The EU’s Digital Copyright Directive – Where now for the UK?

Background

The Digital Copyright Directive (the “Directive”) forms part of the EU’s Digital Single Market programme of reforms and came into force just over a year ago now on 6 June 2019. The UK will have left the EU before the deadline of 7 June 2021 for implementation into national law (assuming there is no extension to the Brexit transition period, which now appears highly unlikely) and the Government has announced that it does not plan to implement the Directive into national law in any event. Implementation has started in other countries though, meaning that businesses trading across the European Union will need to get ready for the incoming reforms. The flexibility afforded to EU member states in implementing certain parts of the Directive will need to be monitored - and the question of course remains as to whether the UK Government might look to take forward any aspects of the Directive independently.

This article sets out a brief analysis of some of the key (and arguably most controversial) provisions of the Directive, namely:

• Article 15 on the press publication right;
• Article 17 on online content sharing service providers; and
• Articles 18 to 22 on protections for authors and performers.

This article will also examine how these key provisions have been/are being implemented across the EU and the future of these copyright reforms in the UK, in particular focusing on the direction that the UK Government may take in respect of the adoption of (any or some of) the provisions of the Directive.

Given that the implementation of the Directive is still very much in the early stages across the EU, we will update this article periodically as the situation progresses – so please, watch this space!

Article 15: The press publication right – or the so-called “link tax”

Article 15 gives publishers of "press publications" established in a member state the rights of reproduction and making available for the online use of their press publications by information society service (ISS) providers.

This is an ancillary copyright for publishers that post or make available press articles. The right will expire at the end of two years measured from 1st January after publication. The intention is that this right should enable publishers to charge a fee to online services that re-publish excerpts from their publications.

There are some exceptions. The right does not apply to:

• private or non-commercial uses of press publications by individual users;
• acts of hyperlinking; or
• the use of individual words or very short extracts of a press publication.

Member states must also provide that authors of works incorporated in a press publication receive an appropriate share of the revenues that press publishers derive from the use of their publications by online services.

This proposal has proven controversial for a number of reasons. Some regard Article 15 as critical to ensuring the sustainability of quality journalism and the availability of reliable information in a world where ‘fake news’, particularly on social media, has become a real issue. However, others believe these provisions will help larger news publishers who are able to negotiate with major platforms, but will not favour smaller publishers who are much more reliant on traffic from news aggregators and likely have very little bargaining strength in a negotiation with the likes of Google.

Furthermore, the experience of two EU countries that sought to introduce similar legislation into national law prior to and independently of the Directive (i.e. Spain and Germany) was not positive for publishers. For example, in 2014, Google announced it would be shutting down the Google News service in Spain following the introduction of a new law (lobbied for by the Spanish newspaper publishers' association) that required news aggregators to pay news services for the right to use snippets of their stories on Google News. It remains to be seen whether the implementation of Article 15 in other EU member states will similarly have the unintended consequence of reducing traffic – and ultimately revenue - to press publications online.

Article 17: Online content sharing platforms – the so-called “value gap”

Article 17 is designed to shift the balance of power between copyright owners and sites that store huge amounts of user-uploaded content (referred to as “Online Content Sharing Service Providers” in the Directive, but think YouTube). It seeks to clarify the law on intermediary liability for these types of services.

Currently, content sharing platforms take advantage of the hosting defence in the E-Commerce Directive, such that they are only obliged to expeditiously remove content that infringes copyright on the request of a rights-holder. However, under Article 17, content sharing platforms will be primarily liable for user-uploaded content on their service that infringes third-party copyright, because they will be treated as having communicated it to the public. Furthermore the Digital Copyright Directive clarifies that they are not entitled to rely on the hosting defence, but rather a new safe harbour provision applies instead.

