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Intellectual property gets political: the new EU Digital Copyright Directive

26 June 2019

It isn’t often that measures designed to reform intellectual property law become controversial because of the likely effects they may have on everyday activities. But the Digital Copyright Directive, which was finally approved by the European Parliament on 13 February 2019, has triggered debates about the powers of substantial copyright owners and free expression on the internet.

The official story is that we need new rules to regulate digital expression in line with established copyright law. We must create a true digital single market and the Directive aims to do just that. Striking a balance between the protection of rights and free expression and the making of reasonably free use of copyright-protected works was always going to be difficult The number of votes against the adoption of the Directive and abstentions would seem to suggest that the balance has not been achieved.

The New Legislation

Whether or not the controversy continues, the European Council adopted the measure on 15 April 2019. From the date of publication of the final text, EU member states have a period of 24 months to implement the Directive in national law.

Despite (or maybe even because of) Brexit, the UK is an avid supporter of the Directive even if some countries are set against it. The UK will be obliged to transpose the Directive into national law if it remains in the EU for long enough to be obliged to do so. The UK may however decide to adopt effectively identical copyright laws in anticipation of its departure from the EU.

So what does the Directive contain?

Pro bably least controversially, the Directive provides for certain activities ('exceptions') which, if conducted within the scope of the legislation, will not amount to copyright infringement in circumstances where they otherwise would be. These exceptions include text and data mining, both generally as well as in the context of scientific research, where lawful access to relevant works has been obtained. Digital use of works used solely for teaching is another non-contentious exception.

The Directive makes detailed provision for the use of 'out-of-commerce' works. These are materials that are deemed not to be available to the public through customary channels of commerce. Such works may be used within reasonable limits. Collective management organisations (CMOs) will get the power to grant licences to cultural institutions for non-commercial purposes with respect to out-of-commerce works of non-CMO entities that are curated by such institutions, with the proviso that the CMO validly represents the rights owners for that type of work. The Directive confers extended effect on allowing licensing agreements to be regulated to a limited extent by national laws.

So far, few of the foregoing measures are problematic. They accord well with established copyright principles that are relevant to non-digital media. There are some brand-new provisions however, such as where the term of copyright protection of a work of visual art has expired, any material resulting from the reproduction of that work is not to be subject to copyright, unless the work is an original work of independent creation. The Directive also establishes a requirement for exceptions from copyright where copies in any medium are made for the sake of preservation of works that are permanently in the collections of cultural heritage institutions. These provisions will certainly be of benefit to curators and consumers of museum and gallery collections.

The foregoing measures we have discussed are all very well for art and other cultural property. There is no great debate attaching to the “exception” provisions although there are bound to be technical questions of law that may result in clarification by the courts.

On the side of creativity, the further and quite significant provisions in the Directive that are designed to promote fair remuneration for authors who transfer or exclusively license their rights will be welcomed by authors and performers. They will be entitled to 'appropriate and proportionate remuneration' if they license or assign their work for the purpose of commercial exploitation. Rights-owners such as authors and performers will be entitled to receive accurate, relevant and timely information on revenues received and on the ways in which the exploiters are monetising the works in issue. When the Directive is implemented, EU member states, may provide that disputes concerning these transparency obligations and contractual obligations between relevant parties may be submitted to a voluntary alternative dispute resolution (ADR) procedure. Rights-owners will be permitted to revoke or limit any licence or transfer of rights where the work has not been exploited. Contracts that try to exclude or limit these broad rights of authors and performers will be unenforceable. Technology sector participants should however note that fair remuneration, transparency, contract, ADR and right of revocation provisions do not apply to authors of computer programs.

Article 15: Ancillary Copyright

Our analysis of the Directive so far has considered the easy provisions. It leaves the thorny issues of press publication rights and online platform liability to be dealt with in this article as the most controversial topics that have attracted widespread commentary. Those following the process of refinement and adoption of the Directive will recall that the relevant provisions were contained in Article 11 (now Article 15) and Article 13 (now Article 17) respectively.

Article 15 is weighted very much in favour of press publishers and arguably against journalists. It confers on publishers, say of newspapers and magazines, a new ancillary copyright quite separate from the copyright in the articles themselves. They will be entitled to grant a licence for any use of material online that is more substantial than mere snippets of text – these are essentially 'individual words or very short extracts' of a press publication. It is a very repressive provision but no clarity is given as to how short the extracts may be. The issue is ripe for adjudication by the courts but ambiguous laws with far-reaching effects are not good laws.

Article 15 could be mitigated if publishers waive the right but this remains to be seen. The controversy results further from the argument that Article 15 limits freedom of expression (or at least the free circulation of information) but it creates a lucrative market for publishers who engage in the licensing of ancillary copyright works. The European Commission refers to this as “strengthening creative industries in the EU” given the increasing number of people who access press articles through social media or search engines, but says quite the opposite on the issue of freedom of expression by asserting that this right is indeed protected. The debate is likely to continue for some time to come.

The press publication right does not however extend to hyperlinking or to non-commercial uses of publications by individual users of even substantial extracts of text.

The Article 15 right will expires two years after the date of publication calculated from 1 January of the year following the actual date of publication, a big improvement from the 20 year period originally proposed! It will not apply to press publication that pre-date the entry into force of the Directive. Since the Directive was first proposed in 2016, Article 15 has been heavily amended, but, as we say, it is arguable if the right balance has now been struck.

