On 26 March, the European Parliament approved the EU’s Directive on Copyright in the Digital Single Market. This inches the EU closer to adopting these new rules governing the use of copyright material on the internet.

Freeloading vs censorship

The Copyright Directive has been several years in the making, forming a central part of the EU’s 2015 Digital Single Market Strategy. It is intended to curb the power of big tech by levelling the playing field between content creators and those who exploit content online.

It has also proved to be one of the most controversial pieces of EU IP legislation in recent history. It has sparked fierce lobbying (being described by supporters as an “end to freeloading” and by opponents as a “censorship plan”), public demonstrations, open letters from Google, YouTube and other key industry players, and even Wikipedia blackouts. 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.

At various stages of its development it appeared that the project might stall altogether. However, EU law makers have been under very significant pressure to adopt the Directive before the end of the current legislative term, marked by the Parliamentary elections in May. Political agreement was finally reached between negotiators in February, and now the European Parliament has added its seal of approval.

Addressing the “value gap” (Article 13)

Article 13 is easily the Directive’s most controversial provision. It 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.

It addresses the liability of online platforms for copyright-infringing material shared by their users. It applies only to “online content sharing service providers”, i.e. platforms which allow users to share a “large” amount of content which is organised and promoted for profit. So, it will bite on YouTube, social media platforms, music-sharing and video-game streaming platforms and many others. It does not apply to not-for-profit online encyclopaedias, educational repositories, open source software platforms, online market places or private cloud platforms. More limited obligations apply to start-ups (i.e. services that are less than three years old, with an annual turnover of less than ten million Euros and no more than five million unique visitors per month).

Notice and takedown +++

Online platforms to which Article 13 applies are made directly liable for their users’ copyright infringements (e.g. uploading pirated films or music) 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.

In determining whether an online platform 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 and cost of suitable and effective means, will be taken into account. So, the bigger the platform, the more they will have to do.

Content recognition technology

Online platforms will not be required to monitor every piece of content shared by their users, but they must make best efforts to prevent users sharing content that infringes copyright works that are specifically identified to them, e.g. by the film company or record label that owns them. Effectively, Article 13 shifts the burden of policing the internet from rights holders to online platforms.

While not expressly mentioned in the final Directive, content recognition technologies are likely to be a suitable means to achieve this, at least for large platforms (although they may be considered disproportionately expensive for smaller ones). Content recognition technology is controversial as it risks blocking works that incorporate copyright content for legitimate (and non-infringing) purposes such as criticism, review or parody. This has significant implications for freedom of speech and open internet.

The Directive stresses that it should not prevent the upload of works that do not infringe, but gives no guidance on how online platforms are intended to achieve this important balance.

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 concessions 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.

Noble aims but lacking clarity

While Article 13 may have noble aims, it currently functions as little more than a set of ideals, with very little clarity on exactly which platforms will be caught or what they will be required to do. There is likely to be an ongoing lack of legal and commercial certainty until the details are fleshed out, either by the Commission’s Guidance or by European case law.

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

Article 11, which creates a new right for press publishers in respect of their published works, has also been controversial. In particular, news aggregators like Google News were concerned that it could require them to pay licence fees for the short snippets of news shown on their sites. Google said that it would, as a result, have to make decisions about which content to include and which to leave out, with unintended consequences for smaller news publishers, limiting innovations and reducing choice for consumers. However, the final version of Article 11 is much watered down, excluding from the new press publishers’ right both hyperlinks and “very short extracts” of publications. As such, it is unlikely to have a significant impact on news aggregators after all.

A done deal?

The Directive must now be finally approved by the Council of the EU. That vote is scheduled for either 8th or 15th April. If it passes that stage, it will be signed in ceremony before being published in the EU’s Official Journal and will come into force 20 days after that. Member States will then have two years in which to implement it into their own laws. So, this new regime is unlikely to apply until May 2021 at the earliest.

The outcome of the Council’s vote is uncertain. In our view it is more likely than not that the Directive, having progressed this far, will be adopted. However, in practice, the devil is in the detail. Until further guidance emerges, this new copyright settlement is far from settled.

Updated on 28 March 2019 following the vote of the European Parliament.