The indefinite article

The transposition deadline for the EU Copyright Directive is fast approaching. However, it now seems likely that only a handful of member states will meet the deadline. Dr Mark Hyland uploads content.

The 27 EU member states have until 7 June to transpose the provisions of Directive 2019/790 on copyright and related rights in the digital single market into national law. The last significant revamp of the EU copyright regime occurred 20 years ago, when the Information Society Directive (2001/29/EC) was adopted.

If the legislative process for this directive proved challenging, the transposition process has been no less eventful. In May 2019, Poland brought a legal challenge to certain aspects of the directive’s article 17.

A postponed opinion from Advocate General Saugmandsgaard Øe on this challenge means that the actual CJEU judgment in the case will also be delayed, possibly until 2022.

Naturally, the timing is anything but ideal, as member states grapple with the transposition of article 17, one of the most complex and debated provisions in the directive.

Further complicating this situation is the failure by the European Commission, up to now, to publish its eagerly-awaited formal guidance on the application of article 17. This delayed guidance was due to be published in early 2021.

None of these things are assisting the transposition process. While the member states are navigating the transposition at different speeds, it now seems likely that only a handful will meet the transposition deadline.

Harmony central

The subject matter and scope of the Copyright Directive are set out in article 1. The directive lays down rules that aim to further harmonise EU 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 acknowledges the need for modern copyright rules fit for the digital age.

Three important objectives of the directive are:

• More cross-border access to content online,
• Wider opportunities to use copyright materials in education, research and cultural heritage, and
• A better functioning copyright marketplace.

Recital (3) of the directive describes the overall context of the new law, referring to the challenges of “rapid technological developments” and the emergence of “new business models” and “new actors”.

It also acknowledges the need for copyright legislation to be future-proof, so as not to restrict technological development.

Importantly, the directive contains mandatory exceptions to the reproduction and extraction rights. These exceptions cover text and data mining for the purposes of scientific research, the digital use of works in cross-border teaching activities, and the preservation of cultural heritage. In short, these exceptions will facilitate greater access to protected works, albeit in certain limited cases.

Gordian knot

Article 17 is a key provision in the directive. It is a significant, much-needed and well-intentioned provision, but it suffers from some rather poor drafting and internal tensions.

The objective of article 17 is to recalibrate the EU’s digital economy to ensure that rights-holders (creators, musicians, video-producers, photographers, etc) are fairly remunerated. This recalibration can occur by addressing the so-called ‘value gap’ in the digital market.

This refers to the mismatch between the economic benefits flowing to online service providers, and the economic benefits flowing to the actual copyright holders. It has resulted in a funnelling of value away from creators and into the hands of the online platforms.

Generally, the online service providers do considerably better, commercially speaking, than rights-holders and one of the key aims of the Copyright Directive is to resolve this commercial unfairness, thereby ensuring that creators receive fair payment for their work.

Article 17 is a complex provision that requires online content-sharing service providers (OCSSPs) to obtain an authorisation from copyright holders in order to communicate to the public, or make available to the public, copyright-protected works that have been uploaded by users of OCSSP services.

Where an OCSSP fails to obtain the authorisation, it will be liable for acts of copyright infringement. However, the OCSSP may be able to obtain an exemption from liability if it complies with three conditions specified in article 17(4).

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”.

The types of companies covered by this definition include YouTube, Daily Motion and Vimeo.

Polish challenge

Article 17 has been the subject of heated debate ever since it appeared in the draft directive (as article 13) in September 2016. The debate surrounding article 17 continues unabated during the transposition process, and will inevitably continue beyond the transposition deadline.

Aspects of article 17 are currently subject to a legal challenge by Poland in Case C-401/19 Republic of Poland v European Parliament and Council of the European Union.

Frustratingly, Advocate General Saugmandsgaard Øe’s opinion on the challenge was recently postponed, from 22 April to 15 July.

This means that the opinion will be published subsequent to the transposition deadline, thereby depriving the 27 member states of an initial indication as to how they should reconcile the conflicting obligations contained in article 17.

The postponement will also have consequences for the actual CJEU judgment – it will be pushed back, and may not be delivered until sometime in 2022.

