As part of its Digital Single Market Strategy the European Commission released a Communication entitled "Towards a modern, more European copyright framework" on 9 December 2015.  The Communication is primarily intended to provide a roadmap for the short and long term implementation of the Commission's wider copyright plans, which include full EU wide cross-border access for all types of content; the increased harmonisation of European copyright exceptions particularly those relating to knowledge, education and research; ensuring value generated by online content is properly shared and right holders fairly remunerated; improvement of the enforcement system and the Commission's ultimate objective of creating a single copyright code. 

Sound a bit familiar? It's fair to say that with each new Commission term of office comes an equally ambitious plan of making copyright "fit for the digital age", unfortunately with little, if any, real progress made before it’s time for the next team of Commissioners to step up to the task.  Perhaps, however, these next five years will be different.

In conjunction with the Communication, the Commission published a focused legislative proposal on ensuring the cross-border portability of online content services in the form of a draft regulation (the Proposed Regulation).  In this article, we consider the provisions of the Proposed Regulation and focus on the implications for service providers, right holders and consumers.  We also briefly take a look at some of the Commission's legislative plans in the pipeline as set out in the Communication.   

Cross-border portability of online content

The Proposed Regulation

Currently, consumers who have paid for or otherwise legally acquired online content in their home Member State are unlikely to be able to access this same content elsewhere in the EU due to territorial restrictions imposed by content service providers. The Proposed Regulation requires online audio-visual content service providers to allow consumer subscribers in one Member State access and use of their online content when temporarily present in another Member State. Article 3 (1) of the Proposed Regulation provides:

"The provider of an online content service shall enable a subscriber who is temporarily present in a Member State to access and use the online content service."

To address the immediate issue of the divergent copyright systems across Member States, the Proposed Regulation offers a workaround solution whereby the cross-border service is deemed to occur where the subscriber is usually resident. This not only covers copyright law issues, but also sidesteps differences in consumer law, data protection and content standards. The Commission has not however given any guidance on the meaning of ‘temporarily present’ which leaves open the question of how long an individual may be resident in another Member State before they have exceeded the ‘temporary’ time measure. 

Retrospective effect

The Proposed Regulation will have retrospective effect in that any contractual provision which is incompatible with the portability obligation will be rendered unenforceable.  This will therefore include terms between rights holders and content service providers, and service providers and users.  Both rights holders and service providers will therefore have to be alert to the Proposed Regulation’s effect on any terms which run contrary to the portability obligation.  There may well be long term agreements in place which have not catered for these developments and will therefore need to be reassessed in light of this proposal.

What are the implications?

Providing for the portability of subscribed content will no doubt be heralded by some as modernising EU copyright to reflect the trend towards mobile device access to audio visual services and appeasing the ever-frustrated travelling content subscriber. However, mandating cross-border portability is not free from negative implications for stakeholders. In particular, the obligation to locate the habitual residence and temporary presence of online content users and the cost implications of removing borders to online content undoubtedly need highlighting to all stakeholders.

Service Providers

If the Proposed Regulation comes into force as currently drafted, service providers will need to ensure they are able to confirm where their subscribers are habitually resident so that an accurate determination of subscribers’ temporary presence in other Member States can be made.

If users are not ‘temporarily present’ and yet service providers do provide content to them, the providers risk infringing copyright if they do not have a pan-EU licence.  It is likely that many smaller service providers will not have the technological capability to geo-locate consumers at the time of using the service.

Rights holders

It is not only content service providers at risk if residence and location cannot be established, but there is also an impact on rights holders.  As drafted, the Proposed Regulation only allows right holders to require content service providers to use ‘reasonable’ specified means to verify the habitual residence of a user.

Unreliable geo-location will result in users having unfettered access to copyright content wherever they are in the EU and regardless of how long they have been present there. Right holders will be concerned with the potentially diminished protection offered as those service providers unable to police the cross-border portability and/or who are vulnerable to piracy ‘open the back door’ to unlicensed access to audio visual material. 

What is the potential cost impact?

Notwithstanding the Commission's proposal that the Proposed Regulation would not require service providers to take any measure to ensure the quality of services outside the user’s habitual Member State, it is inevitable there will be a cost impact of removing borders to online content. Service providers will incur new costs connected both with the provision of the online content throughout the EU and compliance with the geo-location requirement of the regulation.  Most likely, those who do not currently offer portability of their services will find themselves hit with costs arising from the use of foreign network infrastructure and those lacking geo-location technology must upgrade to comply with the Proposed Regulation requirements.

This extra cost to the content service providers is compounded by the fact that cross-border portability will only be profitable in certain regions, in relation to particular content and only for some business models.  Indeed, public service providers such as the BBC and its iPlayer service are caught by the Proposed Regulation and how they will be impacted from a cost perspective is not clear.

