This year’s Easter holiday brings with it a further milestone in the Commission’s endeavor to bring about a truly Digital Single Market: The Portability Regulation (EU) 2017/1128 comes into force on 1 April 2018. The Regulation facilitates cross-border portability of online content. It allows for subscribed content services to “travel” with the subscriber throughout the entire European Union. Be it movies, sport events, music, e-books, online games, they all need to remain accessible when temporarily abroad in another Member State. Service providers need to make sure this travel option is provided to their customers. Importantly, the Regulation applies to both new and existing subscriber contracts.

Background

Subscribing to an online service delivering online content that is copyright protected is widespread. But unlike physical objects, digital content cannot simply be taken on vacation. On the contrary, subscribers’ access is often limited even though the subscription is ongoing. The reason for this is the territorial limitation of such subscriptions. Content is commonly licensed for one Member State only. Crossing a border usually cuts the connection. Geoblocking is the term widely used in this context. However, this situation is perceived as inadequate in a genuine Digital Single Market.

To address this issue, the European Commission presented a first draft for a new regulation on 9 December 2015 (see also our blog post). The Commission’s draft was described as an “appetizer” in the context of the broader copyright reform package and thought to be relatively straightforward.  Nevertheless, it still took the European institutions quite some time to reach a final compromise, which was eventually reached on 7 February 2017 (see our blog post). Originally, the Regulation was scheduled to enter into force on 20 March 2018. However, this date was postponed, as we previously reported last September.

The Regulation

According to Article 3 of the Regulation, providers of paid-for online content services are obliged to allow access and use of the content during a temporary presence in another Member State. The same content, the same types and the same number of devices (PC, smartphone, tablet etc.), the same number of authorised users and the same range of functions must be granted. Only the quality standards abroad are not guaranteed to be equal to those in the country of subscription. Providers who operate on the basis of a contract but free of charge can choose whether they want to make their online content available to their subscribers while travelling (Article 6). This also includes public broadcasters to which a mandatory broadcasting fee has to be paid.

The legal mechanism to achieve this ‘portability’ (already known from the Satellite and Cable Directive 93/83/EEC), is that the provision of the online content service to a subscriber temporarily residing in another Member State is deemed to occur solely in the Member State of residence of the subscriber, with the consequence that a licence only needs to be acquired in the ‘country of origin’ and not in any other Member State. When concluding or renewing the contract with the subscriber, the provider must therefore check the Member State of residence by one or two of the verification means listed in Article 5. Those include, for instance, payment information. The most controversial means of verification is the IP address check. It should be borne in mind that the collection and processing of precise location data is not permitted, but only location data at the level of the Member State in which the subscriber is accessing the service.

By 2 June 2018, providers of paid-for services must carry out a review of existing contracts. Providers who make content available for free must review existing contracts within the first two months in which they enable cross-border portability. Neither right-holders nor providers of the online content services are in a position to conclude agreements which, for example, limit portability to specific periods of time per year or which otherwise conflict with the Regulation. Such clauses are not enforceable (Article 7).

Comment

This is the first time that the European legislator has adopted a Regulation (and not a directive) to harmonize EU copyright law. The rules have direct effect and as a result, in theory, there should be no differences in the operation of portability between them.

Although the subject seems rather rudimental at first glance, there are difficulties in the details. For instance, despite criticism, no concrete time component was added to the concept of the temporary stay. It is therefore initially up to the providers to decide when a stay can still be classified as temporary. If the provider errs, he becomes liable either to the subscriber or to the right holder. Data protection issues should also not be underestimated, especially with regard to IP addresses as a means of verification. It should therefore not take too long before we see portability issues coming before the European Court of Justice for determination.

UK implementation and post-Brexit indications

Although the Regulation has direct effect in the UK (and all other EU Member States), the UK Government, following a short consultation earlier in the year, has put in place (also from 1 April) supporting legislation to permit enforcement of certain of its provisions by subscribers in private civil actions. Under regulation 4 of the UK’s Portability of Online Content Services Regulations 2018 (SI 2018 No. 249), subscribers are given a cause of action for breach of duty (i.e. in tort) where a breach of the relevant Regulation provision, by the provider, causes damage to the subscriber. This cause of action applies to the Regulation obligations:

• to provide the portable service (Article 3(1) of the Regulation);
• not to take steps to reduce the quality of the delivery of the service (Article 3(3)); and
• to verify the subscriber’s Member State of residence (Article 9.2).

In the original draft of this legislation, the UK Government had indicated that breaches of these Regulation Articles would also be subject to enforcement by public bodies where there was harm to the collective interests of consumers. Following the consultation these plans were shelved.

What will happen after Brexit? UK service providers will be concerned about having to clear rights for all Member States if they want to permit subscribers to continue enjoying their services while travelling abroad after the transition period. The Copyright director of the UK-IPO has in the past indicated that the Government does not want to have to yank back the portability rights of UK residents travelling in Europe post-Brexit, and since then the 21 month transition period following withdrawal by the UK has been agreed, so there’s no particular urgency in this respect.  At present, this is the official line from the UK Government (from its 15 March response to the consultation):

The [UK] Government acknowledges the concerns raised by respondents about how portability will function once the UK leaves the EU. We agree that the continued provision of portable content services by UK-based providers will rely on reciprocal arrangements with the EU. The Government welcomes continued engagement with affected stakeholders and will ensure that UK legislation is amended as appropriate to reflect the UK’s future relationship with the EU.

 DSM Watch will keep an eye on how Messrs Barnier and Davis* tackle this one, although we suspect that portability of content services won’t be high on the list of their priorities.

* Michel Barnier and David Davis: chief Brexit negotiators for the EU Commission and UK Government respectively