The question of whether the likes of YouTube are communicating works to the public on their platforms has been unclear for some time, with conflicting decisions in national courts. However, this precise question is the subject of two joined cases referred to the CJEU prior to the adoption of the Directive. In the AG’s recently-released opinion on these cases, its position is that the CJEU should rule that platforms like YouTube are not directly liable for the illegal uploading of copyright works by users. The platforms are mere “intermediaries” providing physical facilities to users, who communicate these works to the public and are primarily liable for the purposes of copyright law. However, given that these cases were brought prior to the Directive coming into force, it’s worth noting that the Court’s decision will only apply to the liability of content sharing platforms under the current legal framework. The implementation of the Directive (and Article 17) would introduce a new liability regime for these platforms.

Under the Directive, these online platforms are required to obtain authorisation from rights-holders in relation to content uploaded by their users, ideally by concluding a licensing agreement with the rights-holders. If no authorisation is granted, the platforms will be liable for unauthorised acts of communication to the public of copyright-protected works by their users, unless they are able to demonstrate that they have:

• made best efforts to obtain authorisation;

• made, in accordance with high industry standards of professional diligence, best efforts to ensure the unavailability of specific works for which rights-holders have provided the relevant and necessary information (so there is an obligation on rights-holders here); and, in any event,

• acted expeditiously, upon receiving a sufficiently substantiated notice from the rights-holder, to take down the notified works and made best efforts to prevent their future upload – the so-called “take down and keep down” provision.

There is an assessment to make here as to what constitutes “best efforts”. This term is not defined in the Directive, although the Directive does say that this assessment needs to take into account the type, audience and size of the service, the types of works uploaded by users as well as the availability of suitable and effective means and their cost for platforms. There is also a lighter regime for start-ups.

Member states must also ensure that, when uploading user-generated content online, users are able to rely on the copyright exceptions relating to quotation, criticism, review and use of material for caricature, parody or pastiche. Finally, the Directive goes on to say that platforms will not be subject to a general monitoring obligation, which seems at odds with the earlier provisions, particularly if platforms are obliged to ensure that users are able to make full use of the exceptions relating to quotation, criticism and parody.

The main controversy around this article relates to the potential impact on free speech. In an effort to avoid liability for copyright infringement, will legitimate content be prevented from being uploaded? The platforms certainly argue that given the scale of the copyright works made available on their services, they will have to deploy upload filters to manage this process. The Directive seeks to address this by providing that platforms must put in place effective mechanisms to deal with disputes with users over the removal of their content. However, it remains to be seen how effective this would be in practice.

In fact, there has been ongoing stakeholder dialogue with the Commission about the practicalities of implementing these proposals (something one might expect to have been done in advance of the Directive being finalised) – with further guidance expected from the Commission.

Articles 18 to 22: Protections for authors and performers

This part of the Directive contains a package of provisions designed to ensure fair remuneration for authors and performers. Specifically:

• Article 18 provides that authors and performers must be entitled to “appropriate and proportionate” remuneration for the transfer of exclusive rights;
• Article 19 provides that authors and performers should receive, at least annually, details of the exploitation of their works / performances and the revenues generated from that exploitation;
• Article 20 provides for a contract adjustment mechanism for authors and performers where their remuneration turns out to be “disproportionately low” compared to the revenues subsequently derived from it; and
• Article 22 provides for the right to revoke a licence or transfer of rights where there is a lack of exploitation after a “reasonable” period of time.

Again, the implementation of this package of measures raises a number of questions. What will be the impact of these new rights on existing projects? How divergent is member state implementation likely to be? How disproportionate must revenues be to trigger the contract adjustment mechanism and over what time period? How long does an author or performer have to wait before trying to get their rights back and do they have to pay back the fee they originally received for their work? It’s currently anyone’s guess as to how these provisions will be implemented in practice, with different member states likely to adopt varying approaches to fair remuneration.

What is the status of the implementation of the Digital Copyright Directive elsewhere in Europe?

