Political agreement reached on controversial EU Digital Copyright Directive: A fair and balanced result?

Following a turbulent course of lengthy negotiations and delays, political agreement was finally reached by the European Commission, European Parliament and the Council of the EU on the revised proposal of the EU Copyright Directive (the "Directive") earlier this month. The final consolidated text was made available on 20 February 2019.

The Commission first adopted its proposal for the Directive back in September 2016, as part of its Digital Single Market Strategy. The Directive forms part of a broader initiative to "adapt copyright rules" to ensure they are "fit for a digital era". The modernisation is long overdue, given the changes which have occurred in the use of material on the internet since its inception, including the explosion of social media.

The Directive is intended to develop a fair and sustainable marketplace for creators, the creative industries and the press; to this end, in the Commission's press release, Vice-President for the Digital Single Market, Andrus Ansip, referred to the Directive as a "fair and balanced result that is fit for a digital Europe". The European Parliament's press release also refers to the Directive re-dressing the balance; ensuring "tech giants" share revenue with "artists and journalists" and also incentivising internet platforms to enter into fair licensing arrangements with rights holders.

The legislation has, however, been the subject of considerable lobbying and public pressure by copyright holders, technology companies and consumer digital rights advocates, which is unsurprising, given the vast array of stakeholder interests at play. In particular it has implications for online platforms and media companies. We set out below further detail around the more contentious provisions, Articles 13 and 11, and discuss the next steps for the legislation.

Article 13 - Use of Protected Content by Online Content Sharing Service Providers

One of the most controversial and complex measures is that included in Article 13 of the Directive. Under current legislation, platforms such as YouTube or SoundCloud, for example, are not responsible for copyright infringement, when infringing material is uploaded by users to their platform, although they must remove infringing content, when notified by a rights holder that it has been posted without authorisation. Article 13 is the EU's response to redress the balance for rights holders to prevent the unauthorised distribution of material, for which they have not been properly remunerated.

Article 13 compels Member States to provide that content sharing services will be responsible for content protected by copyright which is uploaded to their service by users. This will require content sharing services to seek a licence or authorisation from the copyright holder for the content they are hosting. If they are unable to obtain a licence and protected material is posted on the site, the content sharing service may be held liable. However, the compromise on this reached by the Commission, Council and Parliament provides for a series of provisos. Liability will be avoided, if a content sharing service provider can show that it made best efforts to get permission from the copyright holder, made best efforts to ensure that material specified by any rights holder as unauthorised was not made available to users of its service, and that it acted quickly to remove any infringing material once it was notified.

Compliance is to be assessed by considering proportionality, taking into account both the type, audience, size of service and type of material uploaded against the availability and cost of suitable and effective means for the service providers to comply. Furthermore, where content sharing services have been available in the EU for less than three years and have an annual turnover of less than €10m, the burden is reduced: these services only need to show that they used best efforts to obtain authorisation, and acted quickly if notified of infringing material. However, if the average number of monthly unique visitors for these services exceeds 5 million, then they also need to show that they have used best efforts to prevent further uploads of the notified works. The agreed text also confirms that the new obligation on content sharing service providers does not prevent the use of material protected by copyright for the purpose of quotation, criticism, review, or use for the purpose of caricature, parody and pastiche, as provided as existing exceptions to copyright in the EU (and that service providers should tell users this in the terms and conditions). The text also expressly states that the new obligation does not amount to a general monitoring requirement.

Given the number of caveats and qualifiers in the final text, there is clearly ample room for differences in interpretation across the Member States. To address this, the text also provides that there must be means to address dispute (both in and out of court) and that the Commission will issue guidance on the application of Article 13.

Even with the layered approach in the agreed text, campaigners against the new Article 13 have warned that the proposals will result in the automated filtering of content online, with the risk that some permitted content will be removed / prevented from being uploaded to platforms. Further, unless the Commission guidance is issued quickly and is very specific, it is likely that there will be capacity for references to the CJEU on interpretation of this particular Article.

Article 11 – Protection of Press Publications concerning Online Uses

The proposed Article 11 has also been subject to extensive lobbying and disagreement. The agreed text provides that publishers of press publications will now have an enforceable right to prevent further publication by information society service providers. This effectively means that news aggregators or media monitoring services will need to pay licence fees to publication rights holders for the digital use of press publications unless they can show they are operating within the exclusions provided for in Article 11. The rights will not apply to: private or non-commercial uses; acts of hyperlinking; or use of individual words or very short extracts of a press publication. The Commission has also clarified that the new rules are not intended to target individual internet users and that individuals will continue to be able to share content on social media and links to websites and newspapers, as is the case today. Further, the press publication right is limited to 2 years after the publication of the press publication (running from 1 January after the date of publication), although this will provide little comfort to those service providers affected.

Next steps

The Directive will now be formally approved by the European Parliament and the Council. This step is usually simply a formality, and the European Parliament Legal Affairs Committee approved the legislation on 26 February. However, the text seems to remain controversial with the Committee voting 16 for and 9 against. The full European Parliament should vote on the text at the end of March, but it does now seem likely that the Directive will finally be approved over the next few months. Once adopted, it will be published in the Official Journal of the EU. EU Member States will then have 24 months from publication to transpose the new rules into their national legislation.

Given the UK's impending departure from the EU, it is not yet clear whether the UK Government will be required to implement the new Directive (or indeed whether it will chose to do so fully or partially if not under a legal obligation to, given the controversial nature of some of the Directive's provisions). If the UK Government agrees a transition period with the EU that follows the date of the UK's exit, EU law will continue to apply in and to the UK during that period. The obligation to implement the Directive will therefore only continue to apply to the UK, if the 24 month implementation deadline falls within any transitional period. It should be noted, however, that under the EU Withdrawal Agreement endorsed by the EU Council on 25 November 2018 (and subsequently rejected by a majority of UK members of parliament on 15 January 2019), the implementation deadline would have fallen after the end of the transition deadline, which was 31 December 2020.

It remains to be seen whether the Directive does in fact represent a "fair and balanced result" as Vice-President Ansip claims and we await further guidance (and subsequent case law) on the Directive in due course. Watch this space.

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