Précis

Nearly 200 artists have signed a letter addressed to the US Congress asking for reform of the Digital Millennium Copyright Act. The artists argue that the law protects tech companies like YouTube and SoundCloud from copyright infringement, allowing them to give away too much of their work for free, and that current business models were not the intended protectorate when the law was signed two decades ago. Similar calls have been made in Europe against the E-Commerce Directive 2000 which offer equivalent ‘safe harbour’ protections.

What?

The ‘safe harbour’ is a term coined to refer to the intermediary liability regime which protects Information service providers (“ISPs”) under the E-Commerce Directive 2000 (implemented in the UK by the E-Commerce Regulations 2002) (the “Regulations”) and the equivalent US law, the US Digital Millennium Copyright Act 1998 (“DMCA”).

The Regulations protect ISPs such as YouTube and SoundCloud from claims for damages linked to copyright infringement resulting from the activities of their users. It does allow for injunction relief and take down notices by right holders.

There has been wide spread criticism from creative industries given the monetisation and large valuations afforded to SoundCloud and YouTube, as well as the perceived anti-competitive impact on non-ISPs such as Spotify.

What protection is given?

The Regulations

ISP’s liability for damages or a criminal sanction is limited for making temporary copies of electronic content, or caching, where the ISP:

1. does not modify the information;

2. complies with conditions on access to the information;

3. complies with any rules regarding the updating of the information, specified in a manner widely recognised and used by industry;

4. does not interfere with the lawful use of technology, widely recognised and used by industry, to obtain data on the use of the information; and

5. acts expeditiously to remove or disable access to the information it has stored on obtaining actual knowledge of the fact that the information at the initial source of the transmission has been removed from the network, or access to it has been disabled, or that a court or an administrative authority has ordered its removal or disablement.

The DMCA

The DMCA shields an online service provider (OSP) from copyright infringement liability for transmitting, caching or storing material at a user's direction where certain conditions are met. For example, to qualify for immunity for stored content an OSP must:

1. not receive a financial benefit directly attributable to the infringing activity, where the OSP has the right and ability to control the activity;

2. not know the material or activity is infringing or be aware of facts or circumstances that make the infringement apparent;

3. expeditiously remove or disable access to the material if it learns of the infringement, or facts or circumstances that make the infringement apparent, or receives a DMCA Notification;

4. designate an agent to receive DMCA notifications, register the agent's name and contact information with the US Copyright Office and make this information available on its service;

5. accommodate and not interfere with certain technical measures used by copyright owners to identify or protect copyrighted works; and

6. adopt, reasonably implement and inform, subscribers and account holders of a policy for terminating repeat infringer's subscriptions and accounts.

What is the current position regarding the safe harbour protections in the EU?

In May 2016, following consultation, the UK Intellectual Property Office (“IPO”) released a policy paper entitled “Protecting Creativity, Supporting Innovation: IP Enforcement 2020” (the “Policy Paper”). The Policy Paper states that the IPO will be “pushing within Europe for clarification of the current EU rules around platform liability and improving the current system to allow right holders to more effectively protect and legitimately exploit their copyright”.

As part of the Digital Single Market Strategy, the European Commission conducted an assessment of the role of ISPs. This assessment was based on a public consultation. The results of the assessment were published in a communication in May 2016.

The Commission stated that the present liability regime for ISPs, was designed at a time when online platforms did not have the characteristics and scale they have today. The Commission indicates that, while certain concerns were raised on liability issues, the consultation responses showed broad support for the existing principles of the E-Commerce Directive. Given this background, the Commission will maintain a balanced and predictable liability regime for online platforms. At the same time, it identified specific issues that need to be addressed to render this approach sustainable including the allocation of revenues for the use of copyright-protected content. There is a growing concern as to whether the value generated by some of the new forms of online content distribution is fairly shared between distributors and rights-holders.

The Commission set out actions to deal with the issues highlighted. These include a commitment that, in the next copyright package, to be adopted in the autumn of 2016, the Commission will aim to achieve a fairer allocation of value generated by the online distribution of copyright-protected content by online platforms providing access to such content.

What is the current position regarding the safe harbour protections in the US?

There has been on-going pressure on the US Government to introduce changes to the DMCA. In June, a large number of artists and others working in the music industry signed a petition to Congress calling for a changes to the DMCA.

So What?

Most commentators believe the call for change to copyright law is likely to fail, particularly in the US. However, there have been moves within the industry to introduce greater profit sharing initiative between ad-funded services and right holders. It is believed that YouTube collected up to $9 billion in advertising revenue in 2015, around $5 billion of which would be due to right holders.

There may be more of an appetite for change within the EU, especially given the current climate with pressure mounting on US tech companies to properly account for tax revenue and comply with personal data legislation. Although the Union is engulfed in a political crisis, we do expect further developments in copyright law due in Autumn 2016.