in many cases, a fair use defence, which normally means a free use defence, cannot conflict with
the normal rights of a copyright holder.”); R Burrell & A Coleman, Copyright Exceptions: The Digital Impact
(Cambridge University Press); J Reichman, “Universal Minimum Standards of Intellectual Property Protection under
the TRIPS Component of the WTO Agreement” (1995) 29(2) International Lawyer 345, 369; S Ricketson, WIPO
Study on Limitations and Exceptions of Copyright and Related Rights in the Digital Environment (Geneva: WIPO,
2003); S Ricketson, “The three-step test, deemed quantities, libraries and closed exceptions” (Centre for Copyright
Studies, 2003), 147-154; T Newby, “What’s Fair Here is not Fair Everywhere: Does the American Fair Use Doctrine
Violate International Copyright Law?” (1999) Stanford LR 1633; P Geller “Can the GATT Incorporate Berne Whole?”
[1990] EIPR 423; DL Burk and JE Cohen, “Fair Use Infrastructure for Rights Management Systems” (2001) 15
Harvard Journal of Law and Technology; J Cohen, “WIPO Treaty Implementation in the US: Will Fair Use Survive?”
21 EIPR 236 (1999);M Leaffer, “The Uncertain Future of Fair Use in a Global Information Marketplace” 62 Ohio St LJ
849 (2001).
103
T Heide, “The Berne Three-Step Test and the Proposed Copyright Directive” [1998] EIPR 105, 105; R Burrell & A
Coleman, Copyright Exceptions: the Digital Impact (CUP, 2005) 298.
104
See, for example, S Ricketson & J Ginsburg, International Copyright & Neighbouring Rights: the Berne
nd
Convention and Beyond, 2 ed (OUP, 2006) 13.10; M Ficsor, “The ‘Three-Step Test’ – De Lege Lata – De Lege
Ferenda”, paper delivered at the Fordham International Intellectual Property Law and Policy Conference, Cambridge
2009, http://iplj.net/blog/page/2 ; Infopaq International AS v Danske Dagblades Forening (C-5/08), Opinion of A-G
th
Trstenjak, 12 February 2009, para 134.

15
the “test” such as that to be found in Article 5(5) of the Information Society Directive. 105
Differing views have also been expressed on the question of the extent to which the “test” has
any role to play in the control of compulsory licences 106 or in relation to mandatory collective
rights administration. 107

There is, if anything, even less consensus as to the meaning of the three individual elements
of the “test”. Such uncertainty is, of course, particularly important in the context of the
purported application of the “test” in specific, concrete disputes. As noted above, the WTO
Panel interpreted the first step (“certain special cases”) as requiring exceptions to be both
narrow in scope and clearly defined. In the context of TRIPS, the Panel did not find it
necessary for an exception to be qualitatively “special” (ie to be founded on an acceptably
formulated policy rationale). However, a number of commentators have argued that only
exceptions having such a valid rationale can successfully surmount the first step of the
“test”. 108 There are also further interpretative uncertainties concerning the scope and effect of
the first step. Looking at the travaux preparatoires, and reading the provision in accordance
with standard English usage, it has, for example, been argued that, when first incorporated in
the Berne Convention, “certain” is more likely to have meant “some” “special cases” rather
than “clearly specified” “special cases.” 109

The meaning of the second step is also contested. The WTO Panel interpreted this
requirement as precluding exceptions that permit uses that compete economically with the
forms of exploitation that right-holders normally employ to extract economic value from a right
and thereby deprive them of significant or tangible commercial gains. In this respect, the
Panel held that the normal extraction of economic value encompasses not only current
activities, but also activities that could acquire considerable economic or practical importance
in future. 110 This approach avoids the obvious dangers of redundancy or circularity inherent
in some alternative readings. 111 Nevertheless, as was noted above, this is not the only
possible interpretation of the condition. Some commentators have suggested that a conflict
with a “normal” exploitation of a work will only arise where an excepted use “substantially
impair[s…] the overall commercialisation of that work by divesting the authors of a major
source of income” 112 or that “normal exploitation” is a normative, rather than purely empirical,
concept 113 and, therefore, that potential forms of exploitation can be ignored if they fall
outside the normatively justified domain of copyright law. 114

