The Court of Justice of the European Union (CJEU) today issued its decision in the Meltwater Case C-360/13, a long-running (5 year) dispute between the Newspaper Licensing Agency (NLA) and Meltwater and the Public Relations Consultants Association (PRCA).

Along the way, the PRCA, who represents customers (end users) of Meltwater's online media monitoring service, and Meltwater secured victories on two key issues: reducing materially the royalties payable by end users of online media monitoring services and confirming that the temporary copying of content involved in browsing the internet does not amount to copyright infringement.

The amount of royalties payable by end users was fixed by the UK Copyright Tribunal in May 2012 when the fees that the NLA were entitled to collect were reduced by up to 90% from initial NLA demands. For more details on this decision please see our client alert.

The temporary copying question was referred by the UK Supreme Court to the CJEU in May 2013 who today held that the on screen and cached copies made when browsing the internet are temporary copies for the purpose of Article 5(1) of the Information Society Directive1 and may therefore be made without the authorisation of website publishers.

This landmark decision has immediate relevance in the media monitoring industry, but is important for all content owners, content aggregators, search services, broadcaster/streamers and other online service providers. It confirms across the EU that acts of end users which merely constitute opening and reading a web page fall within the EU's temporary copies exception, and as such do not require authorisation, either express or implied, from the relevant copyright owner.

Background

This case initially arose out of a reference to the Copyright Tribunal brought by Meltwater and the PRCA challenging the reasonableness of licensing terms sought by the NLA, representing major UK newspaper publishers. One of the live issues in that Tribunal reference was whether Meltwater's end users, represented by the PRCA, needed a licence to receive the Meltwater service. This issue was determined by way of an application for a declaration to that effect sought by the NLA in parallel proceedings in the UK High Court. The question of temporary copying which was referred to the CJEU was an aspect of these High Court proceedings.

Meltwater offers an online media monitoring service which uses internet search technology to compile an index of newspaper websites. Meltwater end users use the service to monitor the online press. They identify search terms and search reports are sent by periodic e-mail to Meltwater's end-users identifying when those terms appear. End users can also access the search results on Meltwater's website. 

The NLA claimed that end users required a licence due to the following three acts of copying: (1) the copy of Meltwater's alert email containing search results received on the user's computer; (2) the temporary copy of the search results in the cache and on screen on the user's computer when the user viewed search results on Meltwater's website; and (3) the copy of the article in the cache and on screen on the user's computer when the user clicked on a link and viewed an article on the publisher's website. The PRCA claimed in defence that (2) and (3) were temporary copies within the terms of the exception in s.28A CDPA / Art 5(1) Information Society Directive. It was the scope and application of this defence that the Supreme Court referred to the CJEU.

Please note that the issue of whether or not Meltwater needed a licence to index news websites and provide its service was not at issue in this case. This case was about what (if any) licences the recipient of such services required.  

CJEU guidance and previous rulings on temporary copying

In Infopaq I2 the CJEU confirmed that the following conditions had to be satisfied for acts of temporary copying to fall within the Art 5(1) exception:

  1. the act is temporary;
  2. it is transient or incidental;
  3. it is an integral and essential part of a technological process;
  4. the sole purpose of that process is to enable a transmission in a network between third parties by an intermediary or a lawful use of a work or protected subject matter; and
  5. the act has no independent economic significance.    

Both the High Court and the Court of Appeal took the view the defence did not apply to any copies, whether temporary or not, made for the purposes of "consumptive use" of copyright material, including reading or viewing such material, thereby ruling out the application of the exception to internet browsing. They held that none of the above five conditions were met by Meltwater's end users.

Subsequent to the Court of Appeal's judgment, the CJEU issued its rulings in both the FAPL3 and Infopaq II4 cases which cast doubt on this conclusion. In particular, in FAPL the CJEU held that Art 5(1) applied to the reception of broadcasts on digital televisions, delivering an obvious analogy with viewing other forms of copyright work in digital form on a webpage.

The Supreme Court's judgment on temporary copying

The UK Supreme Court, in a unanimous judgment delivered by Lord Sumption, agreed in full with the arguments of the PRCA that temporary copies made in an end user's cache and on screen when simply viewing the content of a web page, as opposed to downloading or printing out the content, are exempted from copyright infringement by the temporary copies exception in Art. 5(1).

After clearly stating its own opinion on the issue before it, the Supreme Court concluded that the issue of the legality of internet browsing had a transnational dimension and "important implications for many millions of people across the EU making use of what has become a basic technical facility". The Court therefore decided to refer the point to the CJEU for a preliminary reference before making any order in order that this "critical point may be resolved in a manner which will apply uniformly across the European Union".

