The 2016 EU Copyright Reform – A Summary

The Commission published today (14 September 2016) its long-awaited copyright reform. The proposal, which is followed by a communication, consists in a:

  • proposed Directive on Copyright in the Digital Single Market,
  • proposed Regulation on copyright in online broadcasting,
  • two proposals (a directive and a regulation) affecting disabled users

The reform also contains an impact assessment documentand a document on the evaluation of the 1993 Satellite and Cable Directive.

The proposals, some of which have been leaked, have already been widely criticised (see our own post, also see here, here and here). The essence can be summarised as follows:

A new neighbouring right for news publishers has been created. In essence, any use of news produced by news sites that is not otherwise covered by exceptions would need to be cleared. Although the preamble 33 does say that the new right “does not extend to acts of hyperlinking which do not constitute communication to the public” the Proposal does not define when a hyperlink (and the potential accompanying snippet of news) is a communication to the public. The present case law (see my post on the new GS Media case here) is not sufficiently clear on that point either. At present it is possible to interpret it to mean that linking to a legally available copyrighted news article is not a new communication to the public. On the other hand, the language used in the GS Media case, as well as the fact that GS Media has been decided before the Proposal was made public, lead us to believe that hyperlinking og a Google News or Twitter-type site, with the news snippet being displayed, will be an act of communication to the public. This is hugely detrimental to the development of a free, democratic and efficient Internet. In addition to that, disastrous experience from Spain and Germany, prove without doubt, that such ideas are counterproductive.

Content-filtering of user-generated content has also been proposed in Article 13. The proposal applies to “information society service providers storing and giving access to large amounts of works and other subject-matter uploaded by their users ”. The proposal here demands that information society service providers enter into licensing agreements with rightholders and introduce adequate content recognition technologies. The idea is that licensing agreements and filtering need to be introduced where information society service providers do not benefit from the hosting exception from Article 14 of the E-Commerce Directive (Recital 38 of the Proposal). This might signify that the intention is not to force licensing and filtering in all cases where material is hosted but only where ISSs are performing an act of “communication to the public” or, in other words, where they are not playing an “active role” and, at the same time, do not qualify for the safe harbor of Article 14. It is not explained in the Proposal what these situations might comprise since typical user-generated sites do qualify for Article 14 safe-harbor. Moreover, Article 15 of the E-Commerce Directive says that Internet Service Providers are under no obligation to actively monitor content on the Internet. In addition to that, the CJEU SABAM case (interpreting the E-Commerce, the Copyright and the Copyright Enforcement Directives) says that filtering cannot be indiscriminatory. Contrary to both of these, the proposal demands that ISP

prevent the availability on their services of works or other subject-matter identified by rightholders through the cooperation with the service providers. Those measures, such as the use of effective content recognition technologies, shall be appropriate and proportionate.  

The proposed Article, in its present form, is both incoherent and contrary to the existing EU law (on why it may have serious consequences for the “communication to the public” see here). There is no reason whatsoever why the Commission should set out to change the regime which has functioned relatively well. Copyright violations which are properly notified to the user-generated sites in the present regime are already covered in the E-Commerce Directive. In addition to that, EU directives as well as CJEU cases accept the ability to use national restraining injunctions. It makes no sense to demand the introduction of expensive content recognition technologies which only large companies can properly pay for and implement.

The third part of the proposal relates to cross-border online broadcasting. The general idea here is to establish a regime where broadcasters (in ancillary online services which are broadcast simultaneously with terrestrial transmissions) only need to clear the rights in the state where the broadcaster is established. This does not apply to video-on-demand, though, which is still under the general system of clearances.

Overall, the proposed changes seem mostly incoherent and do not address the reforms which are really needed (copyright exceptions, technical measures of protection, collective rights management…)

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The 2016 EU Telecommunications Reform – A Summary

On September 14, the EU unveiled proposals for its new telecommunications reform. In the coming weeks we will provide a more detailed comment on some aspects of these proposals but here is a quick summary of what it contains and what it does:

