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Inside IP: A modern EU copyright fit for the digital age?
London & The World

London & The WorldIssue 3 | November 2016

Date
25 November 2016

Jeremy Hertzog Partner

David Rose Partner

Nina O'Sullivan Legal Director, Professional Support Lawyer

On 14 September 2016, the European Commission presented major proposals to reform EU copyright law, the latest instalment in its wide-ranging Digital Single Market programme of announcements. The Commission's aims of promoting a "fair, efficient and competitive European copyright-based economy in the Digital Single Market" and to modernise copyright across the EU are laudable.


Inside IP: A modern EU copyright law fit for the digital age?

On 14 September 2016, the European Commission presented major proposals to reform EU copyright law, the latest instalment in its wide-ranging Digital Single Market programme of announcements.  The Commission's aims of promoting a "fair, efficient and competitive European copyright-based economy in the Digital Single Market" and to modernise copyright across the EU are laudable.  However, given the inherent difficulties in devising a regime that can meet the often conflicting interests involved, a number of its proposals are, not surprisingly, already proving to be controversial.

The proposals will now be scrutinised by the European Parliament and Council and are likely to be subject to intense examination as they make their way through the EU legislative process.  Once in force, Member States will have a short period of time to implement the provisions in the proposed Directive (the implementation period proposed is 12 months). Of course, whether the UK will be obliged to 'sign up' to the proposals will depend upon the status of its discussions concerning its exit from the EU at the relevant time.  Even in a 'hard Brexit' scenario, however (i.e., one that does not involve access to the Single Market), the UK may consider that it should adopt similar provisions, to avoid imposing divergent regulation.  However, it may also identify an opportunity to improve upon particularly problematic/onerous aspects of the new regime.

Key proposals in the copyright reform package

The Commission groups its proposals into three main areas:

  1. Fostering a well-functioning and fair copyright marketplace
  2. Adapting copyright exceptions to digital and cross-border environments
  3. Ensuring wider online access to content in the EU and reaching new audiences

Measures to achieve a well-functioning and fair copyright marketplace

The Commission's policy objective under this heading is to ensure a more equitable sharing of the value generated by new forms of online content distribution.  Its key proposals are:

  • Introduction of a related right for 'press publishers', i.e., publishers of any 'collection of literary works of a journalistic nature', such as newspapers, magazines and online news websites etc.  EU copyright law currently provides for related rights (also called neighbouring rights) for performers, film and record producers and broadcasting organisations: related rights are similar to copyright but reward, for example, the performance of a copyright work or investment in making it available to the public.  

    The new related right will allow press publishers to seek licences for the reproduction and making available online of their press publications, with the right expiring 20 years after publication of the press publication.  This could include, obviously, use in news aggregator sites (such as Google News) and in search engines, but its reach will extend to any online use of a press publication (including, potentially, use by individuals).  However, the Directive also states that protection will not extend to hyperlinking which does not constitute a communication to the public, and will have no impact on authors' rights.  Further, existing copyright exceptions (such as the quotation exception), will continue to apply, provided the relevant criteria are met.

    The Commission believes the new related right will give press publishers legal certainty and allow them to exploit and monetise their publications in the digital market more effectively, reinforced by the EU scale of the right.  Indeed, in response to the Commission's public consultation, press publishers confirmed that they currently face problems when seeking to license online uses of their press content (or to enforce their rights against infringements) due to the fact that they are doing so on the basis of rights assigned or licensed to them by authors.

    However, those opposed to the new related right argue that there is no actual market need for the right, and that it will have a detrimental impact on the symbiotic 'win-win' relationship that they argue currently exists between online services and press publishers.  In particular, they point to the 'negative precedent' following the introduction of national ancillary rights in Germany and Spain (e.g., where Google News left the Spanish market) and argue that the proposal is likely to lead to a decrease in the generation of traffic to publishers' websites, and therefore to reductions in advertising revenue.  They also argue that the new ancillary right could create barriers to entry to the market.
     