Applying the subsequent rulings of the CJEU in the Infopaq II andFAPL cases the Supreme Court found that the dispute turned on the first two conditions of Article 5(1).

Lord Sumption concluded that "temporary" and "transient" mean the same thing (para 30). He concluded that the copies in question were temporary/transient because "it would be strange if the law said that the period of time for which these copies will exist in the ordinary course of [the technical processes involved in browsing] was insufficiently 'temporary' or 'transient' to qualify". The purpose of these conditions is "to distinguish between the use of a computer or other equipment simply to view the relevant material, and its use to record it".

And the copies in question are incidental, being "for the purpose of enabling a lawful use of copyright material.

The Supreme Court did not accept the NLA's argument that its decision would leave right owners without effective remedies against pirates as they took the view that there are remedies against others who are on the face of it more at fault. Certainly, the Information Society Directive provided for clear remedies against the pirates as well as against intermediaries who are used by the pirates to disseminate the work and did not provide for any similar remedy against end users, which it could have elected to do.

For more information on the Supreme Court decision see our client alert.

The CJEU's judgment on temporary copies 

The CJEU has today confirmed the Supreme Court's position that on screen and cached copies are exempted from copyright infringement under Article 5(1) of the Information Society Directive.

The Court found that on screen and cached copies are temporary, as the on screen copies are deleted when the internet user moves away from the website viewed, and cache copies are automatically replaced by other content after a certain time.

Further both copies are created and deleted by the technological process used for viewing websites (i.e browsing), with the result that they are made entirely in the context of that process. It is irrelevant that the process in question is activated by the internet user and that it is terminated by a temporary act of reproduction such as the on screen copy as:

"it is apparent from the case-law that Article 5(1) of Directive 2001/29 does not preclude the technological process from involving human intervention and, in particular, from being activated or completed manually (see, to that effect, orderInfopaq International, EU:C:2012:16, paragraph 32)"

The Court therefore held that the on screen and cache copies must be regarded as being an integral part of the technological process at issue in the main proceedings.

Further the copies are transient or incidental as they only exist for as long as the internet user keeps his browser open (on screen copies) or are incidental in nature in the light of the technological process used (hard drive copies).

Finally, the CJEU addressed Art 5(5) of the Information Society Directive, which embodies the "three step test" contained in Article 9(2) of the Berne Convention, and provides that exceptions and limitations, such as Art 5(1), "shall only be applied in certain special cases which do not conflict with a normal exploitation of the work or other subject-matter and do not unreasonably prejudice the legitimate interests of the rightholder". In previous cases (FAPL, Infopaq II), the CJEU held that "…if those acts of reproduction fulfil all the conditions of Art 5(1) of Directive 2001/29, as interpreted by the case-law of the Court, it must be held that they do not conflict with the normal exploitation of the work or unreasonably prejudice the legitimate interests of the rightholder" (Infopaq II, paragraph 56). However, in this decision the CJEU appears to have applied Art 5(5) as a separate test.

The CJEU held that these Article 5(5) conditions are satisfied because the on-screen and cached copies are created only for the purpose of viewing websites, and so are a special case. They held that, although the copies make it possible in principle for internet users to access works displayed on websites without rightholder authorisation, the copies do not unreasonably prejudice the legitimate interests of those rightholders, noting that the works have been made available to internet users by the publishers of those websites. Finally, they held that such on-screen and cached copies do not conflict with a normal exploitation of the works as viewing the websites is a normal exploitation of the works.

Applying Art 5(5) as a separate test is different from saying that Art 5(5) is satisfied if the conditions of Art 5(1) are met and it will be interesting to see which approach is followed in future, with the FAPLand Infopaq approach having the virtue of greater certainty as Art 5(1) is a very detailed and carefully formulated exemption.

Ultimately the CJEU concluded:

"Article 5 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society must be interpreted as meaning that the copies on the user’s computer screen and the copies in the internet ‘cache’ of that computer’s hard disk, made by an end-user in the course of viewing a website, satisfy the conditions that those copies must be temporary, that they must be transient or incidental in nature and that they must constitute an integral and essential part of a technological process, as well as the conditions laid down in Article 5(5) of that directive, and that they may therefore be made without the authorisation of the copyright holders."

The case will now be referred back to the Supreme Court for confirmation of its final decision based on the answers provided by the CJEU and the question of costs.

What does this mean?

For businesses and consumers who provide services via and/or that browse the internet, the CJEU's decision provides comfort that they or their users are not infringing copyright simply by reading or viewing material on the internet. However, downloading or printing out the content, forwarding the content to third parties or obtaining financial gain by independently exploiting the content, as opposed merely to reading it, will fall outside of the exception.