Do you copy?
A recent landmark ruling by the CJEU has given a significant boost to EU copyright owners. The court has prioritised IP protection over the exercise of internet users’ freedom of expression and information, says Dr Mark Hyland.
On 26 April, the CJEU handed down its landmark ruling in Case C-401/19, Republic of Poland v European Parliament and Council of the EU. In the case, Poland sought to annul certain parts of article 17(4) of Directive (EU) 2019/790 on copyright and related rights in the digital single market.
By dismissing Poland’s application, the CJEU confirmed the validity of article 17(4), a key part of the complex architecture of article 17. In this way, the important liability regime governing online content-sharing service providers is kept intact, and the conditions for exemption from liability for service providers are not watered down.
What is article 17?
Article 17 is a complex provision within a complex directive. At base, article 17 constitutes a new liability regime that applies to service providers. It also incorporates a complicated exemption regime, which is likely to prove difficult to apply in practice.
Article 17 also represents the EU legislature’s attempt to recalibrate the EU’s digital economy to ensure that copyright holders (such as musicians) are fairly remunerated for their creative works.
This recalibration also addresses the so-called ‘value gap’ in the digital market. The value gap refers to the mismatch between the economic benefits flowing to service providers and the economic benefits flowing to the actual rightsholders.
The value gap is of particular importance to the music sector, where there have been longstanding complaints levelled at, for example, YouTube by music rightsholders, to the effect that the former under-compensates the latter for streams of user-uploaded videos that contain copyright-protected content.
For many EU rightsholders, the value gap represents a funnelling of economic value away from creators and into the hands of the online platforms.
The complexity of article 17 is inextricably linked to the triangle of interests apparent in the provision itself. In fact, three distinct sets of interests are referred to in paragraph 20 of the judgment, namely those of (1) the rightsholders, (2) the service providers, and (3) the individual internet users (who use the services of the service providers).
Background to the judgment
On 24 May 2019, almost three years prior to the CJEU judgment, Poland applied to the CJEU for annulment of certain parts of article 17 of the directive. The application was made under article 263 TFEU, and it referred to article 17(4)(b) and (c) in fine (that is, the part containing the following wording: “and made best efforts to prevent their future uploads in accordance with point (b)”).
As way of an alternative plea, Poland claimed that the CJEU should annul article 17 in its entirety should the court find that the contested provisions could not be deleted from article 17 without substantively changing the rules contained in the remaining provisions of the article.
In essence, Poland’s plea alleged infringement of the right to freedom of expression and information guaranteed by article 11 of the Charter of Fundamental Rights of the EU.
Both of the contested provisions form part of the rather complicated exemption regime for service providers under article 17(4). In addition, both of the contested provisions require ‘best efforts’ on the part of the service providers, either in respect of making unavailable on their platforms specific copyright works previously notified to them by rightsholders (article 17(4)(b)), or to prevent future uploads of protected copyright works, also previously notified by rightsholders (article 17(4)(c)).
Poland’s core argument was that, for service providers to make ‘best efforts’ and thereby possibly obtain an exemption from liability under article 17(4), they are obliged to carry out prior automatic verification (filtering) of user-generated content (UGC) that has been uploaded to their platforms by individual internet users.
Poland asserted that this translates into the necessary introduction of preventive control mechanisms by service providers, which undermines the essence of the right to freedom of expression and information. In addition, Poland also argued that such mechanisms do not comply with the requirements that limitations imposed on the aforementioned right be proportional and necessary.
The judgment
In its analysis of Poland’s application for annulment, the CJEU weighed four important rights within the charter. Article 11(1) enshrines the right to freedom of expression. As part of this right, internet users have the right to receive and impart information and ideas without interference by public authority and regardless of frontier.
This right has relevance in the context of copyright exceptions and limitations. From a service provider’s perspective, article 16 is significant as it enshrines the freedom to conduct a business. Rightsholders’ interests are protected by article 17(2) of the charter – it provides that “intellectual property shall be protected”.
Lastly, article 52(1) is a type of overarching provision that permits limitations on the exercise of the rights/freedoms recognised by the charter, provided certain conditions are satisfied. One such condition is that the limitation “meets the need to protect the rights and freedom of others within the meaning of article 52(1) of the charter”.
At paragraph 58 of its judgment, the CJEU concluded that the specific liability regime established in article 17(4) covering service providers entails a limitation on the exercise of the right to freedom of expression and information of internet users, protected by article 11 of the charter. This limitation arises due to the de facto filtering of uploaded content by the service providers.
When reviewing the propor-tionality of the limitation on the exercise of the right to freedom of expression and information of users of online content-sharing services, the CJEU ruled that the limitation “meets the need to protect the rights and freedoms of others within the meaning of article 52(1) of the charter”. In this case, the ‘others’ are rightsholders, and the “need to protect intellectual property [is] guaranteed in article 17(2) of the charter” (paragraph 82 of the judgment).
The CJEU elaborated, stating that the obligations imposed on service providers (and from which the limitations on internet users’ freedom of expression and information arise) are there to ensure that intellectual property rights are protected in such a way as to contribute to the achievement of a well-functioning and fair marketplace for copyright.
Of particular importance is the final sentence in paragraph 82 of the judgment, where, referring to online content-sharing services, the CJEU states: “Copyright protection must necessarily be accompanied to a certain extent by a limitation on the exercise of the right of users to freedom of expression and information” (emphasis added).