105
See, for example, C Geiger, J Griffiths & R Hilty, “Towards a Balanced Interpretation of the ‘Three-Step Test’ in
Copyright Law [2008] EIPR 489.
106
For discussion, see M Senftleben, Copyright, Limitations and the Three-Step Test: an Analysis of the Three-Step
Test in International and EC Copyright Law (Kluwer Law International, 2004) 129.
107
For discussion, see C Geiger, “The Role of the Three-Step Test in the Adaptation of Copyright Law to the
Information Society”, UNESCO Copyright e.Bulletin, January-March 2007, 1,9-12.
108
See, for example, M Ficsor, “How Much of What? The Three-Step Test and Its Application in Two Recent WTO
Dispute Settlement Cases”, (2002) Revue Internationale du Droit d’Auteur 111; M Senftleben, Copyright, Limitations
and the Three-Step Test: an Analysis of the Three-Step Test in International and EC Copyright Law (Kluwer Law
International, 2004) 144-152; H He, “Seeking a Balanced Interpretation of the Three-Step Test: an Adjusted Structure
in View of Divergent Approaches” [2009] IIC 274; cf S Ricketson & J Ginsburg, International Copyright &
nd
Neighbouring Rights: the Berne Convention and Beyond, 2 ed (OUP, 2006) 767 (such an approach would cause
‘unnecessary complexity’). Geiger?
109
M Senftleben, Copyright, Limitations and the Three-Step Test: an Analysis of the Three-Step Test in International
and EC Copyright Law (Kluwer Law International, 2004), 137.
110
“We believe that an exception or limitation to an exclusive right in domestic legislation rises to the level of a conflict
with a normal exploitation of a work (ie, the copyright or rather the whole bundle of exclusive rights conferred by the
ownership of the copyright), if uses, that in principle are covered by that right but exempted under the exception or
limitation, enter into economic competition with the ways that right holders normally extract economic value f rom that
right to the work (ie the copyright) and thereby deprive them of significant or tangible commercial gains.” (Panel
Report, 15th June 2000, WT/DS/160/R, para 6.183).
111
For discussion, see S Ricketson & J Ginsburg, International Copyright & Neighbouring Rights: the Berne
Convention and Beyond (OUP, 2006) 13.15 ff.
112
M Senftleben, Copyright, Limitations and the Three-Step Test: an Analysis of the Three-Step Test in International
and EC Copyright Law (Kluwer Law International, 2004) 193.
113
J Ginsburg, “Toward Supranational Copyright Law? The WTO Panel Decision and the ‘Three-Step test’ for
Copyright Exceptions” (2001) 187 RIDA 2; S Ricketson & J Ginsburg, International Copyright & Neighbouring Rights:
the Berne Convention and Beyond (OUP, 2006) 13.20-13.22.
114
It has been suggested that the adoption of such an approach could alleviate some aspects of the “show-stopper”
problem associated with the second “step” However, it would do nothing to promote certainty in the interpretation of
the “test”. What, if any, are the “norms” upon which copyright law is founded?