  1. The last big telecoms reform took place in 2009 (the consolidated version can be found here). The latest attempt to make changes to this took place in 2015 with the so-called “Connected Continent” regulation which really only did two things: clarified the rules on net neutrality and introduced a system for gradually getting rid of the roaming charges.
  2. The Commission is dealing with relatively serious problems: lack of investment, fierce competition between the incumbents and the disruptive OTTs, large discrepancies in Internet (both broadband and mobile) availability, penetration and use between the poorer and more developed parts of the EU, convergence between content and carrier…
  3. The new plan sets as its goals the access to extremely high gigabit connectivity to all socio-economic drivers, download speeds of at least 100Mbit for households and uninterrupted 5G coverage for all urban areas.
  4. The first link in enabling the huge investments which are needed for this is the proposed European Electronic Communications Code (EECC Directive). The Directive is horizontal recasting of the already existing Framework, Access, Authorisation and Universal Services directives (their 2009 versions). This means that these four directives will, from the date of adoption, cease to exists and be subsumed under one unified Directive. After the 2002 and 2009 reforms, this would create the third big EU telecoms reform. In order to understand the changes in the proposal, one needs to be somewhat familiar with the operation of the previous regime. Overall, the rules are simplified:

The Code will apply market regulation only where end-user interest requires it and where commercial arrangements between operators do not deliver competitive outcomes. The new Code substantially reduces regulation where rival operators co-invest in very high-capacity networks and makes it easier for smaller players to be part of investment projects, thanks to the pooling of costs, the overcoming of scale barriers, etc. New rules make the investment case more predictable for “first movers” who take the risk to invest in those networks in less profitable areas, such as rural areas.

Additionally, the proposal increases consumer protection and makes better use of radio frequencies.

  1. The Commission also presented an action plan for 5G deployment. The plan presents a calendar for coordinated EU 5G launch in 2020.
  2. The WiFi4EU initiative aims at helping European communities offer free Wi-Fi access points to all.
  3. The role of both national agencies and BEREC had been reinforced in the EECC proposal and a new proposed BEREC regulation.

It is, at present, difficult to say how deep the reform goes or what its impact might be. Keep an eye on this space.

Hyperlinking and CJEU: a comment on the GS Media decision

The Copyright Directive, which in Article 3 protects the rightholder’s right of communication to the public, is silent on whether hyperlinking constitutes such a right. This has given the Court of Justice ample opportunity to clarify the situation.

In Svensson, the Court dealt with an aggregator website providing links to newspaper articles located on another site. The articles were provided free of charge on the original site but the rightholders argued that the aggregating site profited from them in their own right without paying proper compensation. The Court took the position that

the provision on a website of clickable links to works freely available on another website does not constitute an ‘act of communication to the public’

It did emphasise, however, that hyperlinking to works protected by paywalls and similar restrictions would constitute communication to the public since a ‘new public’ to which the work is communicated would exist in this case. The case, although bringing clarity to the issue of linking to an already published and available copyrighted work, left open the question of very prevalent hyperlinking to works that are both protected and published without the author’s consent.

The Court had an opportunity to decide this issue in BestWater, which was about linking through a frame on a website to some illegally posted YouTube videos. The Court concluded that

The mere fact that a protected work, freely available on an internet site, is inserted into another internet site by means of a link using the ‘framing’ technique cannot be classified as ‘communication to the public’ since the work at issue is not transmitted to a new public or communicated a specific technical method different from that of the original communication.

Here, just like in Svensson, the Court did not address the issue of whether the poster’s good faith or financial gain played any role.

This changed in GS Media case, which was decided on September 8, 2016. The case involved the GeenStijl website, which is relatively widely read in the Netherlands. An article had been posted on the site which contained a hyperlink to photos hosted on the third party website (Filefactory). The photographer granted exclusive authorisation to use the photos to Sanoma company and they took action against both Filefactory (which removed them) and Geenstijl. The case, thus, involved hyperlinking to material under protection to which the right holder did not grant authorisation. The photos under consideration were, at the point when the case commenced, not available otherwise.

The Court recognises in paragraph 45 the freedom of information role which the hyperlinks play:

      In that regard, it should be noted that the internet is in fact of particular importance to freedom of expression and of information, safeguarded by Article 11 of the Charter, and that hyperlinks contribute to its sound operation as well as to the exchange of opinions and information in that network characterised by the availability of immense amounts of information.

It further remarks that it may be difficult for a user to ascertain whether the material hosted elsewhere, to which they linked, is illegally posted or not. On the other hand, when hyperlinking is not carried out for profit, it is essential that the poster does not know and cannot reasonably know, that that work had been published on the internet without the consent of the copyright holder. A communication to the public will, therefore, always exist where the poster has been notified (presumably by the rightholder) of the protected nature of the work but they decide to link to it anyway (paragraph 49) as well as where the link allows protective restrictions to be circumvented (paragraph 50).

Paragraph 51 introduces a rebuttable presumption that the person who acts for profit and who hyperlink with the full knowledge of the protected nature of the work. Such persons are allowed to challenge that presumption but, obviously, cannot do so where the illegal nature of the links was precisely the biggest marketing point (as it was in case of GS Media company).