In plain language, in this specific judgment, the CJEU prioritises IP protection over the exercise of internet users’ freedom of expression and information. The ruling revolves around the delicate recalibration of rights and duties in the digital copyright world. On the basis of the parties’ legal arguments and the particular facts of the case, the CJEU ruled that the protection of copyright works trumps internet users’ freedom of expression and information on this occasion.
Six safeguards
The CJEU ruled that the obligations imposed on online service providers in article 17(4) do not disproportionately restrict the right to freedom of expression and information of users of those services.
The court then went on to identify six safeguards put in place by the EU legislature in order to ensure respect for the right to freedom of expression and information of internet users, as guaranteed by article 11 of the charter. The six safeguards also ensure a fair balance between the aforementioned right and the right to intellectual property, as protected by article 17(2) of the charter.
The first safeguard is the clear and precise limit laid down by the EU legislature on the measures that may be taken or required by service providers when implementing the obligations laid down in point (b) and point (c), in fine, of article 17(4) of the directive.
This safeguard helps to satisfy the requirement of proportionality and acknowledges that the de facto filtering of content by the service providers will involve an interference with a fundamental right. The aim is to ensure that the interference is limited to what is strictly necessary.
The CJEU emphasised the particular importance of such a safeguard where the interference stems from an automated process, and cited Case C-311/18, Facebook Ireland and Schrems in this regard.
The second safeguard refers to the all-important copyright exceptions and limitations that confer rights on the users of works. This safeguard is contained in article 17(7) (second paragraph) of the directive.
It requires member states to ensure that users in each member state are authorised to upload and make available content generated by themselves for the specific purposes of quotation, criticism, review, caricature, parody, or pastiche.
In view of the particular importance of the exceptions and limitations for freedom of expression and freedom of the arts, the EU legislature made these exceptions and limitations mandatory in the directive.
The reason for this mandatory nature was “to ensure that users receive uniform protection in that regard across the European Union”. In marked contrast, the exceptions/limitations were only optional in the 2001 Information Society Directive (Directive 2001/29/EC).
The third safeguard relates to service-provider obligations to make content unavailable under article 17(4). However, this obligation is dependent on the relevant rightsholder providing the service provider with “the relevant and necessary information with regard to that content”.
This important precondition reduces the likelihood of service provider liability and “protects the exercise of the right to freedom of expression and information of users who lawfully use those services”.
The fourth safeguard is contained in article 17(8) and provides that the application of article 17 must not lead to any general monitoring obligation being imposed on service providers. This safeguard reflects the status quo under article 15 (1) of the E-Commerce Directive (Directive 2000/31).
The fifth safeguard comprises a number of procedural safe-guards relevant in cases where service providers “erroneously or unjustifiably block lawful content”.
The first and second paragraphs of article 17(9) of the directive require service providers to put in place “effective and expeditious complaint and redress mechanisms” to support lawful uses of works or other protected subject matter and, in particular, those uses covered by exceptions and limitations to copyright.
These provisions enable internet users to submit a complaint to a service provider when they consider that access to uploaded content has been wrongly disabled/removed by the service provider.
All complaints must be processed without undue delay, and be subject to a human review. Where rightsholders request service providers to disable access to or remove UGC, the reasons for their requests must be duly justified.
The fifth safeguard also encompasses “out-of-court redress mechanisms” and “efficient judicial remedies”, both of which can be availed of by individual internet users. Article 17(9) specifically refers to a user’s access to a court or “another relevant judicial authority” as being important in relation to the assertion of an exception or limitation to copyright.
The sixth safeguard is arguably more supplementary to the system of legislative safeguards than a safeguard itself. Article 17(10) of the directive requires the European Commission to organise, in cooperation with the member states, stakeholder dialogues to discuss best practices for cooperation between service providers and rightsholders.
It also requires the commission to issue guidance on the application of article 17 of the directive. It is worth noting that both these things have already occurred. Six stakeholder dialogues were held between October 2019 and February 2020 and, in June 2021, the commission published its comprehensive, albeit non-legally binding, guidance on article 17.
Article 17(10) expressly states that, when 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.
Referring to its findings in paragraphs 72 to 97 of its judgment, the CJEU disagreed with Poland’s assertions and ruled that “appropriate safeguards” had been put in place by the EU legislature to ensure that the right to freedom of expression and information of internet users was respected.
Those safeguards also ensured that there was a fair balance between the aforementioned right and the right to have one’s intellectual property protected. Accordingly, the CJEU rejected Poland’s plea in law and dismissed Poland’s application to annul parts of article 17(4) of the directive.
Striking a fair balance
The concluding part of the judgment (paragraph 99) is particularly interesting, as the CJEU requires member-state governments to strike a fair balance between the various fundamental rights protected by the charter when transposing article 17 into domestic law.
Further, the CJEU also requires “the authorities and courts of the member states”, when implementing the transposing provisions for article 17, to do so in a manner that would not be in conflict with the fundamental rights or general principles of EU law.
The CJEU specifically highlights the principle of proportionality and its 2008 judgment in Case C-275/06, Productores de Música de España (Promusicae) v Telefónica de España SAU.
While this ruling by the EU’s senior court will certainly be welcome news to EU rightsholders, it is also a very good example of how the CJEU can painstakingly craft a compelling legal solution by striking the fairest possible balance between the various fundamental rights protected by the charter.
Look it up
CASES:
LEGISLATION:
Read and print a PDF of this article here.
Dr Mark Hyland
Dr Mark Hyland is IMRO Adjunct Professor of Intellectual Property Law at the Law Society and lecturer at the College of Business, Technological University Dublin