Tears of joy or tears of sorrow? European Parliament approves biggest overhaul in copyright law for 20 years
We have been following the progress of the proposals for the new Copyright Directive closely for over two years now and finally, last Tuesday 26 March 2019, news broke that the Copyright Directive had been voted through the EU Parliament (click to see the final text). The Directive, which has been the subject of the most intensive lobbying ever experienced in relation to new legislation, passed through the EU Parliament with 348 votes in favour, 274 votes against and 24 abstentions. Leading up to the vote, a petition of 5 million was circulating in protest over part of the text whilst supporters of the proposed law have been penning open letters urging the European Parliament to approve the proposals.
The law must now be approved by the EU Council (28 Member States), which should just be a formality as the EU Council and the EU Parliament have technically both agreed on the text, although given the history of the passage of this legislation, nothing is certain! If all goes to plan, however, the Council looks set to formally adopt the Directive without further amendment on 15 April 2019, following which it will be published in the Official Journal. Member States will then have 2 years to implement the Directive and that implementation period will kick start 20 days after publication in the Official Journal. This means that the new law will have to be implemented by Member States (but query the UK – see 'Comment' below for more on that) by May 2021.
A quick re-cap
Our previous blog 'Progress finally made on the proposed Copyright Directive' provides detail on the provisions of the Copyright Directive but as a re-cap, the new law sets out to adapt and supplement existing copyright rules to ensure they are fit for the digital and cross-border environments of today's society. It is important to ensure wide access to content online, whilst also protecting and rewarding the creators of that content. The new law aims to enhance the freedoms and rights enjoyed by internet users, allow copyright owners to obtain the money they deserve for their work through licensing agreements and clarify the legal framework within which online platforms operate.
Whilst there has been little doubt that EU copyright law needed updating for the digital age, there have been extreme and opposing views on how this is being achieved through the Directive. Critics have not been averse to the idea of rewarding content owners for their works, but consider the measures adopted in the Directive to be too onerous or restrictive and fear that this is the end of the internet as we know it. Of particular concern have been controversial Articles 11 (new press publisher's right) and 13 (use of protected content by online content-sharing service providers). (Despite these article numbers being heavily ingrained in our minds for over two years, they have now rather confusingly been changed to Articles 15 and 17 respectively in the new text!)
So was it really "a dark day for internet freedom" as it was so dramatically described by German MEP, Julia Reda, a vociferous opponent of the Copyright Directive? Let's take a look at some of the main concerns about the new Copyright Directive and consider whether they are justified or groundless.
Article 15 (formerly Article 11)
Why do we need it and what does it do?
Article 15 is a new press publishers' right which allows publishers to obtain fair and proportionate remuneration for the digital use of their press publications by information society service providers. (e.g. big news aggregators like GoogleNews, search engines and other online platform operators). In recent years, publishers of press publications have been facing problems in licensing the online use of their publications to information society service providers, making it difficult for them to recoup their investments. This provision aims to redress the balance and allow publishers to seek licences for the use of their press publications. In turn, the provision allows the journalists to seek a fair share of any of the additional revenues that a press publisher may receive for the secondary use of a press publication by information society service providers.
What are the main concerns?
The provision applies to 'information society service providers' (e.g. news aggregators like GoogleNews and media monitoring services) who are concerned that they will now be limited as to what they can re-publish without a licence and fear that this will affect freedom of information on the Internet and some fear their business models will collapse as a result. Some of those disgruntled platforms have said they may not now re-use press publications in any form for fear of falling foul of the new provision and that would prevent internet users from enjoying perusing 'snippets' of news at a glance on their platforms.
The objective of this right, however, is to provide a fairer market place for the press publishing industry when large chunks of content are re-used without a licence. It is not meant to stifle the industry. Through the various iterations of the Directive, the law makers have attempted to create a balance for the competing interests by introducing various exemptions. The provision does not apply to hyperlinking and the re-use of 'individual words' or 'very short extracts'. This means information society service providers are still free to re-use snippets of content, provided they are 'very short extracts' or use words to describe an article and then link to it. The Directive does not target individual users either so internet users will still be able to share content on social media or link to websites and newspapers as is currently the case today.
Article 17 (formerly Article 13)
Why do we need it and what does it do?
Currently online content-sharing platforms have little incentive to sign fair licensing agreements with rights holders because they are not considered liable for the content that their users upload. They are of course obliged to remove infringing content once notified of its existence by the rightsholder, but this is not always effective and does not guarantee the rightsholder a fair revenue for their content. Some are concerned that for too long, major tech giants have been profiting (through advertising) from user generated content without a licence and this must now be addressed. Article 17 aims to make 'online content-sharing service providers' liable for infringing content and obliges them to negotiate fair licensing agreements with rightsholders and actively prevent infringing content from appearing on their platforms.
An 'online content-sharing service provider' is defined in Recital 62 as 'those online services that play an important role on the online content market by competing with other online content services, such as online audio and video streaming services, for the same audiences. The services covered by this Directive are services, the main or one of the main purposes of which is to store and enable users to upload and share a large amount of copyright-protected content with the purpose of obtaining profit therefrom, either directly or indirectly, by organising it and promoting it in order to attract a larger audience, including by categorising it and using targeted promotion within it'. So the platforms caught by Article 17 are the likes of YouTube and Facebook which compete with other platforms which host licensed content such as Netflix and Spotify.
Going forward, it will be key for online platforms to establish whether their activities are even caught by Article 17. It is important to remember that you are only caught if you are a platform which hosts content uploaded by third party users.
What are the main concerns?
