Artists to get royalty boost and contract readjustment

In an important development for digital content creators, the CJEU has now backed Article 17 of the EU Copyright Directive, despite some internal tensions in its drafting, a Law Society lecture has heard.

The CJEU ruling is very positive news for copyright owners, attendees at the third annual IMRO/Law Society copyright lecture (4 May) heard.

The Copyright Directive represents the  most significant modernisation of EU copyright law in 20 years and is an attempt to recalibrate rights in the digital market to create a balance between copyright-holders and service providers in a manner that is fair and equitable.

However, integrating the wishes of very different and competing interests led to poor drafting of Article 17, explained Dr Mark Hyland (Law Society/IMRO Adjunct Professor of Intellectual Property Law).

‘A good day for right-holders’

As regards the recent ruling (Case C-401/19, Poland v European Parliament and Council of the EU), Dr Hyland stated that it was very significant as it copper-fastens right-holders’ interests.

In ruling that Article 17 is valid, the CJEU’s judgment provides copyright owners with an important boost, he said.

In particular, the CJEU judgment assists with narrowing the so-called ‘value gap’, which is the imbalance that exists between revenues flowing to the service-providers and that flowing to copyright-holders.

The recent judgment will help recalibrate rights and revenues in the digital environment, in favour of the copyright holder, he explained.

The CJEU copyright ruling handed down (on 26 April) is a boon for right-holders, in that it followed the Advocate General’s opinion, and held that article 17 is valid, Dr Hyland said.

“This is very important, very timely and very significant,” he said.

The ruling also gives quite a high degree of operational discretion to service providers in terms of how they remain copyright compliant under Article 17.

The judgment states that service providers are permitted to determine their own specific measures to achieve the results sought. These measures can reflect the ‘resources and abilities’ available to a particular service provider.

Intellectual property is a key aspect of the Irish economy, Dr Hyland pointed out, but this major change has been subject to very limited commentary.

Because of its importance in this country, IP is also an extremely attractive and growing area of legal practice.

Highlighting  the importance of IP to Ireland, Dr Hyland pointed to the proposed €300 million film and TV campus in Greystones, Co Wicklow, backed by the Irish Strategic Investment Fund and due to open in 2024.

Both film and TV programmes are, obviously, protected by copyright.  

Triangle of interests

Dr Hyland elaborated on the ‘triangle of interests’ at issue the recent CJEU ruling.

The three sets of interests are those of:

• Copyright holders,
• Service providers,
• Individual internet users (who are responsible for user-generated content (UGC).

Each set of interests is protected by a provision in the EU Charter. The CJEU’s task is to strike a fair balance between them.

Solicitor and external IMRO director James Hickey echoed the point that copyright law supports very significant creative industries in Ireland and added that the lack of media attention paid to it is somewhat surprising.

The news media struggles to write about itself, he suggested. This is despite the fact that the news media faced an existential threat, as ad revenues were swallowed up by online services.

Press publishers now have stronger copyright protections and legal rights in relation to online use of their work, as a result of the transposition of the Directive into Irish law, Hickey said.

Platforms can now only use hyperlinks to news stories, or very short extracts, rather than wholesale aggregation of original news reporting, Hickey added.

Coming to the rescue

The EU may be coming to the rescue of the news media, he said, but the bigger picture is also that cultural and creative industries, underpinned by copyright law, are among the largest in Europe, representing 5.5% of gross GDP.

Content and processes protected by copyright are everywhere in our lives, and more attention should therefore be paid to it, Hickey said.

Another ‘revolutionary’ milestone in Article 20 of the new copyright dispensation is its contract-adjustment mechanism, which allows artists to pursue further remuneration, where what was originally agreed turns out to be disproportionately low compared to subsequent revenues.

Hickey said that this clause may prove particularly challenging for common-law lawyers in terms of the principle of freedom of contract.

Article 23 goes on to declare that any contractual provision that prevents compliance with Article 20 will be unenforceable.

British lawyers no longer setting precedent

Irish lawyers will have to deal with a complex new set of regulations at a point where British lawyers are no longer setting precedent in the area because of Brexit, James Hickey pointed out.

“The previous solution of examining what is done in the UK is unfortunately not available to us,” he said.

Litigation ahead

“I suspect we are not out of the woods yet,” Dr Hyland said, predicting a lot of litigation ahead concerning Article 17 and its different transpositions in the EU27.

It is almost inevitable that there will be legal challenges concerning interpretation of terms such as ‘best efforts’, acting ‘expeditiously’ and ‘high industry standards of professional diligence’.

There may also be preliminary references to the CJEU concerning Article 17 and/or the European Commission Guidance on the implementation of Article 17  which was issued last June.

“The EU legislature has had its go, and done its best, it was always going to be difficult to come up with a watertight solution, trying to cater for three different sets of rights,” said Dr Hyland.

'Comprehensive but unclear'

The European Commission copyright guidance is very comprehensive, but not very clear, Dr Hyland observed.

“I didn't find the European Commission guidance created a lot of clarity. Arguably, it hinders rather than helps,” he added.

Licensing for content use

One key part of Article 17 is the obligation placed on content-sharing service providers to obtain a licence from copyright holders, which keeps a reasonable balance between both parties, in a manner that is fair.

Right-holders are not obliged to give an authorization to the service provider.

Article 17 is akin to a Gordian Knot, very complex and difficult to apply effectively, Dr Hyland said. 

Service providers may avail of an exemption from liability if three cumulative conditions are met – but this is also problematical as some of the expressions used in the exemptions are open-ended in nature, he said.

Service providers must establish effective and expeditious complaints and redress mechanisms that can be availed of by internet users who are unhappy with decisions taken by service providers.

The service provider must make best efforts to obtain an authorisation for use, but the term “best efforts'" and has not been defined, and the notion of “high industry standards of professional diligence” will vary from Member State to Member State, Dr Hyland said.

Importantly, copyright exceptions and limitations covering quotation, criticism, review, caricature, parody, and pastiche are made mandatory under the Directive and tie in directly with the internet users’ right to freedom of expression and information.

Article 17 is very much a political compromise, Dr Hyland said, and was subject to intensive lobbying.

The question of how much to pay in licence fees will be a very sensitive topic, with a bearing on service provider profitability, Dr Hyland said.

Lawyer Ed Condon, a music publisher on the IMRO board, said that the vagueness of the wording is the direct result of intense lobbying by tech interests.

“It suits them to end up in litigation for decades, because they can afford it, and while the litigation is going on they are making a hell of a lot of money,” he concluded.