In early October 2021, the Swedish Ministry of Justice (the “Ministry”) initiated a review of the forthcoming DSM Directive (2019/790) (the “Directive”) by issuing the publication DS 2021:30 – Copyright on the Digital Single Market. The Ministry provides an intriguing analysis on how to tackle the controversies raised by the Directive from a practical point of view. This article will focus on a few practical aspects pertaining to the implementation of Article 17 put forward by the Swedish Ministry, and how it arguably differs from the Directive and the Commission’s guidelines.
The Directive was adopted in April 2019 in an effort to reform European Copyright Law in a multitude of ways. The Directive has been subject to a lot of criticism, both before and after the adoption thereof. Much of the criticism is directed against the new liability regime for online contentsharing service providers (“OCSSP”) in Article 17.
A short summary of Article 17 of the Directive
According to Article 17.1, the member states shall ensure that an OCSSP performs an act of communication to the public when it gives the public access to, e.g. copyright protected works. Therefore, as a main rule, OCSSPs must obtain authorisation from the rightsholders by, e.g. entering into licence agreements, before allowing such content to be shared. In other words, OCSSPs are made primarily liable for their users’ uploads. Given the amount of copyright protected material that is posted on different social media platforms, the new obligations will have a noticeable business impact on many OCSSPs.
Furthermore, Article 17.3 of the Directive provides that the safe harbour rules (limitation of liability rules) set out in Article 14 of the E-Commerce Directive (2000/31/EC) shall not apply to situations governed by Article 17 of the Directive. This is arguably a major change, seeing that the safe harbour rules have limited the liability for OCSSPs for a long time. The rules concerning limited liability in the E-Commerce Directive will, in relation to the applicable area, be replaced with Article 17.4 of the Directive. This article entails that when no authorisation from a rightsholder has been granted, the OCSSP shall be liable for unauthorised acts of communication to the public, e.g. when making copyright protected work available to the public without the rightsholder’s consent. This applies unless the OCSSP can evince that they:
i. made best efforts to obtain authorisation;
ii. made, in accordance with high industry standards of professional diligence, best efforts to ensure the unavailability of specific works; and
iii. acted expeditiously, upon receiving sufficient notice from the rightsholders, to remove or disable access to such protected work and made best efforts to prevent their future uploads.
When assessing whether an OCSSP has fulfilled these requirements, all relevant factors must be taken into account as well as the question of whether the actions were proportionate.
In conclusion, the Directive imposes liability with a few exceptions that must be reviewed in contrast to the earlier, general, limitation of liability rule set out in Article 14 of the E-Commerce Directive.
The Swedish DS 2021:30 (the “Publication”) contains several different proposals relating to OCSSPs. Set out below is a short comment on the Swedish initial legislative proposal on implementation of Article 17, as described in the Publication.
Which services will be covered by the new rules?
The Publication proposes that Article 17 shall apply to OCSSPs with the main purpose to store and give the public access to a large quantity of copyright protected works that has been uploaded online by its users. However, the proposal only applies if the online content-sharing service providers sort and market such works for the purpose of profit and if the service competes with other online contentsharing service providers.
With reference to recital 62 of the Directive, the Ministry is narrowing down the scope of OCSSPs to cover certain services that play an important role in the online content area, e.g. streaming services (p. 135 in the Publication). The intention from the Ministry is that the rules shall apply to the big online content-sharing service providers. In practice, this will most likely entail that the rules will apply to the providers that are market dominating and which provide their services globally. This intention seems to be in line with the recent, and frequently discussed, AG’s opinion in the case Poland v. Parliament and Council 1 . In the case, Poland is challenging the Directive and claims that it must be annulled. The AG concluded that it is clear that Article 17 is intended to apply to the ‘large’ service providers deemed to be linked to the value gap and whose operations the definition is clearly intended to reflect.2 It therefore appears as if the Ministry’s view is in line with the Commission’s intention.
It also appears as it is the Ministry’s intent to give the legislation a wide scope of application in order to permit the courts to further develop the enforcement thereof. However, this must be assessed in contrast to the need of clear and predictable legislation. Inspired by the recent German implementation, the Ministry further proposes that the legislation contains a clarification that exempts services where the users create the content, e.g. blogs, dating applications and forums (p. 136 et seq in the Publication). Such a clarification is, in our opinion, desirable due to the uncertainty pertaining to which services the Directive will apply.
In light of the above, it can be argued that the Ministry does not seem to depart from the Commission’s view in regard to which services the Directive will be applied to.
New rules on limitation of liability for OCSSPs
In order to implement Article 17.4 of the Directive, it is proposed that the limitation of liability for online intermediaries applies if the OCSSP acted expeditiously to remove the infringing material and made its best efforts to obtain authorisation to provide the material. Furthermore, the provider must have taken reasonable steps to ensure that content, which rightsholders have stated constitutes infringement, is not made available. Such an interpretation is likely to correspond with the Directive.
