In the lobbying battle about the new EU copyright directive between Internet giants and content producers, the creative industry gained a partial victory. On September 12, 2018, the EU Parliament, in favor of content producers, accepted a draft proposal with only minimal amendments that it had rejected only two months ago. This gives way to inter-institutional negotiations with the spotlight continuing to be on two issues: monitoring obligations for platform providers and the granting of an ancillary copyright for press publishers. Both undertakings aim at facilitating a participation of rights holders in the revenue of major online platforms – the infamous “value gap.”
Press Publishers’ Copyright: An ancillary copyright had already been introduced on a national level in Spain and in Germany with limited success. Its implementation was directed at obligating platforms like Google to pay license fees to press publishers for the display of small excerpts of publications (“snippets”) but ultimately led to Google receiving free-of-charge licenses from German press publishers and shutting down its Spanish Google News service.
Monitoring Obligation vs. Notice and Takedown Procedure: It has generally been the predominant rule that host providers are not directly liable for user generated content (UGC) and are only obligated under notice and takedown procedures. General monitoring obligations regarding UGC are prohibited under the E-Commerce Directive. While rights holders such as music labels have lobbied strongly in favor of monitoring obligations, platforms and institutions like the German Association for Digital Economy (BVDW) have argued that content filters would ignore technical possibilities and lead to over-blocking, thereby impeding freedom of speech.
In July 2018, in a rare occurrence, the EU Parliament (“Parliament”) vetoed its own legal committee’s draft. Two months of substantial lobbying efforts on all sides later, Members of the Parliament have now agreed to a proposal that is not very different from the rejected one (438 votes to 226, 39 abstentions).
THE PARLIAMENT’S PROPOSAL
Article 13 (Liability of Platforms for UGC)
Article 13 determines qualifying platforms to be directly liable for copyright infringements by UGC.
While the EU Commission’s draft defined service providers “providing access to large amounts of works” as qualifying platforms, the Parliament’s draft introduces the additional prerequisite of the service provider “optimizing” the UGC. Optimization refers to the promotion, display, tagging, curating, and sequencing of UGC. This new definition aims at bringing the introduction of a platform’s liability for UGC in line with European and national case law as well as the E-Commerce Directive. Under case law, such UGC optimizing platforms tend to be considered “active” host providers – with the consequence of their actions already being considered a direct copyright infringement on the basis of current law and with the E-Commerce Directive’s host provider privilege not being applicable.
In a notable amendment, the Parliament’s draft exempts micro and small sized enterprises as well as non-commercial enterprises from liability for UGC. Based on EU law, small sized enterprises are defined as companies employing less than 50 people with an annual turnover that does not exceed EUR 10 million.
The EU Commission’s draft introduced monitoring obligations. This was perceived as being in harsh contrast to the general principles of the E-Commerce Directive. The Parliament’s draft provides for identical obligations in different phrasing by explicitly determining all online content sharing service providers to be directly “communicating to the public,” i.e., acting in a copyright relevant way. In other words, the provision of a platform is as copyright relevant as each UGC upload by individuals. Corresponding to such direct liability, the introduction of content recognition technology and the conclusion of comprehensive license agreements is the only way for platforms to protect themselves from being sued with regard to copyright infringing UGC. Though a significant turnaround, this was not entirely unexpected. In the past, the European Court of Justice has increasingly broadened the scope of acts qualifying as direct infringements of copyright.
In a small concession to MEPs who fear the hampering of free creative expression, the draft determines that its provisions shall “not prevent the availability of non-infringing content” and that “redress mechanisms” processed by humans shall be implemented.
Article 11 – Copyright for Press Publishers
Article 11 of the Commission’s original proposal granted remuneration rights to the press regarding the usage of snippets by online platforms. In similar provisions, the Parliament’s draft grants a copyright to press publishers that entitles them to remuneration for the digital reproduction and distribution of press content. In response to criticism regarding a potential impediment to free speech, the MEPs have, however, excluded “hyperlinks accompanied by individual words” as well as legitimate non-commercial use by individual users from the provision’s scope. After discussions that were likely related to current litigation in Germany on the legitimacy of “free” licenses by press publishers to search engines to avoid being de-listed in search results, the Parliament has further determined that a listing on a search engine may not be considered to be remuneration. A concession vis-à-vis the EU Council has been made restricting the press publishers’ copyright to five years while the EU Commission’s draft still provided for twenty years. Finally, Member States shall ensure that authors partake in the press publishers’ additional revenues.
REACTIONS BY STAKEHOLDERS
With battle fronts being drawn and the Parliament’s press release proudly announcing that the “Parliament’s position toughens the EU Commission’s proposed plans,” the adoption of the draft proposed is a victory for the creative industry and press publishers. The Parliament’s draft is a long way from the EU Council’s proposal that sought to balance interests between tech giants and media companies – and it clearly favors the creative industry. Correspondingly, platforms like Mozilla referred to the Parliament’s vote as “a very sad day for the internet” and it turning its back on “key principles on which the internet was built.” While the Parliament’s proposal addresses some concerns that were voiced, it remains to be seen if concessions like human redress mechanisms can truly safeguard against overblocking. With regard to monitoring obligations, case law has already started to move in that direction and some major companies including YouTube already voluntarily employ technical filters. Nevertheless, a legislative rule on monitoring obligations would, in practice, have a more comprehensive and immediate impact on the matter. With several cases currently pending regarding YouTube’s qualification as liable for infringing UGC, the current rights situation is less than clear. Regarding the press publishers’ right, Internet activists embrace the exemption of hyperlinks but warn that the reference to “individual words” leaves lots of room for litigation.
Going forward, the Parliament’s proposal will now be submitted to the EU Commission and the EU Council for approval. Taking into account that the Parliament and the EU Commission show a similar approach regarding the main subject matters, the main battle may have come to an end. Considering, however, that the EU Council’s proposal differs significantly from the Parliament’s draft, there may be some room for further heated debates. In any event, the legislator will have to move fast – EU Parliament elections take place in May 2019 and newly elected MEPS may not support the current draft anymore.