Summary

  • The Commission has unveiled its package of proposals for copyright reform. The latest proposals consist of:
  • Copyright reform - a draft directive that
  • seeks to address the purported "value gap" that exists between UGC platforms and rights holders in a variety of ways.
  • adds some additional exceptions for non-commercial use of copyright works.
  • Broadcast Law Reform - a draft regulation which widens the country of origin principle of the CabSat Directive to also cover online simulcast and catchup TV.

Background

  • These proposals are part of the Commission's Digital Single Market initiative.
  • Last year the Commission proposed the Portability Regulation, which will allow users to access their digital content/subscriptions when they are temporarily in another Member State.
  • Below, we've called out some of the key proposals and highlighted some of the issues arising from the current drafting.

Detail and Comment

1. Directive

Article 10 sets out a requirement that Member States must put in place a 'negotiation mechanism' to facilitate the licensing of content by VOD platforms.

  • It is not clear what the Commission intends to achieve here, but on its face it looks like a proposal that Member States put in place mediation mechanisms for negotiating content deals for VOD platforms.
  • The proposal does not look like it extends to the implementation of an arbitration / rate court system.
  • The proposal does not contain anything about what happens if an agreement is not reached.
  • Both rights holders and services will want more clarity around what this provision means.

Article 11 introduces a new ancillary right covering the 'digital' use of content from 'press publications' (the "snippets tax").

  • The major change from the previously leaked drafts is the change from "news" publications to "press" publications. A press publication is defined as: "a fixation of a collection of literary works of a journalistic nature, which may also comprise other works or subject-matter and constitutes an individual item within a periodical or regularly-updated publication under a single title, such as a newspaper or a general or special interest magazine, having the purpose of providing information related to news or other topics and published in any media under the initiative, editorial responsibility and control of a service provider."
  • 'Digital' uses is not defined. Art 11 is constructed so that this new right would operate like a copyright, but subject to a 20 year term.
  • What is really interesting is the change made to Recital 32 from earlier leaked drafts. This now states that the right does not extend to "acts of hyperlinking which do not constitute communication to the public". This is potentially a very big change. Post Svensson it is not CTP to link to a freely available piece of authorised content on the Internet. GS Media confirms this. So links to publisher authorised sites should not engage this right. However, it depends how wide "acts of hyperlinking" is construed based on current functionality.
  • We believe that this ties into value-gap (see below). It may be that the licences envisaged by the value gap proposals subsume this ancillary copyright in any event.

Article 13 contains the Commission's proposals to solve the "value gap". It proposes:

  • UGC service providers have to enter into licensing negotiations with rightsholders unless they are entitled to benefit from the Art 14 ECD hosting defence.
  • Or, UGC platforms must take 'appropriate and proportionate measures' to keep infringing content off the platform. The proposal is that this duty of care would exist notwithstanding the Art 15 ECD prohibition on general obligations to monitor.
  • As part of this, certain transparency obligations will apply to licensees of content.
  • Also key is Recital 38. It says that this only applies where the platform is not an Art 14 ECD passive host.
  • The language of Recital 38 is vague and arguably seeks to legislatively change CJEU jurisprudence on the active / passive host question. It is the word "thereby" in the following that creates the ambiguity: "(38) Where information society service providers store and provide access to the public to copyright protected works or other subject-matter uploaded by their users, thereby going beyond the mere provision of physical facilities and performing an act of communication to the public, they are obliged to conclude licensing agreements with rightholders .."
  • This implies that the Directive could define any online UGC platform out from being an Art 14 ECD host. However, this is immediately contradicted by the next words in the Recital, which are "… unless they are eligible for the liability exemption provided in Article 14 of Directive 2000/31/EC of the European Parliament and of the Council."
  • The Recital then goes on to say the following, which again looks like a legislative instruction to deviate from CJEU jurisprudence: "In respect of Article 14, it is necessary to verify whether the service provider plays an active role, including by optimising the presentation of the uploaded works or subject matter or promoting them, irrespective of the nature of the means used therefor."
  • This has the potential to spin up a whole new round of litigation around what constitutes an active/passive host.
  • Recital 39 is interesting as well. It sets out certain proposed transparency obligations on platforms.
  • This Recital is targeted at addressing complaints from rights holders that content identification and management systems are opaque to them and that they need more data in order to properly value their rights and negotiate fair deals.
  • Platforms therefore need to provide adequate reporting and transparency about how the systems work. However, the recital does anticipate that rights holders must first provide the necessary data in order for platforms to build appropriate systems and report effectively.

2. Regulation

Broadcasting Reform

  • Through its investigation into copyright and the AV sector, the Commission has claimed that broadcasters and operators of retransmission services face a complex rights clearing burden to make their online and digital services available cross-border.
  • The Commission's solution is to introduce this Regulation, which widens the country of origin principle from the Satellite and Cable Directive, to also cover online simulcast and catch up broadcasts. That means that for online simulcast and catch up broadcasts ancillary to a traditional broadcast, once rights are cleared in the country where the broadcaster is located, they are cleared for the whole Community.
  • The Regulation does not change anything for on demand providers or web-only broadcasters.
  • The intention is to promote inter-EEA online competition between broadcaster's online services and to undermine territorial licensing in the free TV market (DG Comp is dealing with pay – TV in a current investigation following the Murphy decision).

Next Steps

At this stage, the proposals are just that, proposals. The EU legislative process now sees the proposals go to the European Parliament and the Council of Ministers. That means that an opportunity to influence the proposals and their ultimate outcome remains.