16
Perhaps as a result of its inherent malleability, the third step of the “test” has not attracted
equivalent controversy. It is widely held to impose some form of proportionality enquiry.
However, as noted by the Swiss Federal Court in ProLitteris, the interests to be taken into
account under the third step vary depending upon the version of the “test” at issue. In this
respect, it has been argued that, under the Berne Convention and the WIPO Copyright Treaty
at least, the “moral” interests of authors must be taken into account in determining whether a
particular exception would unreasonably prejudice the legitimate interests of authors. 115 More
generally, it has been argued that, as TRIPS is a trade agreement, all steps of the “test” must
be interpreted by reference to economic arguments only under Article 13 116 or, by contrast,
that, as the Berne system is fundamentally concerned to protect the interests of authors, the
“test” must be interpreted in a manner that favours strong protection for original creators
under the Berne Convention and WIPO Copyright Treaty. 117 Article 5(5) of the Information
Society Directive, by contrast, forms part of a European copyright acquis that is ostensibly
premised upon a need to balance the interests of right-holders and users and to take account
of other interests such as free competition and respect for fundamental freedoms. As a result,
it can be suggested that a more “balanced” approach may be appropriate under Article
5(5). 118

Despite the entrenched position of the “three-step test” within international and national
copyright law, its detailed requirements thus remain fundamentally uncertain. In such
circumstances, it is hardly surprising that attempts to apply the “test” in concrete situations
can, at best, be described as guesswork and, at worst, characterised as reverse reasoning
disguising pre-determined policy preferences. This assessment is amply supported by the
decisions of national courts outlined above – whether those cases are characterised as
“restrictive” or “flexible”. In none of the decisions can it truly be said that the “three-step test”
determined an outcome. Unsurprisingly for a decision of the French Supreme Court, the
explicit reasoning in Mulholland Drive is extremely thin. Nevertheless, it is clear that the court
does not consider the concept of “normal exploitation” in any detail – either generally or in the
precise context at issue in that case. It simply frames a concern about the potential risks of
digital reproduction within the abstract formula of the second step of the “test”. Senftleben is
critical of the District Court of the Hague’s failure to justify its conclusion that the use of
copyright works at issue in Private Copying from Illegal Sources constituted a violation of the
119
“three-step test” for similar reasons. Even in the German and Swiss cases, in which the
courts record their reasoning in greater detail, there are a number of leaps of faith. In Re the
Supply of Photocopies of Newspaper Articles by a Public Library, not only are the second and
third steps of the test not clearly distinguished, 120 there is also no precise indication of the
point at which the library’s activities became sufficiently significant as to require the payment
of statutory remuneration to authors. The court appears to have been motivated by a desire to
provide authors with some benefit form the library’s increasingly intensive activities. The
“three-step test” simply provided approved legal cover for the impulse to share benefits justly.
Similar criticisms can be levied at ProLitteris. The judgment in that case pays attention to the
detailed interpretation of the “three-step test”. However, when the “test” is applied on the
facts, one is left with the distinct impression that it has simply provided an approved
framework for an impulse to “balance” the interests of the parties in a “proportionate” manner.

115
See S Ricketson & J Ginsburg, International Copyright & Neighbouring Rights: the Berne Convention and Beyond
(OUP, 2006) 13.24. The TRIPS Agreement, by contrast, explicitly excludes the obligation to protect moral rights (Art
Art 9(1)) and, as a result, may require different interpretation.
116
See, for example, Ricketson & Ginsburg, ibid, 13.102.
117
Although the Preamble to the WIPO Copyright Treaty may suggest a more “balanced” interpretation: “recognising
the need to maintain a balance between the rights of authors and the larger public interest, particularly education,
research and access to information, as reflected in the Berne Convention”.
118
See, for example, Directive 2001/29/EC on the harmonisation of certain aspects of copyrights and related rights in
the information society, recital 31. For support of this position, see C Geiger, “The Role of the Three-Step Test in the
Adaptation of Copyright Law to the Information Society”, UNESCO Copyright e.Bulletin, January-March 2007, 1,6.
119
“The court’s way of applying the three-step test enhances legal uncertainty. In general, a court invoking the EC
three-step test ought to be alert to the risk of legal uncertainty which this departure from the wording of national
provisions implies. Hence, national courts can be expected to offer a detailed explanation of the requirements
resulting from the test’s abstract criteria to make future decisions and further adaptations of national limitations
foreseeable. The simple formula of ‘conflict with the three-step test’ used by the district Court of The Hague hardly
meets this basic requirement…” (M Senftleben, “Fair Use in the Netherlands – a Renaissance?” [2009] AMI 1, 3-4).
120
“Article 9(2) of the RBC allows, in certain special cases, reproduction which unreasonably prejudices the author's
legitimate interests or which conflicts with the normal exploitation of the work (which would not be subject to the
author's exclusive right) to be rectified by granting the author a right to a fee” ([2000] ECC 237, para 50).

