Political agreement has now been reached on the controversial new EU Copyright Directive. We consider if the EU has created a new copyright settlement between content producers and the tech industry.

Freeloading vs censorship

The EU’s Directive on Copyright in the Digital Single Market has been several years in the making, forming a key part of the EU’s 2015 Digital Single Market Strategy. It has also proved to be one of the most controversial pieces of European IP legislation in recent history.

At various stages of its development it appeared that the project might stall altogether, including back in July 2018 when it was rejected by the European Parliament, and then again in January 2019 when the final scheduled “trilogue” negotiations were cancelled. However, EU law makers have been under significant pressure to find a compromise before the end of current legislative term marked by the EU Parliamentary elections in May. If they had missed this opportunity, the Directive would probably have been shelved for the foreseeable future. Now it appears that they have reached a compromise.

The Directive aims to make copyright fit for the digital age and to level the playing field between content creators and those who exploit that content online. The most controversial elements of the Directive have been the new press publishers’ right under Article 11 and the additional liability placed on internet platforms for user-generated content under Article 13. These proposals have been described variously as an “end to freeloading” or a “censorship plan”. They have resulted in fierce lobbying and intense public pressure, open letters from various industry associations on both sides of the debate, including the likes of Youtube’s CEO, a Wikipedia shut down in Italy and a mock Google News newsfeed stripped of content.

This controversy is part of an ongoing “Hollywood v Silicon Valley” tension between content creators who want a high level of copyright protection based on traditional models, and the tech industry that wants to clear the path for new and innovative ways to use and share content.

Addressing the “value gap” (Article 13)

Article 13 addresses the perceived “value gap”, i.e. the idea that online content sharing platforms obtain unreasonable value from enabling their users to share copyright content, without ensuring that the underlying rightsholders receive their share.

The official final draft of Article 13 is not yet available. However, based on the unofficial texts that are now in circulation (here), this provision now only applies to “online content sharing service providers”, i.e. platforms one of the main purposes of which is to store and give the public access to “large” amounts of work uploaded by users which the platform organises and promotes for profit. (“Large” is not further defined.) However, it does not apply to not-for-profit online encyclopaedias, educational repositories, open source software platforms, online market places or business-to-business or private cloud platforms.

Notice and takedown +++

These service providers are made liable for their user’s copyright infringements unless they:

  • obtain authorisation from the rightsholder or make best efforts to obtain authorisation;
  • failing that, make best efforts in accordance with “high industry standards of professional diligence” to ensure that works of which they are notified by rightsholders are not made available; and
  • operate an expeditious notice-and-take down procedure.

Much more limited obligations apply to start ups, i.e. entities whose services have been available for less than three years, whose annual turnover doesn’t exceed ten million Euros and whose average number of unique visitors per month does not exceed five million.

In determining whether a service provider has complied with its obligations, the type, audience and size of the service and type of work uploaded by users, as well as the availability of suitable and effective means, and their cost, will be taken into account. That means that the bigger the service provider, the more they will have to do to comply. No guidance is provided as to the possible range of responses.

Content recognition technology

While not expressly mentioned in the final Directive, content recognition technologies are likely to be suitable and effective means, at least for large platforms, although they may be considered disproportionately expensive for smaller ones. This expressly does not extend to an obligation to generally monitor user-generated content. The focus therefore appears to be on works that have been specifically identified to the service provider by the rightsholder.

The Directive also stresses that the cooperation between services providers and rightsholders should not prevent the upload of works that do not infringe, including where they are covered by an exception or limitation. Users must be able to rely on the existing EU exceptions for quotation, criticism, review, caricature, parody or pastiche (thought these are currently optional and at the discretion of EU Member States). In fact, the Directive obliges service providers to inform users of the existence of these exceptions and limitations to copyright infringement in their T&Cs.

Dispute resolution

This could leave service providers in the middle of a dispute where a rightsholder asserts their copyright and a user asserts its right to upload the copyright content on the basis of an existing exception or limitation. The Directive’s concession to this is two-fold:

  • it envisages that guidance on these provisions will be issued by the European Commission following stakeholder dialogue – with special account to be taken of the need to balance fundamental rights and the use of exceptions and limitations; and
  • it requires EU countries to ensure that “out of court redress mechanisms are available for the settlement of disputes” as well as “access to a court or another relevant judicial authority to assert the use of an exception or limitation to copyright rules”.

Importantly, the service provider is not forced to be final arbiter of any such dispute.

This means additional obligations on service providers, with more onerous obligations the bigger and more profitable they are. The nature and extent of those obligations remains unclear and until either the Commission issues its guidance, or the scope of these obligations is fleshed out by European jurisprudence, legal and commercial uncertainty remains about the extent of these obligations in practice.

Support for the news industry or an extension to the status quo? (Article 11)

Article 11 has a different aim - to create a more sustainable online market for the news industry. The original proposal was to provide press publishers with the right to prevent the digital use of their publications.

This was of most concern to news aggregators, like Google News and Bing News; it could require them to pay licence fees for the short snippets of news shown on their sites. Google stated it would have to make hard decisions about which content to include and which to leave out. In other words, Article 11 would have unintended consequences for smaller news publishers, limit journalistic innovation and reduce choice for consumers.

The official draft of Article 11 is not yet available. However, based on the unofficial texts that are now in circulation (here), Article 11 provides a much more limited right. EU press publishers will now have the right, for two years, to prevent the online use by information society service providers of their journalistic publications. However, this right does not allow the press publisher to prevent private and non-commercial uses, or, more significantly, acts of hyperlinking or uses of individual words or “very short extracts”.

The accompanying press release heralds the fact that “the ‘snippet’ can therefore continue to appear in a Google News newsfeed”. It appears therefore that the status quo has been maintained for news aggregators, meaning that they will not need to compensate publishers for their current uses of snippets after all. If so, does Article 11 effect any real change? It may potentially prevent news aggregators from using the photographs that appear with news articles, but this would appear to do little towards its aim of creating a sustainable online market for news.

A new copyright settlement?

The deal must now be finally approved by the European Parliament, but this should be a formality. Rapporteur Axel Voss is already celebrating, claiming the internet will become “a space which benefits everyone, not only a powerful few.” Others have been less complimentary.

In practice, the devil is in the detail. Until further guidance emerges, this new copyright settlement is far from settled.