By obliging service providers to offer cross-border portability in situations where there is no demand and still considerable cost implications, the Commission is arguably not balancing the needs of the consumer with the business needs of the service providers.  Considering these implications for service providers, it is arguable that cross-border portability should have been posed as a business decision and not EU mandated, and that it almost certainly is not offering “better protection” or “fair remuneration” for stakeholders as professed in the Communication.

Further proposals in the Communication  

The Commission discusses a number of other proposals on copyright which it aims to legislate in early 2016.

Exceptions

The exceptions to copyright are an area where the fragmentation of copyright rules across the EU is seen as especially acute. Divergence in the availability and scope of exceptions is highlighted as a particular problem for those which are related to education, research and access to knowledge.

It is within this context that text and data mining (TDM) is discussed. Reflective of the absence of concrete proposals throughout the document, the Communication states that the Commission is "assessing options and will consider legislative proposals" in order to allow public interest research organisations to carry out text and data mining of content they have lawful access to for scientific research purposes.

Whilst the belated recognition of the legitimacy of TDM technologies will be welcome news to stakeholders, concerns persist around the wording used in the Communication. Specifically, the limiting reference to "public interest research organisations" as the sole beneficiaries takes a narrow view of the participants in this sector and ignores the practical reality that much scientific research occurs in public private partnerships.

One of the few firm commitments in the Communication is the Commission's pledge to propose the legislation required to implement the Marrakesh Treaty, which was originally signed on behalf of the EU on 30 April 2014. Such implementation will result in the introduction of a harmonised EU exception to allow for the making and dissemination of special formats of printed material to the benefit of those with visual impairments. Whilst this is a welcome restatement of the Commission's intention, ultimately implementation is simply the fulfilment of its pre-existing commitment.

Value gap in online content provision

The Commission acknowledges the growing concern amongst right holders about the ‘value gap’ created by online content-sharing platforms which capture an ‘unfair’ proportion of the value generated by online content distribution.  It is acknowledged that there is a clear disparity between the revenue generated by these platforms and the royalties paid to the owners of shared content.

As part of its proposals, the Commission is also considering issues such as the safe harbour exemption, its scope, and the types of platforms that should / should not be entitled to benefit from it.  Whether we will see any legislative solution to these issues is uncertain.    

The Commission acknowledges that legislative clarity may be required on the definitions of the "right of communication to the public" and the "making available right" in the Copyright Directive 2001/29/EC.  These rights govern the digital use of copyright protected content and uncertainty about the scope of these rights has led to numerous CJEU referrals over recent years.  Consequently, we have seen piecemeal law making at the judicial level in an area that obviously calls out for legislative intervention.      

Enforcement system

The Communication also acknowledges that the current enforcement regime is not fully fit for the challenges of the digital single market.  The Commission proposes to continue to formulate and pursue a 'follow the money' approach aimed at deterring infringers by depriving them of the revenue streams flowing from their activities. It plans to immediately engage with all interested parties including intermediary service providers to set up and apply Codes of Conduct implementing follow the money mechanisms. Such a self-regulatory approach could (and arguably should) be backed by legislation for full effectiveness.

At the same time the Commission will consider the need to amend the existing legal framework focusing on commercial scale infringements. This review will seek to clarify, amongst other things, the rules for identifying infringers and for injunctions and their cross-border effect and is scheduled to conclude by autumn 2016.

Single Copyright Code

Looking ahead, the Commission has not relinquished its vision of full harmonisation of copyright in the EU with a single copyright code. Whilst the Commission can be commended for its unwavering commitment to this goal and for its recognition that this would require "substantial changes" to the current legal regime, a single copyright code seems a far stretch to achieve during the current term. 

The Communication points to the Community Trade Mark and Unitary Patent as evidence of successfully implemented pan-European rights.  However, we saw the creation of the Unitary Patent span decades from first discussions 40 years ago - predating the launch of iPhones, Netflix and Spotify. If the Commission takes as long to push through a single copyright code, who knows how technology might have advanced and moved on by the time it is implemented!

Conclusion

When announcing the proposal on portability, Günther H. Oettinger (EU Commissioner for Digital Economy and Society) described it as the ‘appetiser’ to 2016’s ‘main course’, which seems apt.  The approach taken by the Commission is clearly incremental and is one aimed at fostering convergence of national laws in the long term. Despite the Communication's perhaps overly ambitious narrative, the Commission’s plans will be welcomed largely by consumers as a step forward in its vision to remove barriers. 

That said, the Communication largely consists of promises of consultations and legislative proposals with little concrete action actually committed to thus far.  Moreover, the one draft regulation proposed is fairly limited in scope in that it only applies to portability of content to those "temporarily present" in another member State and not wider geo-blocking practices.  However, to give credit where due, this term of Commissioners have at least got the ball rolling and seem to be undeterred by the significant obstacles that lie ahead. 

This article was first published in the January 2016 issue of E-Commerce Law & Policy Journal.