  • A provision requiring online service providers that store and give access to 'large' amounts of content uploaded by their users (YouTube etc) to take measures to ensure the functioning of agreements with rights holders remunerating them for the online exploitation of their content, or to prevent the availability of those works on their platforms.  Such measures could include appropriate and proportionate use of effective content recognition technologies, i.e., content filtering technologies. 

    The Commission believes this proposal will address the 'value gap' between the exploitation of content through online services and rights holders, but that it will not create barriers to entry for new entrants to the market, given that the obligations will only kick in when 'large amounts' of content are involved.  However, there is no indication as to what 'large' means in this context – whilst the intention behind the provision is perhaps clear, the ambiguity is unwelcome as it will undoubtedly lead to disputes over interpretation.  The Commission also suggests that its proposal will not impose onerous requirements on ISPs, as the technological measures required must be proportionate. 

    More generally, the relationship with ISPs' existing safe harbours from liability under the E-Commerce Directive is unclear, in particular the hosting exemption provided for in Article 14 of the E-Commerce Directive and the prohibition against requiring ISPs to monitor content in Article 15. 
     
  • A new 'transparency obligation' which will require publishers and producers to provide authors and performers with information on a 'regular basis' about exploitation of their works (including revenues generated).  The Directive also introduces a requirement on Member States to provide a mechanism allowing authors and performers to seek to 'rebalance' existing contracts where the contractually agreed remuneration is disproportionately low to the revenues actually generated by the works.  There are concerns that this will give rise to considerable uncertainty for contracting parties and impose onerous administrative burdens on publishers and producers (the Directive proposes that where the administrative burden arising from the transparency obligation is disproportionate to the revenues generated, Member States may adjust the obligation).

Adapting copyright exceptions to digital and cross-border environments

Copyright exceptions allow copyright works to be used without the consent of the copyright owner for certain specific purposes, provided specific criteria are met.  Under the present EU copyright regime, many of the copyright exceptions are optional for Member States and do not apply cross-borders.

The Directive proposes new mandatory copyright exceptions for the following specific uses:

  • Use by educational establishments to illustrate teaching through digital tools, and in online courses across borders
  • Text and data mining carried out for the purposes of innovative research
  • Digital preservation by cultural heritage institutions

In addition, proposals have been adopted for implementation of the Marrakesh Treaty relating to facilitating access to published works for people who are blind, visually impaired or otherwise print disabled.

Ensuring wider online access to content in the EU and reaching new audiences

The proposals under this heading follow the Commission's publication in December 2015 of a Regulation relating to portability of online content, allowing consumers to access their online subscriptions when away from their home country.  The latest proposals include measures aimed at improving online access to content and across borders:

  • A Regulation which applies the 'country of origin' principle to the clearing of rights for broadcasters' online services which are ancillary to the initial broadcast. 
  • The Regulation also proposes extending mandatory collective management of rights which currently apply to cable retransmission to certain other forms of retransmission.
  • The Directive requires introduction of a negotiation mechanism making it easier for licensing agreements between audio-visual rights holders and VoD platforms to be negotiated and concluded.

More to come – proposals to upgrade the IP enforcement framework

As part of its Digital Single Market strategy, the Commission has also been analysing improvements to enforcement of IP rights, both in relation to copyright and more generally.  The Commission will issue proposals later this Autumn to improve the enforcement framework.  This is expected to include clarification of the scope and application of interim measures and injunctions, and of the rules relating to calculation and allocation of damages. This will sit alongside self-regulatory 'follow-the-money' mechanisms in relation to e.g. online advertising, payments and shipping services providers. 

The UK Government, in its response to the consultation, has called for 'important shifts of emphasis' as opposed to a fundamental revision of the IP Enforcement Directive.  We will report on these proposals once they are published.

Comment

Modernising EU copyright law was never going to be a straightforward task and it remains to be seen whether the Commission will be successful in its aim of creating a copyright environment that is "stimulating, fair and rewards investment", fit for the digital age. The proposals will now be examined closely, and subject to undoubtedly challenging scrutiny in the European Parliament, and we may see revisions agreed to certain aspects as the proposals make their way through the legislative process.