17
The statutory licences imposed on information intermediaries in the German and Swiss cases
may indeed provide a promising mechanism for the resolution of conflicts of interest between
authors, other right-holders and users. However, the suggestion that any such solution is
mandated by the “three-step test” is pure fiction.

What these cases suggest is that the “three-step test” is (at least as currently understood)
much too crude a tool to function as a useful method of determining the appropriate answer to
questions about the application of copyright exceptions in novel situations. This impression is
also supported by scholarly attempts to apply the “test” to specific copyright exceptions. In
Copyright, Limitations and the Three-Step Test, Senftleben analyses the history of the “test” in
great detail and adopts a particular interpretation of its requirements. 121 His argument
concerning the meaning of the “test” is carefully constructed and logical. He identifies the
concept of “intergenerational equity” as a principle capable of functioning as a guide to the
resolution of disputes about the scope of copyright exceptions and, therefore, of breathing life
into the abstract, and relatively empty, formula of the “three-step test”. 122 However, when he
comes to apply the “test” in detail to the full range of exceptions permitted under Article 5 of
the Information Society Directive, his argument is less convincing. This is apparent, for
example, when he applies his reading of the “test” to Article 5(3)(l) of the Directive, which
permits the use of copyright works:

“in connection with the demonstration or repair of equipment…” (Art 5(3)(l))

Inter alia, this provision permits Member States to allow businesses selling or repairing TV
sets or radios to switch them on to demonstrate the equipment to members of the public.
However, Senftleben concludes that it is, at least in part, incompatible with the first step of the
“test”. Along with some other commentators, he reads the “certain special cases”
requirement qualitatively; that is, as obliging a state (or a party seeking to rely on an
exception) to demonstrate that “some clear reason of public policy” underlies the application
of an exception and that an appropriate policy-making exercise has been undertaken in
deciding to exempt a particular use from the control of a right-holder:

“Some clear reason of public policy must underlie the adoption of a copyright
limitation. To give some clear reason of public policy, the national legislator must
enter into a careful weighing process. The legitimate interests of the author, to which
the third criterion of the three-step test refers, must be weighed carefully against the
competing interests at stake. The legislative decision to set limits to the author’s
exclusive rights must be a reaction to an understandable need for the reconciliation of
the user interests at stake with the author’s legitimate interests. That the national
legislator considers the imposition of a limitation politically useful, is not sufficient.” 123

Against this standard, Senftleben finds Art 5(3)(l) wanting. In certain circumstances, he
acknowledges that there may be legitimate policy reasons justifying free use under a
provision such as Art 5(3)(l):

“It can easily be imagined that, while demonstrating a radio for sales purposes, some
copyrighted piece of music might become audible. Similarly, it is not unlikely that
copyrighted material will be heard or seen when a repaired TV set is switched on in
order to show that the repair has been successful and the client will get value for
money. In these cases, where the use of copyrighted material is incidental, it is
justified to speak of a special case. If the proprietor of a shop would have to obtain
the authorisation of the authors even for the described incidental performance of a
work that can furthermore hardly be avoided in the normal course of events, he could
rightly assert that copyright interferes with his business. The legislator is thus free to
react to the resultant conflict of interests.” 124

121
M Senftleben, Copyright, Limitations and the Three-Step Test (Kluwer Law International, 2004), 257-277.
122
Ibid, 38-41.
123
Ibid, 152 (footnotes omitted).
124
Ibid, 151.

