Copyright and the evolving digital landscape

The much-debated Copyright Directive entered into force on 7 June 2019, almost three years after the publication of the draft, but the legislative process was not the smoothest.

Now that the dust has somewhat settled on the process establishing Directive (EU) 2019/790 on copyright and related rights in the digital single market, the member states are left with the not inconsiderable challenge of transposing this rather complex piece of copyright legislation into domestic law by 7 June, 2021.

Besides constituting a key element of the European Commission’s digital single market strategy (2014-2019), the Copyright Directive will help to bring about an ambitious modernisation of the EU copyright framework.

Separate rules on the exercise of copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes are laid down by Directive (EU) 2019/789.

Major reform

The Copyright Directive will bring about the first major reform of the EU copyright regime in almost 20 years. The last significant revamp of the EU copyright rules occurred in 2001, when the Information Society Directive (2001/29/EC) was adopted. The aim of that directive was to harmonise certain aspects of copyright and related rights in the information society.

The Copyright Directive was adopted to meet the challenges of ‘rapid technological developments’ and the emergence of ‘new business models’ and ‘new actors’ (recital 3). It acknowledges the need for copyright legislation to be future-proof, so as not to restrict technological development.

While the directive reiterates the soundness of the objectives and principles laid down by the EU copyright framework, it also recognises that some legal uncertainty remains for both rights-holders and users as regards certain uses, including cross-border uses of works and other subject matter in the digital environment.

It is worth noting that the modernisation of EU copyright law was heralded four years prior to the adoption of the Copyright Directive, when a European Commission communication (‘Towards a modern, more European copyright framework’, 9 December 2015) spoke of adapting and supplementing the existing EU copyright framework.

By creating a comprehensive new EU copyright framework, the Copyright Directive should benefit a wide range of players acting in the digital environment: internet users, music creators, artists, journalists and the press, film and music producers, online services, libraries, researchers, museums and universities, among many others.

Directive objective

The subject matter and scope of the directive are set out in article 1. The directive lays down rules that aim to further harmonise union law applicable to copyright and related rights in the framework of the internal market, taking into account, in particular, digital and cross-border uses of protected content.

The directive also lays down rules on exceptions and limitations to copyright and related rights, on the facilitation of licences, as well as rules that aim to ensure a well-functioning marketplace for the exploitation of works and other subject matter.

Protected content

Considerable ink has been spilled discussing the pros and cons of article 17. The objective of this particular provision is to recalibrate the EU’s digital economy to ensure that rights-holders are fairly remunerated.

This recalibration can occur by addressing the so-called ‘value gap’ in the digital market. The value gap refers to the mismatch in financial benefits flowing to rights-holders (such as musicians) and the online content-sharing service providers (OCSSPs).

The Copyright Directive defines an OCSSP as “a provider of an information society service of which the main or one of the main purposes is to store and give the public access to a large amount of copyright-protected works or other protected subject matter uploaded by its users, which it organises and promotes for profit-making purposes”.

Normally, the OCSSP does disproportionately well, economically speaking, from the provision of copyright material on its platforms. In contrast, the rights-holder (such as the musician) generally receives comparatively little economic benefit from the (often unauthorised) sharing of his/her IP-protected material online.

Licensing agreements

Recital 61 provides the rationale behind article 17. It refers to the growing complexity of the online content market and the challenges posed to copyright holders whose protected material is uploaded without their prior authorisation.

Legal uncertainty exists as to whether the providers of online content services engage in copyright-relevant acts and need authorisation from rights-holders in the context of copyright content uploaded by individual users (user-generated content).

Recital 61 goes on to exhort the establishment of a licensing market between rights-holders and OCSSPs. It states that the licensing agreements should be “fair and keep a reasonable balance between both parties”.

Importantly, the recital also recommends that rights-holders should “receive appropriate remuneration for the use of their works or other subject matter”.

Finally, the recital states that contractual freedom should not be affected and that it is entirely up to rights-holders whether or not they wish to give an authorisation or to conclude a licensing agreement.

Exclusive performance rights

Article 17(1) deems an OCSSP to have performed an act of communication to the public or an act of making available to the public when it gives public access to copyright-protected works uploaded by its users.

Both of these acts are deemed exclusive rights under article 3 of the Information Society Directive. To make this situation legal from a copyright perspective, the OCSSP is obliged to obtain an authorisation from the rights-holders – for instance, by concluding a licensing agreement.

