Directive on Copyright in the Digital Single Market: What you need to know

Following recent leaks of the Draft Directive on Copyright in the Digital Single Market ("the Directive") and the EU Commission's Communication relating to the Directive ("the Communication"), we round up a list of the key proposed changes to the copyright legal landscape.

The Directive is in early form and still subject to review by the EU Parliament and Member States and its final form may well be different from what is laid out in these proposals. In this blog we look at the key points you need to know about the Directive, how the proposals have been received and the potential impact the package of measures may have on businesses operating in the EU.

The Digital Single Market

The Directive comprises a suite of measures focused on promoting a fair and efficient European copyright-based economy in the Digital Single Market ("DSM"). The DSM aims to reduce differences between national copyright regimes and promote wider access to online content across the EU. To achieve this it plans to focus on:

1. Ensuring wider access to digital content across the EU;
2. Adapting exceptions to infringement of copyright in digital and cross-border environments;
3. Achieving a well-functioning marketplace for copyright; and
4. Providing an effective and well-balanced copyright enforcement system.
   

Wider Access to Copyright Content

The package of measures includes proposals for an EU Regulation which will set out the rules relating to the online broadcasting and retransmission of copyright protected works. These rules will simplify and speed up the process for clearing rights for online broadcasting and retransmission services, promoting greater dissemination of works, consumer choice and cultural diversity within the single market.

Mandatory exceptions to copyright

Existing exceptions to copyright allow for the use of copyright protected works without prior consent of the rightsholder. New mandatory exceptions under the Directive have proven to be the most controversial of the proposed changes. In the UK the exceptions to copyright, referred to as 'fair dealing' in the UK or 'fair use' in other jurisdictions, include acts such as copying limited extracts of protected works for non-commercial research and reporting current events or parody. Presently, most copyright exceptions in EU law are optional for Member States. Thus there is inconsistency of rights between Member States.

The Directive therefore proposes mandatory EU-wide exceptions for the use of copyright protected works for certain purposes in areas like education, research, preservation of cultural heritage and for the benefit of people who are blind or have disabilities and includes a mandatory exception for text and data mining carried out by research organisations. These are all laudable aims but no doubt some will prove more problematic than others. The text and data mining exception for example cannot be overridden by contract and is not limited to non-commercial use. This is bound to give rise to disputes. However the educational use exception should be welcomed in the UK as the existing law on this is very difficult to apply and the current exception can be very narrow in scope.

A well-functioning marketplace for copyright

As content is increasingly consumed and traded digitally across borders, the Commission wants to address growing concerns about the equitable sharing of the value generated by new forms of digital distribution. The marketplace has become increasingly focused on a few key players, especially in relation to the mainstream distribution of music, books, video, movies and television in digital form. This concentration of the marketplace has led to difficulties for rightsholders in control and maximising the economic rewards for their copyright works.

Controversially, the Directive proposes measures that seek to redress the balance, which has tipped against rightsholders over the last few decades. One of the most debated of the new measures is the so-called publishers' ancillary or neighbouring right. Critics claim that Article 11 of the Directive will inhibit access to news publications and provides unnecessarily lengthy copyright protection of 20 years for the publishers. These critics cite the fear that publishers of news media will use this right to charge search engines like Google to display excerpts from copyright works in search results. This is a valid fear which was borne out when similar national measures were put in place in Spain and Germany in recent years. These measures have had a detrimental effect there in relation to access to media and were ultimately regarded as a failure (although in Germany, unlike Spain, the right could be waived by publishers). Other commentators have argued that whilst the Article 11 of the Directive may give publishers some leverage, it may be challenging for individual publishers to take on the might of the search engine giants like Google and Microsoft.

Provide an effective and well-balanced enforcement system

In the Communication, the Commission expresses its desire to focus its reforms on large-scale commercial infringement of IPRs and will consider options to amend the legal framework in this regard later this year (estimated Autumn 2016). An assessment of the overall functioning of the current enforcement framework is ongoing and early responses reveal that three quarters of respondents made up of rightsholders and public authorities have (perhaps not surprisingly) observed an increase in IPR infringement over the last decade (not just copyright).

Early feedback suggests that a principal concern for rightsholders is that the IP Enforcement Directive has not gone far enough to eliminate the disparities at a national level when it comes to enforcing IPRs. For the moment, the key takeaway is the Commission's focus on large scale infringements. As specialists in IP disputes, the Brodies IP team will be monitoring developments closely and will keep readers updated as these measures are announced in Autumn 2016.

The Value Gap

The measures proposed by the Directive have been met with mixed reactions. Whilst rightsholders have lauded the attempt by the Commission to address the "value gap" (being the concern that online platforms like Spotify, Netflix and YouTube have driven down the value of copyright works), digital platform providers have criticised the potential burden being placed on them by the new measures.

For example for hosts and providers of digital content, there is a fear that the proposals in the Directive will require them to police content by requiring them to "to take appropriate and proportionate measures to prevent the availability on their services of works" not covered by agreements with rightholders(Article 13 of the Directive). This introduces a technical burden on platforms to implement systems and procedures to prevent access to content that is not appropriately licensed. This is an obligation that will no doubt require clarification by the European Court in due course.

Similarly, proponents of open and unrestricted access to content have expressed concern that the publishers' ancillary right will lead to pay walls and diminished access to information.

What's next for the Directive?

This article is based on a leaked draft of the Directive and relative Communication. The draft Directive will be officially announced later this month and will then need to go through the European Parliament and be subject to agreement by Member States. Ultimately the end product will inevitably contain variations on some of the above ingredients.

The changes proposed by the Directive will have an impact on any business operating in and offering services to the EU. Brexit will mean that the UK, if the Directive has not been implemented into national law by then, will not have the same rules in play as apply EU wide. It may decide to incorporate the same regime into local legislation anyway to assist to maintain a level playing field. Given the uncertainty surrounding the triggering of Article 50 by the UK at the time of writing, businesses based in the UK should keep an eye on developments and identify the potential risks and challenges posed by the Directive.