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Copyright in the digital single market – a fairer and sustainable marketplace?
Theo SavvidesSean Ibbetson

On 14 September 2016, the European Commission published this communication unveiling its proposed Directive on Copyright in the Digital Single Market. You can read our bitesize summary of the proposals here.

In his State of the Union address, made on the day that the Directive was unveiled, President Juncker said: “I want journalists, publishers and authors to be paid fairly for their work, whether it is made in studios or living rooms, whether it is disseminated offline or online, whether it is published via a copying machine or commercially hyperlinked on the web." It is this objective which has shaped the Commission’s proposals to create a “fairer and sustainable marketplace for creators, the creative industries and the press”, which are likely to prove the most controversial aspects of the new Copyright package.

Below we look at these proposals, and how they have been received by those in the industries which they are most likely to affect.

An ‘ancillary’ right for news publishers

Article 11 of the proposed Directive requires member states to provide publishers of press publications with an ancillary right for digital use of their press publications, including a right to prohibit third parties copying their publications, or making them available/communicating them to the public without permission. This new right, which will last for 20 years, leaves intact the rights of the authors of the underlying works within those publications, in other words the journalists who have written the articles.

The ancillary right is intended to address the “problems in licensing the online use of their publications and recouping their investments” which publishers face because “licensing and enforcement in the digital environment is often complex and inefficient” (Recital 31 of the proposed Directive).

The creation of such a right has parallels to recent developments in Spain and Germany, which had the objective of halting traditional newspapers’ declining revenue as users increasingly consume content via news aggregators, rather than navigating through the newspapers’ websites.

Whilst clearly intended to protect news publishers, the ‘ancillary rights’ initiatives taken at a national level in Spain and Germany have not been universally welcomed by the newspaper industries in those countries. On the day that the law came into effect in Germany, for example, Google News changed its policy so that newspapers had to opt-in to the service. A number of major newspapers did so and waived their right to be paid for their stories. The equivalent right in Spain cannot be waived by newspapers, however, and Google News is therefore no longer available there.

Google has been quick to criticise the Commission’s new proposal, calling it a ‘backward step’ which ‘could also limit Google’s ability to send monetizable traffic, for free, to news publishers via Google News and Search” because “paying to display snippets is not a viable option for anyone.” Whilst the European Publishers Council, whose members include the likes of Thomson Reuters and Axel Springer welcomed the proposal to recognise publishers’ rights, some newspapers have expressed reservations. The Financial Times, for example, described the Commission’s proposed remedies as “unrealistic and unlikely to stick” (Financial Times – subscription required). 

As currently drafted the ancillary right is broad but arguably makes no significant difference to the present situation, because most newspaper publishers will hold the copyright which subsists in any underlying article already, either by an assignment or under a licence from the journalist who authored it, and the newspaper can rely on this copyright to prevent unauthorised copying or communications to the public. News aggregators therefore already have to ensure that their activities are lawful, and following the CJEU’s decision in Infopaq, it is clear that relatively small extracts of long articles might constitute a ‘substantial part’ of an article and therefore infringe. Similarly, in Meltwater the English courts have held that a small extract of a newspaper article can constitute a ‘substantial part’ of the original work, and therefore be protected by copyright.

It is therefore difficult to see how this new right will really benefit newspaper publishers, other than perhaps by making it harder for news aggregators to dispute the publisher’s rights in an article which has been published.

Crucially, there is no indication that publishers will be prevented from waiving their new right, as they have been in Spain, and so many newspapers will presumably continue to prefer the status quo of receiving clicks to their content from Google and other aggregators. 

A monitoring obligation for music/video sharing platforms?  
 
Artricle 13 of the proposed Directive places an obligation on music and video-sharing platforms and other internet service providers who provide access to ‘large’ amounts of content which is uploaded by users to cooperate with rights holders to:
  • Take measures to ensure the functioning of agreements concluded with rights holders relating to the use of their works;

  • Prevent the availability of such works on their services.
 
The measures, which must be “appropriate and proportionate”, include the deployment of  content recognition technologies which will automatically detect unauthorised music or video content which is specifically referred to in the draft legislation.  These measures include an obligation on the service providers to provide “adequate” information to rights holders on the functioning and deployment of the measures, as well as the recognition and use of works.  
 
The reference to “content recognition technologies” has parallels to Google’s ContentID software which can identify an artist’s work in uploaded content. Since the technology was introduced Google has paid rights holders over $2 billion, which is generated by monetizing that content and then distributing some of the profit which is generated. It is currently unclear whether smaller or start-up platforms will be required to develop/deploy equivalent technology under the “appropriate and proportionate” qualifier to the required measures included in the legislation. What will likely be of more concern to existing ISPs is that the obligation in Article 13 represents the apparent introduction of a mandatory obligation to monitor content. If implemented, this will mark a watershed moment in European copyright law - ISPs currently benefit from Article 15 of the eCommerce Directive which provides that member states must not impose a general obligation on providers to monitor the content which they transmit or store.   

The music industry, perhaps unsurprisingly, is broadly in favour of these proposals, along with the other measures which the Commission believes are needed to close the ‘value gap’ which has developed. Earlier this year over 1000 artists signed an open letter to the Commission calling for it to take action to protect their ability to monetise music, and PRS For Music has welcomed the Commission’s draft proposals.

It is apparent from the extract of President Juncker’s State of the Union address which we refer to above, and from previous communications from the European Commission, that it would prefer a voluntary agreement to be reached between service providers and rights holders. The draft Directive is so vague that it would be difficult for rights holders or service providers to know how to comply without a reference to the CJEU. It might be that this vague drafting is therefore a tactic by the European Commission to push rights holders and service providers into voluntary steps. If no voluntary agreement is reached then it is possible that the legislation will firm up as a result. 

Will the new Copyright Directive be transposed into UK law post-Brexit?

The Commission’s proposals will now be considered by the European Parliament and Council before they can be adopted, and, according to the timetable for Brexit currently indicated by the UK government, the UK is likely to have left the EU by the time the new Directive is required to be transposed into member states’ national laws.

The Directive is likely to be incorporated into the EEA Agreement, so in the (currently unlikely) event that the UK joins the EEA post-Brexit then it would very likely need to adopt the new regime.

If the UK is not obliged to transpose the measures in the Directive into national law it would of course be open to the UK government to nevertheless implement legislation which is equivalent to one or both of the Commission’s proposals. Looking at each proposal in turn:
  • Ancillary right for publishers: The creation of an ancillary right has been on the radar of some European governments (as shown by the steps taken at national level in Spain and Germany), but there has been no indication that the UK government has previously considered taking similar measures. It therefore seems unlikely that it would be a top priority for a post-Brexit UK government.
     
  • Monitoring obligation for music/video sharing platforms: In 2009 the ‘Digital Britain’ report was published by the UK government. One of the observations the report made was that for intermediaries to take greater responsibility for restraining illegal content, rights holders had to provide alternative business models to “encourage the sharing and exploitation of intellectual property” to reduce piracy and maximise opportunities to maximise monetisation. It is therefore not inconceivable that a UK government could take steps to implement measures similar to that envisaged by the new Directive, even if it was not required to do so having left the EU. 
What’s next for the Commission’s DSM strategy? 

Later this year the Commission is expected to announce its proposed reforms to improve enforcement of all types of IP rights, presumably by amending or replacing the 2004 IP Enforcement Directive.