Following two and a half years of negotiations and unprecedented public attention, the European Parliament adopted the controversial EU copyright reform in its plenary session on 26 March 2019. The objective of the Directive on Copyright in the Digital Single Market is to adapt the existing EU copyright legislation of 2001 to respond to the rapid technological changes that significantly affect the production, distribution and monetisation of copyright-protected works or other protected content in the copyrights industry.

The key objectives of the new legislation are a) to facilitate the use of copyrighted material for education and research; b) to allow for more cross-border access for citizens; and c) to introduce clearer rules for all stakeholders in the copyrights industry, in particular regarding the online distribution of content.

The two issues that have attracted the most attention from the business community and the wider public are:

Article 15 - new press publishers' right (Article 11 in the original European Commission proposal); and Article 17 - monitoring and filtering obligations on platforms providing access to user-uploaded content (Article 13 in the original European Commission proposal)

If EU Member States formally adopt the new legislation, as they are currently scheduled to do on 9 April 2019, the new Directive will be published in the Official Journal of the EU, and will enter into force 20 days later. Member States will then have 24 months to implement the new rules (i.e. by spring 2021). The national implementation of the new rules is expected to have major implications for the balance of rights amongst the creative industry and online platform providers.

Background and timeline

The proposal for the Copyright Directive was put forward by the European Commission in September 2016 to address in the EU's copyright rules the increasing prominence of new business models and habits of consumption.

Despite significant opposition against the new legislation - including amongst the business community and some EU Member States in the Council of the EU - the upcoming adoption by Member States representatives on 9 April represents the final hurdle for the legislative process to be completed.

Key elements of the Directive

Once adopted, the new copyright rules will bring about the following key changes:

  • Mandatory copyright exceptions

The new Directive includes mandatory copyright exceptions for the following domains:

  • teaching and educational purposes
  • the preservation of cultural heritage
  • text- and data-mining for the purpose of research
  • general text- and data-mining (i.e. for other purposes, in order to facilitate the deployment of data analytics and artificial intelligence across the EU)
  • Article 15 (Article 11 in the original Commission proposal) - Protection of press publications concerning online uses (so-called "press publishers' right")

In its initial impact assessment, the European Commission found that publishers are experiencing significant difficulties when seeking to monetise digital content published on news platforms and search engines, and often struggle to conclude licences with online platforms and to receive compensation for their using of this content.

The new Directive therefore seeks to introduce a new right for press publishers for when their press publications are being used by news aggregators or similar media monitoring platforms, so-called "information society service providers". The scope of this right includes journalistic publications published in any media, ranging from daily newspapers to special monthly, subscription-based magazines to news websites.

Not protected under this provision are scientific journals and websites such as blogs that do not engage a press publisher. "Hyperlinks" to news reports as well as "individual words or very short extracts" will not be covered by this right, so that information society service providers will continue to be allowed to use these elements of publications without requiring the publisher's authorisation. The provision requires Member States to ensure that are allocated an appropriate share of the revenues of press publishers.

  • Article 17 (Article 13 in the original Commission proposal) - Use of protected content by online content sharing service providers (so-called "value gap")

The European Commission identified that the current legal framework represents a challenge for authors and operating in a digital context in terms of enforcing copyright and ensuring appropriate remuneration.

On the basis of the E-Commerce Directive of 2000, information society service providers are currently exempted from liability for copyright infringements by third parties in the EU, insofar as these providers represent "technical, automatic and passive internet intermediaries". The Commission, however, identified significant legal uncertainty and points to unsettled case law on the scope of providers and operations exempted under the E-Commerce Directive.

The new Copyright Directive thus aims to reinforce the position of rights holders to receive remuneration for the use of their copyright-protected works or other protected content used by content sharing service providers. The new legislation will require these online platforms, which make publicly available "large amounts of works or other subject-matter uploaded by their users", to obtain an authorisation from the rights holders concerned when using their content, notably by concluding a licence agreement.

In the absence of such licence agreements concluded with rights holders, platforms will be liable for any copyright infringements resulting from protected content that users may have uploaded to a platform. In order to avoid such liability, online platforms are required to demonstrate that they have:

  1. made "best efforts" to obtain an authorisation
  2. made "best efforts" to ensure the unavailability of unauthorised content for which rights holders have provided necessary and relevant information
  3. acted "expeditiously" to remove any copyrighted content following a notice received by the rights holder
  4. made their "best efforts" to prevent future uploads

Although the word "upload filter" is nowhere to be found in the Directive, this aspect continues to dominate the political and public debate on the copyright reform. The reasons for the controversy are the above-mentioned requirements for platforms to prevent any unauthorised content from being uploaded in the first place and to effectively take down any protected content that has been uploaded by users. Although the Directive does not prescribe specific measures for platforms to fulfill these requirements, it is widely understood that this can technically only be achieved by installing content monitoring software. The prospect of such "upload filters" has sparked wide-spread debate, protest and campaigns, not only amongst policy-makers, but also between the rights industry, online platforms and predominantly young activists who argue that such measures would necessarily limit the freedom of speech online.