18
However, if the legislator were to frame an exception which allowed businesses to
demonstrate equipment by permanently leaving TV sets on, and therefore permanently
performing copyright works in public, a violation of the “three-step test” would, according to
Senftleben, arise because:

“…[t]aking advantage of the limitation in this way is certainly not necessary to enable
the proprietor of the shop to run his business. It simply facilitates his commercial
activity. The permanent playing of music or showing of copyrighted works on TV may
be perceived as a useful background to the sale of equipment and attracts passers-
by in the street outside. The interest in these positive side effects of a permanent
performance of works, however, does not call for a reconciliation with the legitimate
interests of the author…”

There are significant problems with this analysis. The policy distinction that Senftleben draws
is a fine one and is open to question in a number of respects. Is it reasonable, for example,
for the owner of a copyright work to expect to benefit from the incidental display of his or her
work on a television in a television repair shop? Is it sensible to require the proprietor of such
a business to switch on a TV set only in response to a bona fide expression of interest from a
potential customer? These are questions upon which legitimate disagreement is possible.
Indeed, Senftleben’s conclusion on the appropriate balance of interests under the Directive
may well be justifiable. However, it seems entirely artificial to suggest that this fine, and
arguably dubious, distinction is mandatory under international copyright law. In such
circumstances, the “test” – even where its bare bones are fleshed out with principle – is a
hopelessly blunt instrument unsuited for the making policy distinctions on issues on which
125
differing, but nevertheless legitimate, conclusions may be reached.

Other attempts to conduct a similar exercise – no matter how carefully – inevitably create the
same impression. In English, alongside Senftleben’s analysis of the exceptions permitted
under the Information Society Directive, the most sustained example of an attempt to test
specific exceptions against the “three-step test” is provided by Ricketson’s The Three-Step
Test, Deemed Quantities, Libraries and Closed Exceptions. 126 In this report, he considers the
application of the “three-step test” to certain provisions, and proposed provisions of the
Australian Copyright Act. The background and meaning of the “test” under various
international treaties is analysed in scholarly detail and an interpretation of the “test” is
adopted. Again, however, when the test is employed as a standard against which the
legitimacy of specific exceptions is measured, the results are questionable. An example of
this difficulty is provided by reference, again, to an attempt to apply the first step of the “test”.
By contrast with Senftleben, but in line with the WTO Panel, Ricketson eschews a qualitative
approach and interprets this step as requiring exceptions only to be “clearly defined and
narrow in…scope and reach”. 127 He concludes that the fair dealing provision under s 40(1) of
the Australian Copyright Act, failed to make this standard because it lacked a statutory list of
“factors” relevant to the determination of “fairness” and therefore could not be regarded as
sufficiently “certain” 128 despite the existence of a detailed body of case law interpreting the
concept of “fairness”. This conclusion seems peculiar. Although strong arguments can
certainly be made for the enhancement of transparency through the listing of relevant factors
in the Act itself, the suggestion that the identification of these factors by the judiciary rather
than the legislature renders the provision unlawful under international law seems excessive.
The very activity of attempting to apply the “test” in detail to specific situations seems to
encourage the making of artificially narrow distinctions.

In The Three-Step Test, Deemed Quantities, Libraries and Closed Exceptions, Ricketson also
applies the “three-step test” to s 40(3) of the Australian Act (in the form that was in force at

125
While Senftleben is testing legislative provisions in abstract against the “test”, there is no reason to suppose that
the process would produce more convincing results in the context of a judicial resolution of a concrete dispute.
126
S Ricketson, The Three-Step Test, Deemed Quantities, Libraries and Closed Exceptions (Centre for Copyright
Studies, 2002).
127
Ibid, 62, for example.
128
“A fair dealing with a literary, dramatic, musical or artistic work, or with an adaptation of a literary, dramatic or
musical work, for the purpose of research or study does not constitute an infringement of the copyright in the work.”
Copyright Act 1968 (Cth).

