As part of its strategy to harmonise national copyright regimes across the EU and reflect the digital age in which we live, on the 9 December 2015, the European Commission published a "Communication on the modernisation of the European copyright framework" (“Communication”), a draft "Regulation on ensuring the cross-border portability of online content services" (“Regulation”) and a "Consultation on the enforcement of IP rights within the EU" (“Consultation”).

What?

Background

The European Commission published a Communication on a "Digital Single Market Strategy for Europe" (“DSMS”) on 6 May 2015 in which it set out five legislative proposals for EU copyright reform to reduce the differences between national copyright regimes and allow for wider online access to works by users across the EU, namely:

  1. portability of legally acquired content;
  2. ensuring cross-border access to legally purchased online services while respecting the value of rights in the audiovisual sector;
  3. harmonised exceptions for the cross-border use of content for specific purposes (such as research, education, text and data mining);
  4. clarification of the rules on the activities of intermediaries regarding copyright-protected content; and
  5. modernising cross-border enforcement of IP rights.

Accompanying the DSMS, EU Commission President Jean-Claude Juncker released a video in which he said: “you can drive from Tallinn to Turin without once showing your passport, but you can’t stream your favourite TV shows from home once you get there […] we are making a single market fit for a digital age.”

Regulation - Overview

The DSMS noted that less than 4% of all video on-demand content in the EU is accessible cross-border, and the Communication notes that in 2014, 49% of EU internet users accessed music, video and games online.

The draft Regulation addresses this as it contains a “cross-border portability right” for users to enjoy digital subscriptions they pay for at home whilst they travel across the EU. For example, someone who lives in the UK who travels on holiday to Spain could access the online film or live sport service that they subscribe to in the UK, while “temporarily” staying in Spain.

The Questions and Answers (“Q&A”) accompanying the Regulation state that many users resort to technological workarounds such as virtual private networks to access online content whilst travelling across the EU.

The UK Prime Minister David Cameron is supportive of the Regulation as he describes it as a step towards “securing a flexible single market that works for EU consumers and businesses”.

Regulation – Provisions

Article 3(1) of the Regulation obliges a provider of an online content service to “enable a subscriber who is temporarily present in a Member State to access and use the online content service”. Article 2(a) defines a “subscriber” as a consumer who has a contract for the provision of an online content service with a provider. Article 2(d) defines “temporarily present” as the presence of a subscriber in a Member State other than the Member State of residence. Article 2(e) defines an “online content service” as one which is provided to a subscriber on agreed terms either against payment of money or the service provider verifies the Member State of residence.

Article 4 sets out that the provision of, and access to, content falling under Article 3 will be considered as occurring solely in the Member State of residence where the subscriber habitually resides.

Article 5(1) provides that any contractual provisions between right-holders and service providers, and between service providers and subscribers which are contrary to Articles 3 and 4, will be unenforceable. Article 5(2) allows right-holders to require the service provider to use effective means to verify that it is providing access to subscribers in accordance with Article 3.

Article 7 sets out that the Regulation will apply retrospectively to rights and contracts that pre-date it.

Regulation – Comment and next steps

The explanatory memorandum of the draft Regulation states that intervention by the EU will ensure “greater legal certainty and do away with the need to renegotiate the whole network of existing licences for the purposes of cross-border portability” as “the proposal will not oblige right-holders and service providers to renegotiate contracts as it will make unenforceable any provisions in contracts contrary to the obligation to provide for cross-border portability.”

Under the current draft of the Regulation, “temporarily present” is not defined with reference to any time limit, so it is unclear how one assesses this. Although the Regulation will benefit users, it may arguably bring about a reduction in subscription revenues for service providers.

The Q&A states that the costs of implementing the Regulation will only be marginal for service providers. Anticipated costs will be the reconfiguration of user authentication systems which instead of geo-blocking a user based on their location will allow access on a temporary basis to online content. The Commission believes that the ability to use and enjoy online content when travelling in the EU will make these products and services more attractive and will boost revenues for the creative sector.