Paragraph 53 states that

Such an interpretation of Article 3(1) of Directive 2001/29 provides the high level of protection for authors sought by that directive. Indeed, under that directive and within the limits set by Article 5(3) thereof, copyright holders may act not only against the initial publication of their work on a website, but also against any person posting for profit a hyperlink to the work illegally published on that website and, under the conditions set out in paragraphs 49 and 50 of the present judgment, against persons having posted such links without pursuing financial gain. In that regard, it should in particular be noted that those rightholders, in all cases, have the possibility of informing such persons of the illegal nature of the publication of their work on the internet and of taking action against them if they refuse to remove that link, and those persons may not rely upon one of the exceptions listed in Article 5(3).

This means that copyright holders are allowed to go after the primary infringer as well as the link poster who knows or ought to have known or who circumvents protective measures. The exceptions of Article 5(3) do not have the capacity to excuse such an infringer. Effectively, this means that a notification triggers a take-down procedure whereby a hitherto bona fide linker loses the good faith.the moment the notification is received.

The final decision is stated thus:

in order to establish whether the fact of posting, on a website, hyperlinks to protected works, which are freely available on another website without the consent of the copyright holder, constitutes a ‘communication to the public’ within the meaning of that provision, it is to be determined whether those links are provided without the pursuit of financial gain by a person who did not know or could not reasonably have known the illegal nature of the publication of those works on that other website or whether, on the contrary, those links are provided for such a purpose, a situation in which that knowledge must be presumed.

What can be inferred from this judgment?

  • first, hyperlinking to a work with the full knowledge of the lack of a rightholder’s consent, or by circumventing any protective mesures, constitutes communication to the public, irrespective of whether hyperlinking is carried out for profit or not.
  • second, knowledge is presumed in cases of those who link for profit but they can rebut this presumption.

So, the two elements, financial gain and knowledge, are combined in such a manner than financial gain increases the burden of proof for the for-profit linker. The not-for-profit linker must still be unaware of the illegal nature and the mere fact that they did not profit financially from hyperlinking does not, in the presence of bad faith, change the situation.

There are two problems with the Court’s approach and both of them have to do with the financial nature of the activity in question.

First, the financial nature of the “for profit” hyperlinking is neither defined nor properly discussed. The term used is not the more common “commercial gain” – which would mean an operation on a larger scale. A private person operating a website which uses some form of advertising could, according to the GS Media court, be judged to be acting “for profit”.

Second, it is not clear why a financial element ought to be part of the decision concerning whether something constitutes communication to the public or not. Whereas it is true that the Court made good faith a central criterion and the pursuit of financial gain is just a clarifying one, it is still true that persons acting without financial gain are in a better position. This is puzzling for works have either been communicated to the public – i.e. new public had been found and this public gained access to the works – or they have not. The financial nature of the poster’s work has nothing to do with the number of people who have gained extra access to the work (although it very well may have to do with the amount of damages which will be awarded in the ensuing tort case).

It seems that potentially problematic hyperlinking covered in EU case law now falls into three categories:

  • the first are hyperlinks to protected material legally available elsewhere (e.g. links to news articles). These links, as per Svensson, are not communication to the public since no new public is gained
  • the second are hyperlinks to material behind protective walls (e.g. paywalls). Linking to these would, as in Svensson, constitute communication to the public.
  • the third, covered in GS Media, are hyperlinks to any other material not available elsewhere (e.g. movies, photos or music) but not involving the act of cracking a protective measure. In this case, the decisive element is the linker’s good faith combined with the financial nature of the case.

It is to be noted, however, that the recent leaked proposal for a Copyright Directive in the Digital Single Market, attempts to create a neighbouring right for news publishers. This grants the right of communication to the public to the news outlets and would potentially severely limit the scope of the first of the three situations outlined above.

Finally, the Court’s insistence on the subjective element as well as its clear warning from paragraph 53 may, in fact, have created a new form of notice-and-takedown procedure for hyperlinks.

How to Write Bad Copyright Laws – Leaked Proposal for a New EU Copyright Directive

The EU Copyright regime has been subject to calls for reform for at least since 2008 (Green Paper). The reform process began in earnest in 2014 with the publication of thepublic consultation. The 2015 Digital Single Market Strategy put copyright high on the list of future interventions, promising a draft proposal by the end of 2016. The 2015 Copyright White Paper outlined the pursued aims in more detail, quoting wider access to content, more adapted exceptions, a well-functioning marketplace and an effective enforcement system. Few things in either the Strategy or the White Paper indicated a very radical approach except, perhaps, calls for a ‘follow-the-money’ mechanisms, which was neither defined nor properly explained.

