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European Parliament introduces Directive on Copyright in the Digital Single Market

Published on 08 April 2019

How will the new Directive on Copyright change the legal and commercial landscape for both rights holders and content platforms?

The background

In September 2016 the European Commission proposed changes to copyright law including introducing a Directive on Copyright in the Digital Single Market with the intention “to create a comprehensive framework where copyrighted material, copyright holders, publishers, providers and users can all benefit from clearer rules, adapted to the digital era”.

To this end, on 13 February 2019, the European Parliament, the Council of the EU and the European Commission reached an agreement on this Directive.  The Directive was subsequently passed by the European Parliament on 26 March 2019 and will come into force from 2021.  The Directive includes new copyright exceptions and limitations, rights for press publishers (and content creators) as well as regulating the position between content platforms and the respective rights holders.

The development

Changes to the copyright market

  • Right for publishers of press publications

In the Directive, the new press publishers right (Article 15) gives the publishers of 'press publications', which are defined as a 'collection composed mainly of literary works,' rights to reproduce and make their works available online, for the use of their press publications by information society service providers (ISSPs). These rights will expire 2 years after the press publication is published.

This will be relevant to online press articles by ISSPs, as Member States must provide that authors of the works, which are used in press publications, obtain an appropriate proportion of the amount that press publishers receive from the ISSPs.

Provisionally, the use of individual words, short phrases and hyperlinks of publications will still be allowed without authorisation from press publishers.  
  • Hosting user generated content
The Directive seeks to regulate the payment received by writers and performers and the revenues enjoyed by the online platforms when they share their output.  Article 17 considers that an “online content sharing provider” is communicating with the public when it allows them access to works that are protected by copyright.  Sites which host user generated works will need to apply for a licence in order to present copyright protected content uploaded by users unless it complies with conditions set out in the Directive.  Where no licensing agreements exist with rights holders, the platforms, under Article 17(4) will have to:
  • make all efforts to obtain an agreement
  • ensure the unavailability of unauthorised content where rights holders have provided the appropriate information and
  • act quickly to remove any unauthorised content once notified and stop future activity.

Whether the platform has observed these obligations above is determined by the principle of proportionality, the audience and types of work that users upload and the methods and costs for the platforms. At the right holder's request, platforms are obliged to provide the right holders with information regarding how they comply with their obligations set out under Article 17(4).

For less well-established platforms, that have not been available to the public for three years and that have a turnover of less than €10 million and 5 million monthly users, they will only have to adhere to the conditions that they have made best efforts to receive authorisation and that if notified they act as quickly as possible to remove the content.  If the users increase to above 5 million they will also have to make certain that notified content does not re-emerge later.

The Directive has also set out that platforms must set out an effective complaints process that all users can access in the event that there is a dispute over removal or suspension of access to works that are uploaded. All complaints must be examined expeditiously and by human review. To further the relationship between the user and the platform, the Commission, with the help of consultations with platforms and rights holders, will discuss best practice for the parties' cooperation.

  • Remuneration for authors/performers

The new Directive gives authors and performers rights to proportionate payment on the licensing of their rights. Under the Transparency obligation in Article 19, authors have the right to detailed information about the exploitation of their work. This article sets out that Member States should ensure that the licensee to the author's work provides to the author up to-date information on the exploitation of their work at least once a year. However, the licensee can limit the burden in 'duly justified cases' where the time or administration spent on the information would be disproportionate to the amount of remuneration for the author.  

If a piece of work becomes hugely successful and the fee originally paid was too low, the Directive provides for a contract adjustment correction.  The Directive also includes a mechanism for writers/performers to reclaim their rights when their work is not being used, although this mechanism does not apply where the lack of exploitation can be remedied easily by the author or performer.

Exceptions and limitations

  • Text and Data mining exceptions - Articles 3 and 4

Article 3 and 4 contain mandatory exceptions to ease the burden on universities and other research institutions by lawfully permitting them to use new technology to analyse large data sets for the purposes of scientific research and text and data mining.

Copies of works made for the purposes of scientific research must be stored with an appropriate level of security and may be retained. Copies of works made for the purposes of text and data mining may be retained for as long as is deemed necessary, but only on the condition that the copyrighted works had not been expressly stored in an appropriate manner.

  • Teaching and Cultural Heritage exception

Article 5 includes an online education exception for the use of online teaching, and Article 6 provides for a conservation and dissemination of cultural heritage exception, giving libraries, museums etc. the opportunity to copy the works in their collections and archives with the benefit of new technology.

Developing licencing practices and spreading the content

  • Use of Out-of-commerce works

Out-of-commerce works are works, whole or part, that, through a presumption of good faith, are not available through the usual channels of commerce after a "reasonable" search has been undertaken to identify whether it is publically available.

Article 8(1) provides for Collective Management Organisations (CMOs) to be able to grant to non-CMO members, for non-commercial reasons, licences to institutions with regards to out of commerce works which reside in the collection of the institution on a permanent basis. Where there is no CMO, Article 8(2) requires the Member States to act as CMOs and grant similar exceptions. Where, in accordance with Article 8(1), a CMO has granted a licence, Article 9 states that this means that the licence can be used across the EU. However, this does not apply for licences granted in accordance with Article 8(2) and the Directive also states that rights holders of out-of-commerce works, can exclude their works from the exceptions in Article 8(1) and (2). 

  • Appointing parties for negotiations for audio-visual works on video-on-demand (VOD)

Where there are disputes between those who are attempting to grant licences for audio-visual works for VOD, member states are now obligated to appoint a mediator, official or impartial body to facilitate the conclusion of the licences.

  • Visual art shown in the public domain

Any works that have resulted from a piece of visual art, whose protection had expired, are only subject to copyright or other such rights if their work is original.

Why is this important?

The Directive has caused considerable controversy with critics believing that its permissions introduce legal uncertainty and will ultimately harm the creative and digital economies.  Some users are also concerned that content will not be as readily accessible.  Some concessions have been made, for example, with news aggregators able to include very short pieces of news reports, although exactly what that means still must be agreed upon.  The Directive is not enforcing upload filters on user generated content platforms and it appears that memes and gifs will be able to be shared on these platforms.  On the other hand, the Directive’s supporters believe that it will increase revenues to publishers and creators of content, which will protect and promote the publishing and creative industries.

Any practical tips?

There is considerable uncertainty as to how the Directive will work in practice and what the commercial consequences will be for platforms, publishers/creators and users.  Platforms will need to review what content they host/make available, the processes in place to deal with content and seek agreements with rights holders where necessary/desirable.  Rights holders will also need to review the exploitation of their content and seek to balance access/availability against (potential) returns. Stakeholders should be proactive in being involved in the consultation process whilst the national laws are implemented.