As we highlighted in our previous blog (link above), platforms caught by Article 17 will automatically be considered to be carrying out 'acts of communication to the public or making available to the public' when they give the public access to copyright-protected content uploaded by users, and therefore require authorisation from the relevant content owners. Where no licensing agreements have been concluded with rightsholders, in order to avoid liability, online platforms will need to fulfil the following (paragraph 4): (i) make best efforts to obtain an authorisation, (ii) make best efforts to ensure the unavailability of unauthorised content regarding which rightholders have provided necessary and relevant information and (iii) act expeditiously to remove any unauthorised content following a notice received and make also their best efforts to prevent future uploads.
So whilst the provisions certainly seem to enhance the rights of content owners by introducing mandatory negotiating mechanisms, online platforms consider the provisions far too onerous. Whilst the new provisions do not appear to require online platforms to actually use filtering technology, in reality, this is perhaps what they will need to do to ensure they avoid liability. The wording surrounding 'best efforts' is also dubious. What exactly is best effort monitoring and how far do online platforms really have to go to ensure they are indeed making these best efforts? Does that wording actually have any value? What some online platforms consider to be onerous provisions, others see as perhaps too vague and possibly an easy way for online platforms to avoid liability - the exact opposite of what Article 17 sets out to achieve.
Some are also of the view that despite the hype around this provision, it does not really add any more to the existing law under the E-Commerce Directive because online platforms become liable and cannot benefit from the Article 14 safe harbour hosting defence if they obtain knowledge of infringing content and fail to act expeditiously or fail to remove or disable access to that content.
Some companies have voiced concerns that if they do need to pre-filter content, this could be an expensive process. Tech giants with deep pockets possibly already have the relevant filtering technologies in place, but it would be a huge financial burden on other smaller companies and for start-ups wishing to enter the EU market.
There is a special regime for smaller enterprises (see previous blog for details) but even those exemptions have been considered to be fairly limited and would not apply after 3 years in any case.
Many have expressed concerns that the obligations on platforms to effectively pre-filter content will lead to over-blocking and users will have significantly less access to content than before, thus affecting the free flow of information and the fundamental freedoms of users (such as freedom of expression and freedom of the arts). Some businesses argue that even if they do currently have filtering technology in place, the algorithms are not sophisticated enough to detect what is and is not infringing content. So in reality, will internet users suffer because content is blocked before it has even had the chance to appear, whether it is infringing or not?
Delay to publication
If there is a delay to the publication of content to allow a platform time to vet it, this may then have a negative effect on its popularity, or it may even be irrelevant by the time it is published.
Detrimental to freedom of expression/freedom of the arts
There has previously been uproar that memes and Gifs will no longer freely circulate on the internet but Recital 70 and paragraph 7 clarifies that users can rely on various exceptions and limitations and are allowed to upload and make available content generated by users for the specific purposes of quotation, criticism, review, caricature, parody or pastiche. Although it will still be necessary to establish whether the content is truly for those purposes.
General obligation to monitor?
It seems somewhat ironic that paragraph 8 of Article 17 provides a statement confirming that the application of Article 17 shall not lead to any general monitoring obligation. It is hard to reconcile this with the fundamental basis of Article 17, which requires platforms to track (i.e. monitor) infringing content so that it does not make its way onto the platform in the first place.
Onerous complaints mechanism
Paragraph 9 of Article 17 requires online content-sharing service providers to put in place an effective and expeditious complaint and redress mechanism that is available to users of their services if there are disputes over the disabling of access to, or the removal of, content they have uploaded. This in itself is considered by some to be fairly onerous as it is, but the onus does not stop there! The provision goes on to dictate that complaints submitted under this mechanism are to be processed without undue delay, and decisions to disable access to or remove uploaded content must be subject to human review. It is unclear at this early stage just how onerous this provision will be and how many disputes will arise once the legislation is incorporated into national laws. It could be difficult for businesses to budget for this before the law has been put into practice.
The above are just a sample of the widespread concerns that are currently pervading those affected in the online industry. We must not forget, however, that there are also many provisions in the Directive that have remained uncontroversial and have been welcomed e.g. new permitted acts such as text and data mining, digital and cross-border teaching, preservation and online dissemination of cultural heritage and hamonised rules to facilitate the exploitation of out-of-commerce works and rights clearance for video-on-demand platforms. We will provide a further note on the impact of those provisions in due course.
The major focus has been and will no doubt continue to be on the more controversial Articles 15 and 17 and there is a huge amount of speculation as to how these provisions will operate in practice. The Directive is a prime example of where the devil really will be in the detail. The key will be how Member States decide to transpose these provisions into national law, ensuring a balance between the interests of rightsholders, online platforms and internet users alike. Content creators must be encouraged to continue to create content and must be adequately rewarded for their creativity but it is also important to allow access to content online and not stifle it.
Article 17 does stipulate at paragraph 10 that as soon as the Directive has entered into force, the Commission and Member States must organise discussions with relevant stakeholders to discuss best practices for cooperation between online content-sharing service providers and rightsholders. The Commission will then publish guidance based on the results of these discussions. So it is clear to see that there is still much to be done and businesses do not need to panic just yet. Much still needs to be ironed out and only later on down the line (any maybe even after some referrals to the CJEU on interpretation) will it become apparent how the provisions will play out in practice.
With Brexit still very much up in the air, it remains to be seen whether the UK will implement these provisions into UK law. Even though the UK Government appears to have been in favour of the new law, recent press reports have indicated that the UK IPO has confirmed that the UK government may not now implement the new copyright law. A spokesperson for the IPO is reported to have said that UK implementation of the Copyright Directive will be dictated by the outcome of the current Brexit process. Whether it is implemented in the UK or not, however, it will certainly impact on UK businesses operating in Europe.