19
the time of the publication of his report). 129 Under s 40(3) reproduction 130 for the purpose of
research or study was deemed to be “fair” for the purpose of s 40(1) if it fell below certain
limits – ie a) where the work reproduced comprised only an “article in a periodical publication”,
or b) in any other case, where no more than a “reasonable portion” of the work was
reproduced. The concepts of “article in a periodical publication” and “reasonable portion”
were further defined under the Act and, under section 10(2), certain minimum levels of
reproduction for the protected purpose were further deemed to constitute a “reasonable
portion”. 131 This provision, which on its face would appear to be relatively rich in detail by
international standards, was considered by Ricketson to be in conflict with the “three-step
test” on the grounds that it could not, for a variety of reasons, be regarded as “clearly
defined”. 132 One such reason relates to the scope of s 10(2)(b), which deemed reproduction
of the “whole or part of a single chapter” to be reasonable, even where such reproduction
exceeded 10% of the work:

“Most books are divided into chapters or divisions of a similar kind. The lengths of
individual chapters, however, may vary greatly, so it may be possible that a single
chapter will contain significantly more than 10% of the number of pages of the work.
It will therefore be an entirely arbitrary matter as to whether, in any given case, a user
will be able to reproduce more than 10% of the number of pages in the work.
A proportion of published works will contain less than ten chapters, for
example short monographs, novellas, reports and the like. In such cases, it may
follow that more than 10% of the numbers of pages can be copied. For example, in a
book with ten chapters and 200 pages, the 10% limit will mean that only twenty pages
can be copied. However, if there are individual chapters of more than twenty pages,
say one of thirty pages and another of twenty-five pages, either of these can be
copied within the parameters of subsection 10(2) although the percentages of pages
would now be 15% and 12.5% respectively.” 133

Ricketson certainly has a point. The provision in question would appear – in certain
circumstances – to allow reproductions of varying length and proportion depending upon the
form of the work reproduced. The legislation in question could perhaps have been more
effectively drafted to include more specific definitions relating to the number and length of
chapters within particular publications. 134 Again, however, the suggestion that the answer to
such a micro-question concerning the precise scope of an exception for research or study
should be determined by reference to an imprecise provision of international law seems
absurd. It is far from clear that the “three-step test” incorporates a standard of
foreseeability 135 and, even if it does, the translation of this general requirement into such
specific contexts seems dubious.

My intention here is not to take issue with Senftleben or Ricketson’s interpretations of the
“test” or to criticise their application of it in any particular case. On the rules they set, their
conclusions are entirely defensible. My intention rather is to challenge the legitimacy of the
process upon which they are engaged. Applied in this detailed manner, the “three-step test” is
bound to produce arbitrary results. This ought not to be surprising because, when the “test”

129
The provisions discussed in this section have subsequently been amended as a result of the Copyright
Amendment Act 2006 (Cth).
130
S 40(1) was not limited to reproduction, but applied to any use of a work covered by the exclusive rights conferred
under the Act.
131
“Without limiting the meaning of the expression reasonable portion in this Act, where a literary, dramatic or musical
work (other than a computer program) is contained in a published edition of that work, being an edition of not less
than 10 pages, a copy of part of that work, as it appears in that edition, shall be taken to contain only a reasonable
portion of that work if the pages that are copied in the edition:
(a) do not exceed, in the aggregate, 10% of the number of pages in that edition; or
(b) in a case where the work is divided into chapters exceed, in the aggregate, 10% of the numbers of pages
in that edition but contain only the whole or a part of a single chapter of the work.” (Copyright Act 1968
(Cth), s 10(2), as in force at the time that Ricketson was writing).
132
Ibid.
133
Ibid, 73. Ricketson goes on to demonstrate how, in the case of a work with fewer chapters of varying length, the
range within which copies could be made might be even wider (from 10% to 30%).
134
Although there are also obvious disadvantages in attempting to legislate at this level of detail. The provision has,
in any event, subsequently been amended, see n [XX] above.
135
M Senftleben, Copyright, Limitations and the Three-Step Test: an Analysis of the Three-Step Test in International
and EC Copyright Law (Kluwer Law International, 2004), 137.

