Proposed copyright Directive: European Parliament adopts its position

The European Parliament voted in favour of modernising the EU Copyright Directive to better reflect the digital domain and online content. The Vice-President for the Digital Single Market, Andrus Ansip, and Commissioner for Digital Economy and Society, Mariya Gabriel, issued a joint statement at the time, welcoming the decision, confirming that the European Parliament will now negotiate to clarifying rules for digital content while maintaining freedom of speech.

What does this mean for industry and business?

The Copyright Directive will provide additional rights for press publishers, copyright holders, authors and performers with the intention that these rights will enable them to obtain fairer licence fees and remuneration for the use of their works online. Critics have said that the Directive amounts to a ‘link tax’, as websites will be forced to pay licence fees to link to news articles and that it will prevent the sharing of legitimate content, including GIFs and memes.

Has the Directive now been finalised and adopted?

No, the European Parliament has voted to adopt its negotiating position ahead of three-way talks between the European Parliament, the Commission and the Council to agree the final text. However, although the European Parliament has made significant amendments to some of the Commission’s proposals, it has broadly approved the main significant and controversial elements. As the Council has also broadly approved these proposals, it is now expected that the Copyright Directive will be adopted with its main provisions more or less intact, even though the exact wording has not yet been agreed.

What do the proposals change?

The three main significant changes are:

Protection of press publishers for digital uses (Article 11)

This requires Member States to provide publishers of press publications with the reproduction right and the making available right already provided to other rightholders in the InfoSoc Directive 2001/29/EC. This protection is in addition to any copyrights in the underlying works (photographs, articles) included in that press publication. This proposal has been criticised as a ‘link tax’ but it will not directly prevent the provision of a hyperlink to press publications. This is because the Court of Justice has made it clear in Svensson and others case C-466/12, [2014] All ER (EC) 609 (and clarified by GS Media BV v Sanoma Media Netherlands BV and Others case C-160/15), that hyperlinking to content that is freely available (for example, not behind a firewall) with the consent of the rightsholder on another website, does not constitute an act of communication (which encompasses the more limited making available right provided to press publishers). However, when linking to press publications it is common practice to include the headline and/or a short snippet of the article to identify the subject matter of the article being linked to. The use of headlines and snippets in this manner has already been found in some instances to infringe copyright (eg Newspaper Licensing Agency Ltd and others v Meltwater Holding BV and others, [2011] EWCA Civ 890). However, the creation of a separate right for press publishers is expected to provide them with greater leverage to obtain licence fees from information society service providers such as news aggregators.

In a response to the criticisms, the European Parliament has voted to amend the Commission’s original proposed Article 11 so that it states explicitly that it does not extend to hyperlinking and also that it should not prevent legitimate private and non-commercial use of press publications by individual users.

Obligations on platforms to enter into licensing agreements with rightsholders or prevent unauthorised copyright protected works from being available on their platforms (Article 13)

The European Parliament has made some significant amendments to the Commission’s proposal, so it is still not clear exactly what will be agreed in the three-way negotiations. However, in broad terms, platforms that provide access to large amounts of content uploaded by their users, will have obligations to put appropriate licensing agreements in place with rightsholder or take active steps to prevent infringing content being on the platform — rather than just being required to remove specific infringing content when notified.

This proposal is generally seen as requiring platforms to put in place upload filtering technology to identify content that infringes copyright. The concern of its critics is that in practice this will restrict individual users’ ability to share non-commercial content, such as memes or GIFs, because the upload filtering technology will identify such content as a copyright protected work, even though it could potentially fall within an exception (such as fair dealing) or not amount to a substantial part of the work concerned.

In an effort to deal with some of these criticisms, the European Parliament has partially watered down the Commission’s proposals. It has restricted the platforms that will be covered by these proposals and has excluded small and micro platforms entirely. It has also watered down the obligations on platforms, so that in the absence of a licence agreement they are only required to ‘cooperate in good faith [with rightsholders] in order to ensure that unauthorised protected works or other subject matter are not available on their services’ rather than ‘take measures…to prevent the availability on their services of works or other subject-matter…Those measures, such as the use of effective content recognition technologies, shall be appropriate and proportionate.’

Greater rights for authors and performers

This includes the right to receive information on the exploitation of their works and performances and the right to claim additional remuneration under a contract adjustment mechanism when the remuneration originally agreed is disproportionately low compared to the subsequent revenues generated (Articles 14 and 15).

What reasons have been given as to why the modernisation is necessary?

The main driver behind the Copyright Directive is the so-called ‘value gap’ that is said to have arisen from the ease in which content can now be made available online. This is the idea that even though more and more content is being consumed often the revenues that result from that consumption are not going to the content creators but are instead going to the big internet platforms that provide access to that content, such as YouTube and Facebook. All three of the above proposals are designed to give content creators — either the individual authors/performers or content creating businesses—greater leverage so that they can extract higher licence fees from internet service providers and platforms.

What is the likely impact of the Directive?

The Directive will certainly provide publishers and rightsholders with additional leverage to negotiate licence fees from platforms and news aggregators that provide access to their content. Exactly how much additional leverage will be provided by these reforms and how that will impact business models and the level of licence fees that can be negotiated is fairly difficult to work out at present. As mentioned, the precise wording of many of the provisions still needs to finalised. The Directive then needs to be implemented by each Member State and they will have some flexibility as to exactly how they will do this. Even then it is likely that many issues of interpretation will remain that will ultimately be dependent on how the courts interpret the Directive and the resultant national legislation. All the time of course, business models and technology moves on, which will impact both side’s leverage and negotiating power in a myriad of other ways. This all means that how much the Directive will change the balance of power from the internet platforms to content creators in the long term is still an open question.

What happens next?

It is likely that the Commission will seek to ensure that the three-way negotiations are concluded fairly swiftly and certainly before the current Parliament’s term ends in May 2019. The current proposal is that Member States will have 12 months to transpose the Directive into national law, which would see Member States having to implement the Directive by late 2019 or early 2020.

What will be the effect of Brexit?

If the above timetable is accurate then the UK would be required to implement the Directive if the proposed transition period until the end of 2020 is agreed as part of the UK’s withdrawal from the EU. However, it is possible that the law in this area could diverge following the end of that transition period, either through legislation or the courts.

If the UK leaves the EU on 29 March 2019 without a deal or agreeing a transition, then it would not be required to implement the Directive.

This article was first published in LexisNexis.