DSM Watch: Crunch time for the Copyright Directive

Hogan Lovells

Debate on the shape of the draft Copyright Directive between the EU legislative institutions appears this week to be in the final stretch. One of the last bones of contention between the negotiators is the draft’s highly controversial Article 13. A recently leaked document (read it here) provided an insight into the negotiations and the disagreements between Member States on Article 13 within the EU Council. Eventually, these issues were overcome – with an intervention from above – but the question remains: will the Trilogue this week be able to iron all the issues ahead of EU elections in May?

The story so far

The Commission first published its proposal for a new Directive on Copyright in the Digital Single Market (COM(2016)593) on 14 September 2016. The initial goal was not to overhaul the fundamental principles of European law in this area (laid out in the 2001 InfoSoc Directive Directive 2001/29), but to amend and enhance the current framework, and, in EU Commission language, provide an additional set of rules to make copyright fit for the digital age.

On 25 May 2018, after months of deliberations, the Council agreed on a common position regarding the proposal (read our blog here). A couple of months later, the European Parliament also hammered out compromise wording based on the initial Commission draft (read more about it here). That led to the start of the three-way negotiations (also known as trilogue) between the representatives of the Council, and Parliament, with the Commission in a mediating role). Five trilogue sessions were held in late 2018, with a further meeting scheduled for mid-January 2019. That was postponed on short notice because of a disagreement between France and Germany over an exception in the Article 13 proposal in relation to SMEs.

While France wanted a uniform regime for the mitigation of liability under Article 13, Germany advocated for softer requirements for start-ups. The other Member States agreed the Franco-German compromise during a Council meeting ahead of the trilogue, on 8 February, but apparently without unanimity. Reportedly (according to MEP Julia Reda), 8 Member States opposed the deal (Italy, Poland, the Netherlands, Sweden, Finland, Luxembourg, Malta and Slovakia).

Article 13 Council compromise: a limited exemption for SMEs

The current draft Article 13 states that any commercial platform storing and giving access to the public to large amounts of works uploaded by their users performs an act of communication to the public within the meaning of Article 3(1) of the InfoSoc Directive. Moreover, the exemption of liability provided to platform providers (Safe Harbour) as established in Article 14(1) of the e-Commerce Directive (Directive 2000/31) will not apply. This would be a real game-changer, as platforms can currently avoid liability by acting expeditiously on notification of an infringement by a right-holder (notice-and-take-down procedure).

The new legal framework still allows this kind of platform to benefit from a limitation of liability, but in order to be eligible, they must follow a 4-step procedure:

  • make best efforts to get a licence from the right holder (which the right holder has no obligation to conclude)
  • make best efforts to “ensure the unavailability” of works specifically designated by the right holders
  • Upon notification of an infringement, expeditiously remove the flagged content (notice-and-take-down procedure), and
  • Make best efforts “to prevent their future upload.

Beyond the question of the means that need to be deployed to prevent the availability (and the highly-charged issue of so-called ‘upload filters’), the issue of the potential burden of putting in place a system compliant with the new liability regime for smaller structures such as start-ups was heavily debated. The resulting (leaked) compromise was the following:

  • A small or micro-sized platform can limit its liability by complying with a notice-and-take-down mechanism similar to the one currently applicable. Small and micro-sized platforms are
    • Companies whose services have been available for less than three years, and
    • Whose annual turnover is less than €10 million
  • A small or micro-sized platform meeting the criteria, but whose average number of monthly visitors exceeds 5 million, needs in addition to make best efforts to prevent the future availability of copyright-protected content previously taken down.

Next steps

Now that the Member State governments (in Council) have granted a new negotiating mandate to the (Romanian) Presidency, a final trilogue is taking place as we go to press (11-13 February), with the aim of hammering out the final wording of these controversial provisions, as well as to approve the wider text of the draft Directive.

There must be some doubt over whether representatives of the EU Parliament will accept the restricted carve-out for SMEs because it played a crucial part in the Parliament voting in September 2018 to (in effect) start the trilogue. At that time, Parliament got comfortable with a much broader exception for all SMEs than the one on the table now, so it is far from certain whether a majority will be found within the Parliament to agree to something more restrictive.

The leaked compromise is already being criticized by negotiators and stakeholders – opponents as well as proponents, some of whom say that ‘they would rather have no Directive at all than a bad Directive’. If this was not enough, it seems unlikely that members of the European Parliament seeking re-election in the upcoming polls will not somehow be influenced by a petition signed by more than 4.6 million people demanding the suppression of Articles 11 and 13.

DSM Watch will have further news on the outcome of the trilogue: stay tuned for developments.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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