Article 17: Online Content Sharing Service Providers

Article 17 has been at least as controversial as Article 15 attracting some quasi-political commentary. It states that some service providers are themselves engaged in communication with the public with respect to user-generated content that incorporates works of copyright. Certain music and video streaming platforms or social media sites, for example, are regarded as being 'online content-sharing service providers' (OCSPs) because they aim to store, curate and present usually vast amounts of copyright-protected material which they make available to be downloaded by the public in return for profits.

Struck by the disparity between the huge profits that OCSPs make and the sometimes small rewards received by the rights-owners, the Directive requires EU member states to provide a requirement for OCSPs to obtain authorizations from the rights-owners which will usually take the form of license agreements (that should not only cover payment for streaming rights but also non-commercial activity or activities that deliver only small revenues). In the absence of any authorization, OCSPs may be liable, for example, for making available copyright-protected works to the public, unless they have made 'best efforts' to obtain the necessary authorizations, or have taken down or prevented access to works about which the rights-owners have not provided relevant or necessary information, or have acted expeditiously to disable access permanently to works where the relevant rights-owner have demanded the “take-down” of those works.

All of this should not be a problem in the case of major enterprises putting plenty of material on the websites or apps of significant OCSPs. The problem lies with users who upload copyright-protected material, under license terms which are inadequate, but where the OCSP gives access to that work to the public.

At least the criteria that determine whether any entity is actually an OCSP exclude plenty of enterprises such as online marketplaces, B2B cloud services, open source software development/sharing platforms and not-for-profit entities. OCSPs having an annual turnover of less than €10,000,000 or which have only been established for less than three years are subject to much lighter regulation. Some of these moderating provisions only emerged lately while the text of the Directive remained open to amendment.

The measures to be enacted on account of Article 17 are friendly towards rights-owners and users but are not so acceptable to OCSPs. It is the OCSPs who will be liable for the material they make available to public if they have no adequate license to do so from the users who upload the material in the first place.

Copyright Exceptions

Every time an unlicensed work is uploaded, the OCSPs take a risk, unless of course the permissions they have from the rights-owners are copper-bottomed. This may on occasion be difficult, say where the uploaded content incorporates third party material that attracts its own copyright. It may be ambiguous if the user is entitled to make use of the copyright of others, but Article 17 provides that users uploading content must be able to rely on the well-established copyright exceptions relating to quotation, criticism, review and use for the purposes of caricature, parody or pastiche.

The issue of whether the material is or has been brought into any one of these exceptions (so there is no copyright infringement if they are used) is often difficult to determine. The scope particularly of the exceptions for caricature, parody or pastiche is often difficult to determine and quite easy to get wrong. Tough problems may only be capable of being resolved through litigation.

Article 17 provides that OCSPs must establish effective and expeditious complaint and redress mechanisms if disputes arise over the removal or contentious material, but it remains to be seen if these mechanisms provide a simple means keeping all relevant parties within the ambit of the Directive. Rights-owners will always need to justify a request to disable access to their own work or remove it from the OCSP’s platform.

OCSPs providing online music and video streaming services on a significant and profitable scale may not attract too much sympathy if they resent the fact that the Directive deems them to be engaged in “acts of communication to the public” and therefore liable for copyright infringements that they cannot easily control. Controversy stems from the argument that users uploading content are the primary infringers yet OCSPs are taking on liabilities with respect to risks that they cannot fully evaluate. Imposing liability on OCSPs will encourage them anyway to sign fair contracts with users although, as we have seen, the Directive obliges them to conclude contracts that are very user-friendly. But if the burden of risk is seen to be too onerous by some OCSPs, they may well pull out of transacting in the EU by geoblocking access to their service. This would be unforgiveable. A middle way would be for OCSPs to perform extensive due diligence and impose stringent criteria on all uploads, effectively excluding informal and random content uploads. That would probably militate against a whole raft of parodies, memes and gifs if they are excluded (perhaps on account of third party copyright elements) by application of an automated algorithmic vetting device.

Advocates of the Directive say all this won’t happen. But it should up to the courts to evaluate the issues on the particular facts and circumstances of a specific case. The Directive imposes a uniform solution on parties with deepest pockets and removes flexibility and so is arguably unjust.

Comment

We will monitor how the Directive will be implemented in the domestic laws of EU member states. Given the uncertainty surrounding Brexit, it may be that the UK will implement the Directive in time in line with other member states but it would seem more likely at the time of writing this article that post-Brexit it will adopt almost exactly parallel digital copyright law.

We are able to assist clients on all aspects of copyright and other intellectual property law. Our intellectual property practice deals with the identification of applicable rights generated or exploited by individuals and businesses in a variety of sectors and the commercial exploitation of these rights directly or through licensing or assignment. We regularly deal with disputes concerning intellectual property rights. The Corporate and Commercial team are adept at resolving disputes on an expeditious and cost-effective basis and we're always happy to discuss a potentially complex intellectual property law matter informally with you at the outset.

By Laurie Heizler

For a detailed fee estimate please contact one of the Team by calling 01483 543210 or alternatively email enquiries@barlowrobbins.com

Further Reading
  • More power to copyright owners in a digital world (view page)