20
was first devised at the time of the Stockholm revision of the Berne Convention, its lack of
specificity was its predominant virtue. At that point, the laws of Berne Union members
recognised a wide range of exceptions to the reproduction right. 136 The “three-step test” was
never intended to function as an obstacle to the maintenance of these existing provisions. As
Koelman explains:

“…a criterion was needed that was sufficiently vague for [members of the Berne
Union] to do as they pleased and that allowed them to maintain the exemptions they
had. The three-step test is the result of these requirements. Since 1967, each time a
treaty was negotiated the difficult issue of the exemptions has come up. Because
they had learned from their previous experiences, the negotiators fell back on the
three-step test that had proven to be unspecific enough for anyone to read in it what
he wanted and that therefore would not hinder the reaching of consensus.” 137

As a standard, the “test” had to be sufficiently imprecise to be uncontroversial and to

accommodate the wide range of exceptions in existing national laws. 138 It was conceived as a
capacious diplomatic compromise, serving only to preclude the most obviously wholesale
destruction of the reproduction right at national level

Conclusion – next steps

If the arguments advanced above are accepted, there are a number of conclusions to be
drawn. First, any suggestions - no matter how well intentioned – that the role of the “three-
step test” should be expanded must be resisted. . If, in particular, the introduction of an open-
ended exception is considered to be a desirable method of allowing courts to adapt copyright
law to changing conditions in jurisdictions with closed systems of exceptions, then perhaps it
would be better to adopt the US fair use itself, modified if necessary, rather than to re-deploy
the dangerously vacuous “three-step test” in this role. 139 A further lesson relates to the
rhetoric of debates concerning copyright policy. The radical uncertainty demonstrated to
characterise the “test” must make us profoundly sceptical of any assertion that any exception
contravenes the “three-step test” or would contravene it in particular circumstances. Such
claims are increasingly prevalent, both in commentary and in debate on copyright policy. 140 .
They are inevitably speculative, and should be regarded as such.

Less tractable problems exist in jurisdictions, such as the European Community and its
member states, in which the “three-step test” is already embedded within legal systems.
Given the problems discussed above, it would clearly be desirable, as far as possible, for the
“three-step test” to be prevented from (1) serving as a straitjacket on the development of
copyright law in the face of rapid technological change and (2) forming the basis of
inconsistent and poorly reasoned decisions. The need to establish solutions to these
problems is urgent. In addition to the proliferation of national decisions relying upon the
“three-step test” to some degree or other, the Opinion of Advocate-General Trstenjak in the
recent Infopaq case has brought into focus the very real risk of a further misconceived

136
See S Ricketson & J Ginsburg, International Copyright & Neighbouring Rights: the Berne Convention and Beyond
(OUP, 2006) 13.03-13.09.
137
K J Koelman, “Fixing the Three-Step Test” [2006] EIPR 407, 407 [footnote omitted].
138
See Doc. S/1, Records 1967, 112, n 1 for a list of the most frequently existing national exceptions prepared by the
Swedish Government/BIRPI Study Group, which completed the preparatory work for the Stockholm conference.
These exceptions covered (1) public speeches, (2) quotations, (3) school books and chrestomathies, (4) newspaper
articles, (5) reporting current events, (6) ephemeral recordings, (7) private use, (8) reproduction by photocopying in
libraries, (9) reproduction in special characters for the use of the blind, (10) sound recordings of literary works for the
use of the blind, (11) texts of songs, (12) sculptures on permanent display in public places etc, (13) artistic works
used as a background in films and television programmes, (14) reproduction in the interests of public safety. For
further discussion, see M Senftleben, Copyright, Limitations and the Three-Step Test (Kluwer Law International,
2004) 52-81.
139
Recently, versions of the fair use doctrine have been adopted in Singapore (see N Loon, “Exploring Flexibilities
within the Global IP Standards” [2009] IPQ 162) and Israel (see OF Afari, “An Open Standard ‘Fair Use’ Doctrine”: a
Welcome Israeli Initiative” [2008] EIPR 85).
140
See, for example, H Cohen Jehoram, “Restrictions on Copyright and their Abuse” [2005] EIPR 359; D Gervais,
“The Purpose of Copyright Law in Canada”, University of Ottawa Law & Technology Journal 322; P Groves,
“Pistache? A Consultation Paper” (2006) Ent LR 89; H Sun, “Overcoming the Achilles Heel of Copyright Law” (2007)
5 NWJ of Tech & IP 264.

