On 13 February 2019 the Commission, the European Parliament and the Council finally agreed the text of the long-awaited draft Copyright Directive (COM(2016)593) (“Directive“). The next step will be a vote in the EU Parliament on the agreed text on 26 March 2019. Ahead of that decisive vote, DSM Watch takes a deeper dive into the agreed language of the Directive, starting with the much debated Article 13 (This analysis is based upon the text which was presented and provisionally agreed by the Council on 20 February 2019).

What is Article 13?

The Commission’s stated aim of Article 13 is to “reinforce the position of creators and right holders to negotiate [a licence] and get remunerated for the use of their content by certain user-uploaded content services”.

When an online content-sharing service provider gives access to copyright-protected content uploaded by its users, Article 13 provides that it performs an act of communication to the public or an act of making available to the public and those acts must be authorised by the rightholder (e.g. by concluding a licensing agreement). This has been a controversial and heavily debated aspect of the Directive because it makes some online services primarily liable for copyright infringement in relation to the acts of their users.

While the online content sharing services are urged to conclude licensing agreements with right holders or get their authorisation, it is expressly stated that rightholders are free to refuse to grant authorisation. This aspect of Article 13 has been criticised for curtailing the freedom of the internet because if rightholders do not grant a licence for specific works infringement liability cannot be avoided unless the content sharing service can meet the 4-step criteria set out below.

Where authorisation has also been obtained it will cover the acts carried out by a service’s users when they are “not acting on a commercial basis” or when their “activity does not generate significant revenues” It is not clear what “significant” revenues means in this context. Where is the threshold? Would small influencers generating only a couple of hundred Euros per month be covered, or only those who make a living from their activity?

Who is caught?

Article 2(5) defines an “online content sharing service provider” as an online service “whose main or one of the main purposes is to store and give the public access to a large amount of copyright protected works […] uploaded by its users which it organises and promotes for profit-making purposes.” For ease, we shall refer to such a service as a “content sharing service“.

Recital 37b states that the assessment of what amounts to a “large amount” must be made on a case-by-case basis, depending on a non-exhaustive list of criteria (e.g. audience size and amount of copyright-protected files uploaded). Explicitly excluded from the definition are not-for-profit online encyclopedias (e.g. Wikipedia); not-for-profit educational and scientific repositories; open-source software developing and sharing platforms (e.g. GitHub), ISPs, online marketplaces, B2B and personal cloud services. However, discussion forums (hosting comments) or dating platforms (hosting pictures) could arguably be covered by the definition.

Since there is no threshold, it could be argued that any profits made by the platform operator could be sufficient to make it fall within the scope of the definition regardless of the amount. A small platform operated by one person which allows its users to share their pictures and which generates through advertising barely enough revenues to be self-sufficient is treated much the same as the most popular platforms out there. To deal with this, the Directive includes a lighter regime for start-ups (see further below).

Unlicensed Content: the four-step limitation of liability regime

Content sharing services currently benefit from the safe harbour regime under Article 14(1) of the e-Commerce Directive (Directive 2000/31/EC), which provides that service providers are not liable for the content they store if they (a) have no knowledge of the illegal nature of the content they store, and (b) act expeditiously to remove the flagged content upon notification (notice and take-down).

However, content sharing services cannot rely on the safe harbour regime in relation to the acts covered by Article 13 (i.e. giving the public access to copyright protected works uploaded by users) (Article 13(3)). Instead, the regime set out in Article 13 will apply to such acts.

A generally applicable regime for avoiding liability for content unlawfully uploaded by their users is set out in Article 13(4). Content sharing services must be able to demonstrate they are fully compliant with a 4-step process:

Step 1: they have made best efforts to obtain an authorisation from the right holders; and

Step 2: they have made “in accordance with high industry standards of professional diligence” best efforts to ensure the unavailability of specific works identified by rightholders; and in any event

Step 3: they have executed notice and take down requests expeditiously; and

Step 4: they have made best efforts “in accordance with high industry standards of professional diligence” to prevent the future upload of content which has been the subject of a notice and take down request (i.e. notice and “stay” down).

Where there is no licence in place for a work, rightholders must supply content sharing services with the necessary information to identify the work and submit sufficiently substantiated take down requests. If they don’t, the content sharing service will not be liable for the availability of that work on its service (Article 13(4) and Recital 38b, §9).