Moreover, in the absence of a licence agreement, micro and small platforms will be subject to a "lighter" version of requirements in cases where there is no authorisation granted by rights holders.

This concerns online platforms that (i) have been available to the public in the EU for less than three years; (ii) have a turnover of less than 10 million euros; and that (iii) have fewer than five million unique monthly visitors. These companies will "only" have to act expeditiously to remove the unauthorised works, notified by the rights holders, from their website.

The following online services will be explicitly excluded from the scope of the Directive:

  • Not-for-profit online encyclopedias
  • Not-for-profit educational and scientific repositories
  • Open source software developing and sharing platforms
  • Electronic communication service providers
  • Online marketplaces
  • Business-to-business cloud services and cloud services which allow users to upload content for their own use

It is important to note, however, that the Directive sets out that no general monitoring obligation should be imposed "in line with Article 15 of the e-Commerce Directive", and that the new rules do not affect the existing copyright exceptions allowing for quotation, caricature, parody or pastiche.

Moreover, the new Directive requires online platforms to provide platform users with an effective complaint and redress mechanism for the case of any disputes on the removal or blocking of access to uploaded content.

  • Remuneration

Under the new Directive, authors and performers are entitled to appropriate and proportionate remuneration on the basis of licences being concluded or their rights being transferred. The new rules establish a transparency obligation in view of the use of licensed content. Mechanisms for remuneration adjustment and for alternative dispute resolution will be introduced.

  • Other relevant provisions

Moreover, the reform contains the following provisions:

  • a new licensing mechanism for out-of-commerce works
  • the possibility of collective licensing for collective management entities to be able to agree on licences covering protected content of non-members
  • a new negotiation mechanism to facilitate the availability, visibility and distribution of audiovisual works
  • a mechanism to ensure that copyrights cannot be claimed for works of art in the public sphere

Brexit implications

Regardless of when and how the UK will withdraw from the EU, it remains unclear at this moment whether or not the UK will implement (all or part of) the new Directive. The UK has been supportive of the new rules in the legislative process, and the UK's creative sector, meanwhile, is advocating for the new EU legislation to be fully implemented into UK law.

Next steps

If and once the EU Member States will formally adopt the new legislation on 9 April, as tentatively scheduled, the new Directive will be published in the Official Journal of the EU, and will enter into force twenty days later. The Member States will then have 24 months to implement the new rules into their national legislation (i.e. by spring 2021).

Nevertheless, the Council could still at this stage reject the proposal or certain articles - although this would be highly unusual. This possibility is reflected in the fact that (i) Finland, Italy, Luxembourg, the Netherlands and Poland earlier in February voted against the current text of the Directive, and Belgium and Slovenia abstained, (ii) and it also becomes clear against the background of the significant public protests that have recently taken place in particular in Germany, and which were aimed at convincing national governments to reject the new Directive (in particular Articles 15/ 11 in the original proposal and 17/ 13 in the original proposal) in the context of the final vote in the Council. In order for the draft Directive to be rejected, it would require the votes of 13 Member States or those of a number of Member States representing 35 percent of the EU's population.

Shortly after the entry into force of the legislation, the Commission will organise stakeholder dialogues, in particular including user organisations and technology companies "to arrive to a uniform application of the obligation of cooperation and to define best practices" in terms of professional diligence for the industry. The results of these dialogues will feed into guidance on the application of Article 17, to be issued by the Commission.

Five years after the entry into force of the Directive, the Commission will be required to conduct a review of the legislation and to present its findings in a report to the European Parliament and the Member States in the Council.

How DLA Piper can assist you

  • Briefings & impact assessments - Our team stands ready to provide tailored briefings and impact assessments to our clients regarding the expected impact of the new rules on specific stakeholders or sectors of industry
  • Protecting our clients' interests throughout national transposition - Seamlessly integrated into our European network of offices, our team is well-placed to assist clients, individually or by establishing alliances with other relevant stakeholders, to effectively represent the clients' interest vis-à-vis the authorities in the EU Member States in the process of national implementation of the Copyright Directive.
  • Stakeholder engagement - Our team is experienced in assisting clients by engaging with the relevant institutional stakeholders. We are keen to support our clients in their engagement with the relevant EU institutional stakeholders in view of the upcoming stakeholder dialogues and guidance to be issued on the application of Article 13. We will also be ideally placed to assist in our clients' engagement with the national authorities during the 24-month transposition period of the Directive in the Member States, in order to ensure that national implementation takes into account our clients' interests.
  • Legal advice - Our team of lawyers stands ready to advise European and international clients on compliance with the new rules.