A number of EU member states have published consultation papers on the implementation of the Directive. Some have published draft legislation. Some have been delayed indefinitely due to Covid-19-related measures taking priority in recent months. In Spain, for example, a draft bill apparently exists and is due for internal and then public consultation possibly in late Autumn.

Some territories already had legislation in force or ready to go at the point at which the Directive was adopted – France and Germany being the two territories most progressed on this.

In France, the press publication right was the subject of a specific bill that was passed a few weeks after the Directive was adopted and which was consistent with the Directive. Unsurprisingly, major news aggregators took issue with this bill, and in September 2019, a month before the law entered into force, Google announced a major change to its services in France. It would no longer display previews of European press publishers’ content in search results unless a publisher opted in, and no remuneration for the use of this content was foreseen. The French press filed complaints with the French Competition Authorities, which have now ruled that Google must engage in discussions with them about remuneration.

A bill to implement the other provisions of the Directive – to the extent not already part of French law - was prepared and published at the end of last year. This was due to be discussed as part of the legislative process in Spring of this year, however due to Covid-19, the French Parliament focused on other issues instead.

So far, Germany has mainly pushed forward with the implementation of the press publication right. The reason is that the previous German ancillary copyright framework for publishers was overturned by the CJEU. In an effort to close the resulting loophole, the German Ministry of Justice reacted quickly and published a first draft for the new provision. This draft has been criticized for not following the wording of the Directive exactly enough. For example, the draft grants a participation right not only to journalists but also to holders of ancillary copyrights such as photographers, which is perceived as too extensive by some commentators.

Regarding Article 17, Germany recently published a first discussion draft of a new bill, the Copyright Service Provider Act, dealing with liability for content sharing platforms. This discussion draft bill is one of the most comprehensive proposals that we have seen on Article 17 to date, firmly placing the burden on content platforms to remove copyright content that has been unlawfully uploaded by users.

Under this new discussion draft bill, content sharing platforms are obliged to detect and delete infringing content, which in practice will be achieved through the use of upload filters. However, users will be given the opportunity to “pre-flag” content that they are seeking to upload as “permitted”, and in such case, platforms will not be allowed to block the content unless it is obviously illegal. Additionally, content sharing platforms may also avoid liability for infringing content by obtaining licences for copyright works that are typically uploaded to the platforms, which may be achieved through collective licensing arrangements.

Under the terms of this draft bill, users must also be granted explicit permission to use content for caricatures or parodies. The draft also provides for a de minimis threshold of 20 seconds of sound/video, 1,000 characters of text or 250 kilobytes of data for photos/graphics; if content falls below these thresholds and is not being used for commercial purposes, it will not need to go through an upload filter.

Interestingly, the bill also tries to achieve a balance by including provisions around over-blocking by online content platforms, and false copyright claims by rights-holders. Online platforms that repeatedly over-block user uploads can be sued by consumer organisations, and uploaders who repeatedly incorrectly pre-flag their uploads can have this privilege revoked. Additionally, rights-holders who repeatedly request to block works that they don’t own can be blocked from making any further requests for an “adequate duration” and may also be liable for damages. The bill also contains further provisions around other areas of copyright law, such as extended collective licensing arrangements, appropriate remuneration, and information and reporting duties.

The German Ministry of Justice has given stakeholders until the end of July to comment on this draft discussion bill, and there will likely be further discussions and amendments to the bill. This first iteration presents an innovative approach to Article 17, in which the German legislature appears to be trying to balance the economic interests of platforms and rights-holders and to be pragmatic, although there are some in Germany who feel that the draft bill should more closely track the wording of the Directive.

In Poland there has been opposition to Article 17 – in fact Poland was one of the countries that voted against the Digital Copyright Directive - and the potential impact on free speech, with the Polish government seeking to annul Article 17.

Where might the UK go next?

The UK on the other hand has made clear that, owing to the current Brexit timetable, it will not be required to implement these three provisions – or indeed any other provisions - of the Digital Copyright Directive.