Meaning of “best efforts”

A central element of the regime is the concept of best efforts, or more specifically “best efforts in accordance with high industry standards of professional diligence”. In making an assessment of the latter, for the purposes of steps 2 and 4 (ensuring unavailability of works), the recitals make clear that account should be taken of “all the steps that would be taken by a diligent operator to achieve the result of preventing the availability of unauthorised works […] on its website”. Account should be taken of best industry practices and the effectiveness of the steps taken in light of all relevant factors and developments, as well as the overall principle of proportionality. When considering the effectiveness of any steps, a number of factors should be taken into account including the type, the audience and size of the service, the evolving state of the art of existing means and the costs for service providers. Any steps should be effective but not go beyond what is necessary to avoid the availability of works.

These criteria are supposed to allow for a finely-tuned mitigation of liability regime, properly adapted to the concrete situation of each content sharing service. However, with so many factors to (potentially) consider confusion on how to implement the steps is highly likely. Recital 39(b) does state however that, as soon as possible after the Directive comes into force, the Commission should organise dialogues with stakeholders to define best practices with regard to the appropriate industry standards of professional diligence. Some guidance should therefore be provided in time.

It is not clear whether any of the above criteria are also relevant to assessing what amounts to best efforts to obtain authorisation. Questions therefore remain as to what a content sharing service must do. Is a content sharing service compelled to do everything in its power to get a licence, and from whom? How is a content sharing service supposed to know what content to get a licence for, and from which right holder? Does it depend on the type, audience and size of the service? The answers are not straightforward.

Lighter regime for start-ups

The negotiators have carved-out a lighter regime (Article 13 (4aa)) for content sharing services:

(a)            whose services have been available to the EU public for less than three years,

(b)            whose annual turnover is below €10 million, and

(c)            whose average number of monthly unique visitors does not exceed 5 million.

Such content sharing services need only comply with step 1 of the general regime (i.e. make best efforts to obtain an authorisation from the right holders), and to respond expeditiously to notice and take down requests. Content sharing services who meet the time and turnover criteria, but whose popularity exceeds 5 million, must also comply with step 4 (i.e. notice and stay down) of the general regime. It is not clear however which standard of “best efforts” applies to the acts of these content sharing services.

Preservation of Users Rights

One of the main criticisms of Article 13 is that it will result in legitimate content being inadvertently blocked, as a result of the use of filtering technology, which cannot judge whether content can benefit from an exception (e.g. quotation, parody, etc.). As a result, the agreed text (Article 13(5)§1 and (8)§4,) now specifically provides that the application of Article 13, and especially the cooperation between right holders and content sharing services, must not affect the legitimate uses of works, especially those covered by an exception or limitation of copyright, and must not result in the blocking of non-infringing content. The challenge remains, however, for content sharing services to comply with the obligations of Article 13 whilst ensuring that lawfully uploaded content is not blocked.

The text also provides (Article 13(8)§§1-2) that a content sharing service must put in place a mandatory complaint and redress mechanism, by which users can contest content sharing service decisions to remove or disable access to content they uploaded. The mechanism must be “effective and expeditious”, and the complaints “processed without undue delay” (Recital 39a, §3). In addition, human review is mandatory for final decisions to remove or disable access to uploaded content.

Conclusions

One of the stated aims of Article 13 is to tackle the legal uncertainty regarding the liability of content sharing services for the acts of their users. The complexity of the different mechanisms, the vagueness of the assessment criteria, and its sheer length however has drawn criticism from all sides. Further, it is hard to see how the regime will be properly harmonised across the various Member States when there is so much scope for interpretation when Member States come to implement the Directive into national laws. Overall, it hardly seems a satisfactory outcome for either content sharing services or rightholders, that the final text includes a provision that the Commission must issue guidance on the application of the Article 13, and specifically the limitation of liability regime. This practice-oriented document will be interesting, as it should contain more precise suggestions of technical solutions to comply with the limitation of liability regime but it will not be binding on the CJEU, leaving uncertainty for both content sharing platforms and rightholders.  We expect that national Courts and ultimately the CJEU will have to answer a number of questions, including, in particular, what amounts to “best efforts” in relation to the various obligations on content sharing services and also precisely which services fall within the definition of an online content sharing service.

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