The Intellectual Property Office (“IPO”) ran a call for views on the draft Regulation which ended on 12 February 2016. The IPO encouraged views from service providers, right-holder organisations and consumers. Areas in which the IPO were particularly interested included:

  • whether consumers should have a cross-portability right;
  • whether the definition of “temporarily” in the draft Regulation achieves the objective of specifying scenarios in which a person is on holiday or a business trip;
  • whether the scope of the draft Regulation should only apply to paid subscription services and those subscription services which have mechanisms in place to allow verification of the subscriber’s country of residence (such as TV licences);
  • given that the draft Regulation contains provisions stipulating that it will apply to existing contracts and acquired rights, whether these provisions were effective and what their impact would be on right-holders and service providers; and
  • whether there were any issues with the timescale for the Regulation to come into force, currently drafted as six months after its agreement (envisaged to be 2017).

The UK Government will take forward the views expressed as part of the negotiations between the European Parliament and the EU Member States this year on the final text of the Regulation.

Communication - Overview

The Communication states that it is aimed at injecting a higher level of harmonisation into the current EU copyright rules, addressing in particular the territoriality of copyright and adapting to new technologies.

The Communication sets out that the availability of online content services “without frontiers” will deliver more choice to consumers, and that a better functioning digital single market will also provide opportunities for content creators and cultural industries to expand their audiences and business and make them more competitive.

The Commission recognises that the objective of full cross-border access for all types of content across the EU needs to be balanced with the readiness of markets to respond rapidly to legal and policy changes and the need to ensure viable financing models for those who are chiefly responsible for content creation.

The Communication focuses on four pillars, each of which are set out below.

(i) Communication – Wider access to content across the EU

The Communication comments on the territorial nature of copyright. It states that the reason why users in one Member State cannot access content they subscribe to at home abroad is because there are many instances where right-holders decide to limit the territorial scope of a copyright licence to service providers, and consequently the services are limited to only one territory. Furthermore, service providers may decide to limit a service to a particular territory despite holding a licence for the whole of the EU. In addition, audiovisual content is often financed through territorial exclusivity licences granted to individual distributors or service providers, and this is an established sustainable financing model.

The Regulation is a first step towards addressing the cross-portability issue. Additionally, following a recent public consultation, the Commission is considering amending the “Satellite and Cable Directive” (Directive 93/83/EEC). Paragraph 2 of Article 1 of this Directive currently sets out that satellite service broadcasters are bound by the laws of the Member State in which they communicate their service, not the Member States in which their signal is received, meaning that satellite broadcasters currently only require a licence to broadcast copyright content in their country of origin to be able to broadcast across the whole of the EU. The Commission is considering whether this principle should be extended to online services also and a legislative proposal is expected to be published this year.

(ii) Communication – Adapting copyright exceptions

Current EU rules on copyright exceptions which Member States have the option to implement into their national laws can be found in the “InfoSoc Directive” (Directive 2001/29/EC). These exceptions have not been universally implemented by all Member States, which has led to inconsistencies between national laws. To address this, the Commission is considering legislative proposals for the following exceptions to copyright to improve cross-border trade and create an EU framework that is relevant for access to knowledge, education and research and also effective in the digital age:

  1. legislation to implement the Marrakesh Treaty (which provides an exception to allow the creation of accessible versions of literary and artistic copyright works for the blind and visually impaired);
  2. allow public interest research organisations to carry out text and data mining of copyright content for scientific research purposes (text and data mining is the reading and analysis by machines of vast amounts of digital content to advance science and research). The Commission believes this exception is necessary to strengthen the EU’s competitiveness and scientific leadership and to encourage cross-border and cross-discipline collaboration in research and innovation activities across the EU;
  3. clarify the scope of the current EU exception which allows use of copyright materials for the sole purpose of illustration for teaching or scientific research. The Commission believes this is particularly necessary because of the advent of online learning, in-classroom use of technologies, digital materials and cross-border learning;
  4. allow cultural heritage institutions such as libraries, educational establishments, archives and museums to carry out preservation activities including digital preservation of copyright works;
  5. allow the public to remotely consult copyright works held in libraries, educational establishments, archives and museums for the purpose of research and private study. The current EU exception only allows the public to access these works on terminals located on the premises of these institutions; and
  6. clarify the scope of the current EU “freedom of panorama” exception (this exception allows the public to take photographs, videos and drawings of buildings and sculptures located in public spaces).