21
 consolidation of the role of the “three-step test” in European copyright law. 141 In that Opinion,
the Advocate-General purported to apply the conditions of Art 5(5) to the activities of the
defendant press agency and concluded that it had violated both the second and third
elements of the “test”. Thankfully, the Court of Justice did not feel it necessary to consider Art
5(5) in that case, on the grounds that the defendant’s failure to demonstrate that its activities
were within the scope of Art 5(1) was sufficient to determine the outcome of the
proceedings. 142 However, there will inevitably be other occasions on which the Court is
required to consider the role and meaning of the “test”.

Faced with this situation, it can be suggested that, as a first step, the role of the “three-step
test” within the national laws of some European states would be diminished somewhat if the
Court of Justice were to confirm that Article 5(5) of the Information Society is directed only at
the legislature and imposes no direct interpretative obligation on national courts. This reading
of Article 5(5) appears to remain available to the Court and, if the opportunity arises, ought to
be taken. However, as noted above, this will not alone be effective in ensuring that the “three-
step test” does not exercise an inappropriate influence in European copyright law. The Court
of Justice will, at some point, inevitably be called upon to confront the question of whether or
not a particular domestic provision is compatible with Article 5(5). Furthermore, as Community
law must be interpreted compatibly with obligations arising under TRIPS, the influence of the
“three-step test” is likely to persist in European national courts even if the Court of Justice
concludes that Article 5(5) imposes an obligation on legislatures only. As has been seen, the
“test” has often been applied outside the framework of European supranational obligations.
Even in jurisdictions in which treaties are not self-executing, courts are often bound by a
tradition of interpretation that obliges them to secure compliance with international
agreements whenever possible.

For all of these reasons, the most useful approach would be for the Court of Justice to adopt
an interpretation of the “test” that minimises its negative impact. It should confirm that, in
European copyright law, the “test” does not have the restrictive meaning adopted by the WTO
Panel and the French, Dutch and Belgian courts in the cases outlined above. The
“Declaration on a Balanced Interpretation of the ‘Three-Step Test” in Copyright Law’” may
provide a working model for an approach to the “test” that is more appropriate in the
European context. 143 If the Court finds it necessary to adopt specific interpretations of the
individual steps of the “test”, there are a number of promising possibilities. For example,
Senftleben’s argument that “certain” means “some” – and does not import a requirement of
foreseeability - is compelling. There is also a strong argument that a conflict with a normal
exploitation of a work should only be regarded as arising where an author or copyright owner
is deprived of an extensive share of his or her potential market. Most importantly, the Court
should emphasise that, in accordance with its historical roots, the “test” is not to be viewed as
a precise mechanism for the resolution of specific concrete disputes or as a useful guide for
the adaptation of copyright law in the face of technological challenge, but as a form of long-
stop, a loose constraint prohibiting only exceptions that would generally be acknowledged to
be unjustifiable.

141 th
Infopaq International AS v Danske Dagblades Forening (C-5/08), Opinion of A-G Trstenjak, 12 February 2009,
paras 134-143.
142 th
See Infopaq International AS v Danske Dagblades Forening (C-5/08), 16 July 2009 (ECJ), para 75.
143
See n [xx] above.

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