Initially, the Ministry emphasises that the intention is that an OCSSP, from a copyright perspective, is responsible for the infringing material. However, this intention is not unconditional since no rule of the Directive imposes a general obligation for the service provider to keep the service free from infringing material (p. 150 et seq in the Publication).
Furthermore, the OCSSP must show that it has made its best efforts to obtain an authorisation from the rightsholder. Given the uncertainty of the requisite best efforts, this term needs to be further defined. The Ministry initially clarifies that it should not be interpreted as an obligation to try to obtain an authorisation by any given means. The term should be interpreted as an obligation to perform an overall assessment of all relevant circumstances, including an assessment of the proportionality of the attempts. The proposed obligation can be summarised as any measures that the cautious provider would have taken (p. 151 in the Publication). Such an interpretation of the obligation is, in our opinion, considered to differ from the Commission’s guidelines and is more beneficial to OCSSPs. This will, in practice, probably entail that Sweden’s national provisions will differ from Article 17 and how the Commission intended the Article to be interpreted. From our point of view, the Ministry’s interpretation is the preferred way of understanding the provision given that it must be proportionate and foreseeable. However, a discrepancy between the member states and the Commission, in terms of interpreting the article, indicates that a common interpretation of the provision lies in the distant future.
The obligation to enter into licence agreements
One of the initial fears when adopting the Directive was that Article 17 would impose an obligation for the service provider to enter into licence agreements with rightsholders regarding large parts of the content that is posted on the service. In the Publication it is emphasised that the obligation to obtain authorisation must be assessed with regards to the occurrence of different content and the possibilities to enter into agreements that include several rights which are relevant for the service. However, it should be noted that service providers should try to obtain an authorisation from rightsholders which can be easily identified and located, for example organisations that represents several mutual and, for the service, relevant rightsholders. Consequently, the same obligation cannot apply towards rightsholders that represent a smaller, narrower, catalogue of rights. In such cases, it can be sufficient that the service provider provides tools through which the rightsholders can offer the service provider the opportunity to enter into a licence agreement (p. 151 in the Publication).
It can be further noted that the Ministry’s opinion deviates from the guidelines on interpretation provided by the Commission. The Ministry emphasises that an interpretation as propounded by the Commission in the guidelines gives rise to the assumption that the service providers in any and all situations when a licence agreement is offered thereby has an obligation to enter into an agreement with the rightsholders. In the Publication it is argued that such an obligation lacks proportionality, e.g. in a situation when a service provider is dedicated to a certain type of content and actively tries to shut out different kind of content (p. 152 in the Publication).
It is rather surprising that the Ministry expressly mentions that the Commission’s guidelines lacks proportionality and proposes another interpretation of the provision. This highlights the practical issues linked to the implementation of the Directive. However, this statement also indicates that Sweden accentuates the practical issues that an interpretation, as the one performed by the Commission, entails. This further gives rise to the assumption that the Directive may be subject to several disputes in the CJEU.
The obligation to prevent future infringement
Another controversy that arose in the early stages of the Directive was the obligation to prevent certain kind of content being made available. The core of the criticism was that the obligation led to the implementation of automated content moderation, inter alia, content filters that may lead to the blocking of material that does not confer an infringement in any copyright (p. 154 in the Publication). Such an obligation would probably constitute a risk of limiting the freedom of speech on the internet in an unjustified way.
The Ministry agrees with the AG’s opinion in the case Poland v. Parliament and Council. The AG concluded that it is not, in practice, possible to fulfil the requirements of the Directive in another way than automated content moderation, mainly due to the fact that the Directive applies to OCSSPs that gives the public access to a large amount of copyright-protected works. The Ministry emphasises this standpoint (p. 155 in the Publication).
In order to prevent the implementation of automated content moderations that will essentially entail an internet filter, the Ministry stresses that the obligation should be limited to manifestly infringing uploads (p. 156 in the Publication). It should be noted that a similar prerequisite exists in the Swedish Bulletin Board Systems Act (1998:112) (the “BBS Act”). The act prescribes that there is an intermediary liability to moderate content on a Bulletin Board System only if the infringement is obvious.
The suggestion to limit the obligation to manifestly infringing content is intriguing in several ways. This is mainly due to the practical issues that arise when OCSSPs must determine if the content is unlawful or not. Such an obligation will most certainly lead to an over-removal of content that is not manifestly infringing in order to not be held liable for a potential infringement. By using the prerequisite manifestly, the Ministry indicates that it is not the OCSSP’s responsibility to determine the lawfulness of published content, but only to act against such content that is clearly infringing.
In summary, the Swedish initial legislative proposal on how to implement the Directive gives rise to several interesting considerations regarding the controversies that have arisen on the coattails of the Directive. In particular, it is interesting that the Ministry disagrees with the interpretation contained in the Commission’s guidelines, e.g. regarding to what extent the obligation to enter into licence agreements apply. This indicates that there are still discrepancies between the Commission and the member states regarding the final interpretation of the Directive. It is not yet possible to predict the outcome of this difficulty or how Article 17 should be interpreted; however, it can be concluded that we have not yet seen the last controversy regarding the Directive.