The Commission states it will consider the above legislative proposals by Spring 2016.

(iii) Communication – Improving how the marketplace functions for copyright

The Commission wants to ensure that the value generated by the online distribution of copyright works is fairly shared with right-holders. The Commission is concerned that right-holders cannot set licensing terms and negotiate fairly with large online platforms (such as search engines, social media, knowledge and video sharing websites, and app stores) for making their work available to the public.

To strengthen the position of right-holders, the Commission is considering:

  • whether action is needed to define “‘communication to the public” and “making available” rights at an EU-wide level. These rights relate to the use of copyright content in digital transmissions. By defining these, creators and creative industries would be able to claim rights and negotiate licences and remuneration in the context of content distributed online;
  • whether action should be taken against online news aggregators who provide links to copyright content. In Spain, a copyright law came into force last year requiring certain online news platforms which post links to copyright content to pay a fee to the news publisher of that content. A large online news platform withdrew from Spain as a result of the legislation. In Germany, legislation was recently debated on whether an online news platform should pay publishers for posts of a ‘snippet’ of more than a few words of the news article to which they referred under a hyperlink. The Commission recognises that these Member States have sought to address the activities of news aggregators, but the differing approaches carry a risk of more fragmentation in a Digital Single Market; and
  • whether proposals are needed for the regulation of contractual practices, unwaivable remuneration rights, collective bargaining and collective management of rights for authors and performers.

The Commission states it will consider the above by Spring 2016.

(iv) Communication – Consultation on the Enforcement of IP rights

The Commission is concerned that the current legal enforcement framework may no longer be fit for purpose. As such the Commission is running a Consultation on the enforcement of IP rights within the EU which ends on 15 April 2016. The aim of the Consultation is to gather views from right-holders, the judiciary, legal profession, intermediaries, consumers and public authorities on the “IP Enforcement Directive” (Directive 2004/48/EC) and its relevance to the enforcement of IP rights in the online environment.

The Commission states that in view of the frequent commercial-scale infringements taking place, it is consulting with all parties:

  • to consider proposals to adopt “follow-the-money” mechanisms, based on a self-regulatory approach. Intermediary service providers would deprive commercial-scale infringers of revenue streams they may be acquiring from consumer payments and advertising in relation to the infringing activity. The Commission is seeking to reach agreement on this by Spring 2016;
  • to consider amendments to the legal framework to clarify the rules for identifying infringers, the application of provisional and precautionary measures and injunctions and their cross-border effect and the calculation of damages and legal costs. The Commission is considering proposals on this by Autumn 2016; and
  • to consider “notice and action” mechanisms, so that once illegal content is identified it is removed by hosting services, and that there are systems in place to prevent legal content from being taken down in error.

So What?

The consumer is the person most likely to benefit from the Regulation by being able to access online content across the EU. However, it will potentially have a negative impact upon licensors and licensees of online copyright content as it may restrict revenue streams (although the Commission believes otherwise).

As stated in the Communication, the ultimate goal is to have a single EU copyright code and copyright title, and a single copyright jurisdiction and tribunal. However this would require substantial changes to current copyright rules. But the proposals being considered by the Commission are a step towards creating pan-European rights that have been successfully implemented for other IP rights such as trademarks and patents.

The timetable for bringing about the above proposals are ambitious, further demonstrating the drive towards creating a single EU copyright framework.