The District Court of Munich last week ordered Fujitsu Siemens Computers (Holding) BV to pay a copyright levy of $13 plus 16 percent VAT on new PCs. Supported by the German Patent Office, VG Wort - an association of German composers, authors and publishers - went to court originally seeking a levy of Euros 30 (US$41) per new computer sold in the country, in compensation for royalties lost through digital copying. VG Wort plans to apply the decision to all PC vendors in the country. Fujitsu Siemens is considering appealing the case, the company said.

For many years, Germany has been collecting copyright levies on the sale of analog copying devices, such as blank audio and video cassettes. The levies are intended to compensate rights holders for lost royalties from private copying of music, images and moves.

The court order gives legal force to a nonbinding agreement reached after a mediation effort by the Patent Office between VG Wort, Fujitsu Siemens Computers, Germany's largest computer manufacturer and other makers. The manufacturers had hoped that the court would overturn the agreement, claiming that it will add close to $80 million to the cost of purchasing computers. But Bundesverband Phono, Germany's recording industry trade association, reported that music sales plunged for the fifth consecutive year in 2003, by more than 11%. The association says that 55% of the 486 million blank CDs sold in Germany last year are used for pirating.

The European Union's Directive on the Harmonisation of Certain Aspects of Copyright and Related Rights in the Information Society, passed in 2001, demands that member states ensure "fair compensation" to copyright holders for copies made by means of digital equipment. Many other EU member states are considering a levy on hardware used in the copying process. The United Kingdom, Ireland, Sweden and Denmark however are against any levy, saying that hardware is used for purposes other than piracy.