EU proposals for copyright modernisation – some bold changes, by Harbottle & Lewis

The EU Commission announced its latest package of copyright reforms on 14 September 2016.  Taking the form of proposals for two Directives and two Regulations, the reforms are the latest step in the Commission’s Digital Single Market strategy to modernise copyright law so that it is in line with technological development and consumer behaviour.

The stated aim of the proposals is to enhance access to content online, whilst creating a fairer deal for all online players. In doing so, however, the package introduces measures which will potentially have considerable impact on existing business models for online content platforms, rights holders and other online players. It will therefore be important for businesses, particularly those which have an online presence, to follow the progress of the reforms and consider whether to adapt their policies accordingly.

Enforcement of rights on online content platforms

One of the most significant proposals is to require online content platforms proactively to implement systems to prevent copyright infringement.

Online content providers which store and provide access to “large amounts” of content will be required to take measures, such as the use of effective content recognition technologies, to detect and block infringing material.

Although the measures will only apply to platforms which carry large amounts of content, and the measures only have to be “appropriate and proportionate”, there is no guidance in the reforms as to the thresholds involved or the steps which will need to be taken.

This is good news for rights-holders, some of whom currently commit significant resources to monitoring content sites for infringements and serving takedown notices, but it represents a big shift for platform providers and potentially a costly burden.  It could also be good news for designers and vendors of automatic content recognition technologies.  Competition among them may drive down the cost burden on platform providers.  Existing online content providers have criticised this proposal, arguing that it would require the pre-vetting of all content uploaded and have serious consequences for the free transmission of original content currently enjoyed by consumers.

If this proposal is adopted in its current form (which is not a certainty) we are likely to see a lot more discussion and judicial interpretation of what measures need to be put in place and by whom, and who should bear the cost of their implementation.

Ancillary rights for press publications

The Commission has proposed a new 20 year ancillary right for press publications, such as newspapers or magazines.

Dubbed by some as the “snippets tax”, the Commission says that this measure is aimed at achieving fair remuneration for news publishers from news aggregators who use extracts of press publications as part of their service, and usually attract advertising revenue in doing so.

This proposal will come as a surprise to some, as plans to introduce it have previously been met with much criticism. This includes a number of European publishers who wrote to the Commission in December 2015 asking it to oppose the adoption of such ancillary rights. A similar ancillary right is already in effect in Germany and Spain. In Germany, publishers appear to have so far taken the view that forcing large news aggregators to pay royalties for extracts from their content could be counter-productive because it would result in reduced traffic to the publishers’ own pages.

Some aggregators have protested that the proposed right could lead to a stultifying effect in the dissemination of news online, with at least one threatening to discontinue its services in the single market altogether. The Commission’s proposal will no doubt lead to further debate on the subject, and the form in which Member States decide to implement the measures remains to be seen.

However, news aggregators may still be able lawfully to provide hyperlinks to online articles if the content in question is freely accessible and was published with the rights holder’s consent.

New copyright exceptions: text and data mining, preservation of cultural heritage, teaching

A number of new copyright exceptions have been proposed, including for digital preservation of works by certain libraries, museums and other institutions; text and data mining by researchers; and the digital use of content for illustration in teaching.

Perhaps the most controversial of these is the text and data mining exception which will allow automated analysis of digital works by research organisations for scientific research.  Although institutions will only be able to mine works to which they have lawful access, the exception is not limited to non-commercial research, unlike its current UK counterpart.

Fair remuneration for authors and performers

In a measure designed to ensure that there is more of a level playing field between rights holders and content creators, the proposed Digital Single Market Directive introduces a “contract adjustment mechanism”.   If adopted, this will enable authors and performers to request additional  remuneration from the party with whom they have contracted, when the remuneration originally agreed is disproportionately low compared to the subsequent revenues and benefits derived from the exploitation of the works or performances.

“Authors and performers” are not defined, meaning that this provision could potentially affect businesses in a wide range of sectors, including the publishing, theatre, film/TV, interactive entertainment and music industries.

It is also proposed that authors and performers receive information on the exploitation of their works and performances, where it is proportionate and effective to do so.

Whilst it is difficult to predict at this stage how this proposal will play out in practice, it is clearly a potentially significant change which businesses in these industries should be aware of.

Online broadcasting

The European Commission has struggled for many years to find ways to apply single market principles to broadcasting.  So far, it has succeeded in applying only a limited number of measures.  They include a country of origin principle, which has been applied to a limited extent in copyright and content regulation, two rather different fields.  The result is that satellite broadcasters need clear rights only in the country from which their channels are played out and broadcasters generally need regulatory clearance only in the country in which they are established (or are treated as such).

Now the Commission has plucked elements from these copyright and regulatory solutions to facilitate rights clearances for online simulcasts of broadcasts and catch-up services – what it calls “ancillary online services”.  It proposes that the country of origin principle should be applied to these services so that, for copyright purposes, they take place only in the Member State in which the broadcasting organisation has its principal establishment.  This will mean that rights clearances in the home State will be a passport for online reception of these services throughout the single market.  When fixing the amounts payable for the rights in the home State, the parties will have to take into account all aspects of the service including the audience and the language version.

The Commission also proposes to borrow another feature of the satellite and cable broadcasting regime to facilitate retransmission of television and radio channels in one Member State that originate in another.  Rights holders (apart from the broadcasters themselves) will be able to exercise their retransmission rights only through a collecting society.  This is not aimed at ancillary online services but at channel aggregators who provide their services over closed networks in much the same way as already applies in respect of retransmissions by cable operators.  It does not apply to over-the-top retransmission services.  It extends the cable retransmission regime to other technologies with a view to reducing transaction costs for cross-border services, but it does not apply to the internet.

No “freedom of panorama”

Perhaps surprisingly, the proposals contain no reference to the so-called “freedom of panorama” exception, which has been the subject of much discussion in recent months. The exception has its roots in the InfoSoc Directive, which allows Member States to introduce national exceptions to permit the “use of works, such as works of architecture or sculpture, made to be located permanently in public places”. One of the main concerns is to ensure that individuals who may take photographs of famous landmarks in public spaces do not inadvertently infringe copyright.

Currently, Member States have varying approaches to this exception. Some have adopted it fully, others limit it to non-commercial use, and a few have do not have it at all. After conducting a consultation on it earlier this year, the Commission has concluded that there have been few actual cases of members of the public being pursued for taking photographs of landmarks, and therefore little appetite for the introduction of a compulsory freedom of panorama exception at an EU harmonised level.

What happens next?

The proposals will now be submitted to the European Parliament and to the Council for adoption. Once adopted, a date will be set for when the two Regulations will come into force, and there will be a period within which Member States must implement the two Directives. The wording of the proposed legislation may change during that process.

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