Trying to predict what the UK might do around some of the topics covered by the Directive is not quite as simple as putting the UK into the pro-tech camp or the pro-creative camp - there has been significant criticism of the Directive from both sides, although different sub-sectors of the creative industries are obviously impacted differently by it. It is fair to say that there have been some mixed messages from the UK Government as well. Ministers have on the one hand seemingly endorsed the line that the Copyright Directive was “bad for the internet” but have also tried to reassure the creative sectors that, though it supports the aims of the Directive, it is just not required to implement the Directive “in full”. And of course, the UK approved the Directive back in 2019, unlike some countries.

What we are clearly not getting is a wholesale implementation of the Digital Copyright Directive, but what we might get is a mixed bag of measures taken from or inspired by it.

At one end of the spectrum, the changes to author and performer remuneration seem the least likely of the Directive’s provisions to be implemented in the UK. Leaving aside the impact of the current Covid-19 pandemic (which is of course significant), the creative sectors in the UK have enjoyed significant success. In parts of the creative industries at least, it is hard to see what the market failure is here that needs to be addressed. On the TV production side, to take one example, the cost of talent has been driven up in large part as a result of the increase in commissioning volumes and budget levels from the SVOD players, and talent in the UK already benefit from established unions with agreed minimum terms for their members (and with lead talent being well represented by their agents). Plus the concept of reopening agreed contractual terms is perhaps more alien to English lawyers than it is to those elsewhere in the EU.

At the other end of the spectrum, it can be expected that the music industry, for example, will continue to lobby hard for changes to the safe harbour regime. Increasing the level of responsibility for online content sharing platforms would also be consistent with the Government’s proposal on online harms (assuming that the bill is not indefinitely delayed due to Covid-19). There are reviews of safe harbour regimes more generally in both the US and the EU, and implementing changes to this regime may enable us to better combat piracy.

The suggestion has been made that by not implementing the changes proposed in the Directive, the UK might gain some advantage in attracting online content sharing platforms to its shores, but is that really the case? The changes to the safe harbour regime are obviously not welcomed by platforms, but if these have to be implemented elsewhere in Europe in any event, is there really significant benefit to be gained by having a different regime here in the UK? And of course, online platforms are not confined within geographic borders and so may end up having to apply upload filters, for example, because their content is accessible in other European countries in any case. So there might be a degree of forced harmonisation for those platforms servicing the EU and the UK.

What about the press publication right? National versions of Article 15 don’t seem to have solved the publishers’ problems in other European territories, although they may be heartened by the latest developments in France. This may be one area where it pays to wait a while to see how this plays out across Europe – although publishers will be keen not to miss out for too long if platforms do start to pay. And of course the current Covid-19 crisis has heightened everyone’s awareness of the need for well-funded, high quality journalism.

But for any changes to find their way onto the UK statute books, parliamentary time will need to be found. Changes to copyright law will likely require primary legislation going forwards (whereas in the past Directives could be implemented using Statutory Instruments). In a world dominated by the impact of Covid-19 and, for the UK, Brexit, will this be a priority? And if copyright is a priority, will this take the form of targeted changes or a full-scale review of UK copyright law?

And finally, to what extent will the negotiation of an EU trade deal impact the UK’s position? The UK’s draft working text for a comprehensive free trade agreement with the EU contains a section on copyright. However this doesn’t touch on any of the issues raised by the Directive and it’s not clear what, if any, inferences can be drawn from that as to the Government’s future policy on copyright.

Then there’s the small matter of a US trade deal to negotiate as well - might that impact the Government’s views on UK copyright policy? For example, would the US want to see protection of the safe harbour position for US tech companies as part of a trade deal?

We will have to watch this space.

For more information on the Digital Copyright Directive, please see our two previous publications, A new age for copyright regulation in the EU digital market, Part 1 and Part 2.