A draft of the promised new Copyright Directive had been leaked a couple of days ago and so has the impact assessment that led to it. The final text of the proposal (which may be different from documents produced here) will be subject to co-decision procedure and intense lobbying both in the Parliament and the Council and is likely to get changed. Nevertheless, assuming that this is the starting position, what do these documents show about the proposed vision?

The proposed directive is meant to complement the Database Directive, Copyright Directive, Rental and Lending Rights Directive, Software Directive, Orphan Works Directive and the Collective Management Directive and not replace them.

It contains five titles, three of which bring new concepts in. Title II, adapting some exceptions and limitations to the digital cross-border environment, introduces new exceptions for text and data mining, use of works for teaching activities and preservation of cultural heritage. Proposed Article 3 allows text and data mining by research organisations of works to which there already is lawful access. Any contractual provision that says otherwise shall be ineffective. Text and data mining are defined as automated activities that generate patterns, trends and correlations. A typical text and data mining context is copying small amounts of material from journals and reports and assembling them for further use. A similar exception had already been introduced into UK law in 2014, although that one applies to non-commercial uses only whereas the Draft is silent on the commercial side of mining. Article 4 allows use of digital works for non-commercial teaching purposes only. Member States are allowed flexibility in implementing this provision. Finally, Article 5 allows cultural heritage institutions to make copies of works in their permanent collections for purposes of preservation only. Overall, the exceptions offered are welcome but exceptionally modest. Even a very cursory look at the literature will reveal a need for a far wider reform of the exceptions regime which needs to be reformed not only in terms of its largely voluntary nature but also its scope and depth.

Title III deals with licensing practices and wider access to content. It contains three relevant provisions. Articles 7 – 9 deal with uses of out-of-commerce works by cultural heritage institutions, specifically with licenses for non-commercial purposes that collective rights management organisations give to cultural heritage institutions for out-of-commerce works. These are relatively uncontroversial measures but are also relevant in a relatively narrow context. Article 10 attempts to cover agreements for making audiovisual works available to on-demand platforms (only partially covered by the above-mentioned Collective Rights Management Directive), but only says that such parties “may rely on the assistance of an impartial body”. This is a bizarre addition. Nothing prevents the parties from relying on such assistance at present and it is not clear how such a reminder is supposed to help anyone.

Title IV relates to well-functioning copyright marketplace. Article 11 introduces what the media (justifiably) calls the “link tax”. The article obliges Member States to provide publishers of news publications (defined very broadly in the Draft) with the rights contained in Articles 2 (reproduction right) and 3(2) (right of communication of the public) of the Copyright Directive for the duration of 20 years. This is essentially the creation of a completely new, previously non-existent neighbouring right. This measure is aimed at 3rd party aggregators (mainly but not exclusively Google) who show snippets of news and/or link to them. The heavily criticised idea would crete strains between USA-based aggregators and the EU and has potential negative freedom-of-speech implications. It seems to protect, for no apparent economic reason, the diminishing revenues at news companies at the expense of arguably more innovative models and is almost certainly going to be difficult if not entirely impossible to implement.

Most surprising, and most damaging, is Article 13 which covers uses of protected content by information society services (ISSs). It demands ISSs which store large amounts of works uploaded by users (i.e. user-generated sites) to take “appropriate and proportionate measures” to ensure that agreements with the rightholders are functioning, and to prevent the availability of works not covered by these agreements – including through use of “effective content identification technologies”. ISSs must provide rightholders information on such technologies. The provision, which in its present form is nothing other than a demand for monitoring, is in direct contravention of Article 15 of the E-Commerce Directive which explicitly prohibits monitoring. The drafters of this proposal are either not familiar with the 15-year-old largely uncontroversial article (nor, for that matter, with the content of the CJEU Sabam case) or are chosing to deliberately ignore it. Either is very alarming. The mechanism proposed here, even if the discrepancy is completely ignored, is unjustifiably tilted in favour of the rightholders. Further to that, only very large operators (such as YouTube) would have the financial and organisational power to install “effective content identification technologies”.

The proposed text has already been subject to heavy criticism (see here and here). In my own opinion, such criticism is entirely justified. The produced text is badly written, is ill-conceived and based on poorly tested ideas. Moreover, it contradicts the already established and well-functioning EU law (Copyright Directive, E-Commerce Directive, CJEU case law). The sooner it is changed (or abandoned altogether), the better.