Market sharing

Recital (61) of the directive provides the rationale behind article 17. It refers to the growing complexity of the online content market and the fact that online content-sharing services provide access to a large amount of copyright-protected content uploaded by their users.

For many internet users, the online platforms represent their main source of access to content online. The recital goes on to refer to copyright-protected material being uploaded by internet users “without prior authorisation” (from copyright holders) and the challenges that that poses to the individual rights-holders.

Recital (61) highlights the importance of fostering the development of a licensing market between rights-holders and OCSSPs. The licensing agreements arising from such market 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”. Recital (61) concludes by reiterating the importance of contractual freedom. In other words, copyright holders are entirely free to give (or withhold) authorisation and, separately, conclude (or not conclude) a licensing agreement with an OCSSP.

Obtaining authorisation

Article 17(1) is of particular importance. It requires member states to provide that OCSSPs perform an act of communication to the public or an act of making available to the public when it gives the public access to copyright-protected works or other protected subject matter uploaded by its users.

Article 17(1) goes on to require OCSSPs to obtain an authorisation from the rights-holders (for instance, by concluding a licensing agreement) in order to legally communicate protected works to the public or to make them available to the public.

Article 17(4) concerns a situation where no authorisation is granted by the rights-holder. In such a situation, the OCSSP will be liable for unauthorised acts of communication to the public, and unauthorised ‘making-available’ to the public of copyright protected works.

An exemption from the liability mechanism is built into article 17(4), and that is where things start to get complicated!

Despite no authorisation being obtained from a copyright holder, the OCSSP may be exempt from liability where three cumulative conditions are satisfied. The OCSSP must demonstrate that they have:

a) Made best efforts to obtain an authorisation, and
b) 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 service providers with the relevant and necessary information, and in any event,
c) Acted expeditiously, upon receiving a sufficiently substantiated notice from the rights-holder, to disable access to, or remove from their websites, the notified works or other subject matter, and made best efforts to prevent their future uploads in accordance with point (b).

Article 17(4) suffers from rather vague wording. For example, the term ‘best efforts’ is used in all three conditions. But what exactly does this term mean in practical terms? How many attempts must an OCSSP make to obtain authorisation from a copyright holder before the condition is satisfied?

References to ‘high industry standards of professional diligence’ and to act ‘expeditiously’ are also rather woolly. It is almost inevitable that some or all of these terms will end up being challenged in national courts (following transposition), or being the subject of an article 267 TFEU preliminary reference from a national court to the CJEU.

Commission guidance

Article 17(10) requires the European Commission, in cooperation with the member states, to organise stakeholder dialogues to discuss best practices for cooperation between OCSSPs and rights-holders.

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

This provision requires the commission to consult with all the relevant stakeholders, take account of the results of the stakeholder dialogues, and issue guidance on the application of article 17, in particular regarding the cooperation referred to in article 17(4).

Between October 2019 and February 2020, six such stakeholder dialogues took place, involving representatives of rights-holders, OCSSPs, consumers, users, and fundamental-rights organisations.

On 27 July 2020, the commission published a 19-page final consultation paper titled ‘Targeted Consultation Addressed to the Participants to the Stakeholder Dialogue on Article 17 of the Directive’.

Participants were then given a final opportunity to submit their written views until 10 September 2020, with a view to the European Commission finalising its guidance by the end of last year. But, at the time of writing, the commission has yet to publish this important guidance. Moreover, there is no clear indication as to when the guidance might be published.

Copyright prognostications

The Copyright Directive will certainly have a very significant and positive impact on the copyright landscape within the EU. While it adapts and supplements the existing EU copyright framework, the directive also ensures that a high level of protection of copyright and related rights is maintained.

Article 17 ensures that there is a legal framework for the use of copyright-protected content in the context of information society services. By imposing on OCSSPs the obligation to obtain authorisation from rights-holders, the directive helps to recalibrate the EU’s digital economy.

By fostering the increased use of licensing agreements between individual copyright holders and OCSSPs, the directive addresses the value gap and the associated commercial unfairness.

It is regrettable that we are still waiting for the European Commission’s guidance on the application of article 17. Equally regrettable is the fact that the CJEU judgment on the Polish challenge to parts of article 17 may not be handed down for quite some time. Both issues make an already challenging transposition process even more challenging for the member states.

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