An authorisation will also cover acts carried out by users of the OCSSP’s services, provided they are not acting on a commercial basis or where their activity does not generate significant revenues.

By virtue of article 17(3), when an OCSSP performs an act of communication to the public or an act of making available to the public (without the rights-holder’s authorisation), then the limitation of liability established in article 14(1) of the E-Commerce Directive (2000/31/EC) shall not apply.

Article 4 (1) is commonly called the ‘hosting exemption’ and applies to information-society services consisting of the storage of information. Under this provision, the provider of such services can avoid liability for copyright infringement, provided it can satisfy one of two specified conditions in the directive.

Possible liability

Importantly, if no authorisation is granted by the rights-holder to the OCSSP, then, under article 17(4), the OCSSP is deemed liable for unauthorised acts of communication to the public and making available to the public copyright-protected works. However, exemptions from liability apply if the OCSSP can demonstrate that it has:

1. Made best efforts to obtain an authorisation, and
2. Made, in accordance with high industry standards of professional diligence, best efforts to ensure the unavailability of specific works and other subject matter for which the rights-holders have provided the OCSSP with the relevant and necessary information, and, in any event,
3. Acted expeditiously, upon receiving a sufficiently substantiated notice from the rights-holders, to disable access to, or to remove from their websites, the notified works or other subject matter, and made best efforts to prevent their future uploads in accordance with point (2).

The determination as to whether the OCSSP has complied with its obligations under article 17(4) will involve the application of the principle of proportionality, and two further elements will be considered:

• The type, audience, and the size of the service and the type of works or other subject matter uploaded by the users of the service, and
• The availability of suitable and effective means and their cost for OCSSPs.

New OCSSPs will be subject to a less strict liability regime. To avail of this less onerous regime, the OCSSP’s services must have been available to the public within the EU for less than three years, and they must have an annual turnover below €10 million.

Article 17(7) refers to envisaged cooperation between OCSSPs and rights-holders, and speaks of the acceptability of copyright-compliant works being uploaded to online content-sharing services. In addition, digital works covered by copyright exceptions and limitations may be uploaded and made available by internet users.

The exceptions/limitations specifically referred to in the Copyright Directive are quotation, criticism, review, and works used for the purpose of caricature, parody or pastiche. No general monitoring obligation is imposed on OCSSPs by the directive.

Complaint and redress

However, under article 17(4), OCSSPs must provide rights-holders with adequate information on the functioning of their practices, and, where licensing agreements are concluded between OCSSPs and rights-holders, information on the use of content covered by the agreements.

Under article 17(9), OCSSPs must put in place an effective and expeditious complaint and redress mechanism that is available to users of their services. This mechanism can be used where there are disputes over the disabling of access to (or the removal of) works or other subject matter uploaded by them.

Where rights-holders request to have access to their specific works or other subject matter disabled, or to have those works removed, they must justify the reasons for their requests.

Complaints submitted by users of online content-sharing services shall be processed without undue delay, and decisions to disable access to or remove uploaded content shall be subject to human review.

Out-of-court redress mechanisms

Under the Copyright Directive, out-of-court redress mechanisms must be available in each EU member state for the settlement of disputes. Such mechanisms shall enable disputes to be settled impartially, and shall not deprive the user of the legal protection afforded by national law, without prejudice to the rights of users to have recourse to efficient judicial remedies.

Interestingly, under article 17(10), ‘stakeholder dialogues’ are envisaged to discuss best practices for cooperation between OCSSPs and rights-holders.

These stakeholder dialogues will be organised by the European Commission and the EU member states, and the results of the dialogues will assist the commission in issuing guidance on the application of article 17.

In discussing best practices, special account must be taken, among other things, of the need to balance fundamental rights and the use of exceptions and limitations.

Protecting creativity

The Copyright Directive will protect creativity in the digital age and ensure that EU citizens benefit from wider access to content.

The new rules will strengthen the creative industries within the EU, which represent 11.65 million jobs, 6.8% of GDP, and are worth €915 billion per year. The directive attempts to achieve the right balance between the interests of all players – users, creators, authors, press – while putting in place proportionate obligations on OCSSPs.

Article 17 is an important and very necessary provision. It is unfortunate, however, that the EU legislators have used rather vague language in the provision.

Terms such as ‘significant revenues’, ‘best efforts’, ‘high industry standards of professional diligence’, and ‘acted expeditiously’ may undermine the principle of legal certainty, and will pose challenges for governments during the transposition process.