The end of an odyssey: The German Act to adapt copyright law to the requirements of the Digital Single Market

Hogan Lovells

[co-authors: Nils Peters, Engeline Eustrup]

The German Act to adapt copyright law to the requirements of the Digital Single Market will enter into force on 7 June 2021 – as the first national transposition of the Digital Single Market Directive (“DSM Directive”). It will result in major amendments of German Copyright law and is the attempt to not only unite conflicting interests of rights holders, authors and internet users but also to adjust the partially outdated German copyright law to the digital age. As a result, a huge variety of partly controversially discussed new provisions and amendments will be implemented. We have looked into it and share with you some of the highlights of the new regulation.

The German draft of the Act to adapt copyright law to the requirements of the Digital Single Market (see here, only available in German) was passed by the German parliament (“Bundestag”) on 20 May 2021 and is expected to enter into force on 7 June 2021. It transposes not only the DSM Directive but also the Online SatCab Directive. The most impactful change in national law will be based on the controversially discussed Art. 17 DSM Directive (see our previous blogs on the controversies around upload filters here, here and here).

Platform liability: the new German Copyright Service Provider Act (“Urheberrechts-Diensteanbieter-Gesetz“)

For the transposition of Art. 17 DSM Directive into national law, a whole new law - the Copyright Service Provider Act - will come into force in Germany on 1 August 2021. A working translation of the Government draft can be found here.

The core provisions of the new bill encompass, inter alia, the direct liability of content sharing platforms for the dissemination of copyrighted content on their platforms, the remuneration claim of authors against platforms for the dissemination of their content and the controversial de minimis provision according to which certain use of short pieces of copyrighted content is presumed to be permissible. That said, the de minimis presumption won’t apply to live video footage – meaning that uploads of short sequences of live sport or music events would not be covered by it. The extent to which the de minimis rule will have a practical impact is questionable, as no other European country has adopted a similar rule. It is thus quite possible that the affected platforms will adopt a Europe-wide uniform approach suited to the cross-border nature of online content when adjusting their workflows to the regulatory changes,

The new German Copyright Service Provider Act is still widely discussed and criticized by all stakeholders. While the right holder industry considers itself to be underprivileged and disempowered, organizations fighting for digital civil liberties criticize reduction of the hurdle for a de minimis use and the expected pressure to use upload filters. As we have already reported (here), some groups have already indicated that they are willing to challenge this before the German Constitutional Court.

Another contentious aspect is the - as yet open - question over which platforms are affected by the new bill. Larger content-sharing platforms are clearly covered but for smaller platforms or share hosting providers the applicability of the Act remains to be determined by the courts.

Further disputes regarding the implementation of the requirements, especially regarding sufficient upload filter technology or licensing efforts by the platforms, will also have to be ruled by the CJEU. There may be further clarity on these aspects soon. While the EU Commission’s Guidelines to Art. 17 DSM-Directive are still expected to be published “in the near future”, the Opinion on the annulment proceedings against Art. 17 DSM-Directive filed by Poland is expected on 15 July (see here).

The new press publishers' related rights

As another central aspect of the upcoming copyright law reform, a new related right for press publishers will be added to the German Act on Copyright and Related Rights. Following a statement of the German Federal Ministry of Justice and Consumer Protection, the new provisions acknowledge the economic, organizational and technical efforts of press publishers and journalists. Publishers will further be participating in compensation for “legally permitted use”. German copyright law had actually already included corresponding provisions since 2013, but these had been declared null and void by the CJEU in 2019 due to formal mistakes in the legislative process (see here).

The new rights of press publishers come with certain restrictions. For instance, the use of hyperlinks to a press release or the use of “single words or very short excerpts of a press release” will still be permissible. So far it remains unclear what constitutes such “very short excerpts”, especially after the removal of certain clarifications included in previous drafts of the bill.

A modern copyright law

The new bill will also contribute to a more innovative use of copyrighted content. It will include copyright exceptions for text and data mining, which allow the reproduction of copyrighted work under certain conditions. Text and data mining refers to technologies used to automatically analyze digital content in order to extract information. It is therefore deployed in the context of artificial intelligence and machine learning by research and by commercial institutions.

The implementation of the opportunity to grant extended collective licenses under Art. 12 DSM-Directive is also a new tool in the German copyright law tool box. It is inspired by Scandinavian examples and can be used to facilitate extensive digitalization processes. This provision could also potentially play a decisive role in licensing efforts of platforms.

Further amendments include the withdrawal of copyright protection for reproductions of public domain visual works, new regulations on the online distribution of television and radio programs, the implementation of a general permission for the use of copyrighted works for the purposes of caricature, parody and pastiche and finally, the amendment of national law in order to comply with the ruling of the CJEU in Pelham et al (see here and here). In Pelham, the CJEU ruled on the admissibility of sampling, declaring it permissible when the original work is no longer recognizable. In doing so, the CJEU also declared a German standard incompatible with European Union law.

Outlook

The Act to adapt copyright law to the requirements of the Digital Single Market will result in the largest reform of German copyright law of the last 20 years. It therefore comes as no surprise that most of the new provisions were highly disputed and are still criticized although the legislation process has been nearly completed.

Since 7 June 2021 is right around the corner, our focus shifts to the practical implementation and actual impact the new bill will have. As usual, the transformation period will be accompanied by a degree of uncertainty regarding the applicability and legal consequences of the new law, with its large number of rather complex new provisions. In addition, Poland's action for annulment of Article 17 DSM-Directive on the European level is still pending. The decision of the CJEU could – in a worst case scenario – render all national transpositions of Art. 17 DSM-Directive obsolete and restart the legislative process afresh.

Finally, on 22 June, the CJEU will rule on the liability of platforms for unlawful actions by users under current law. This ruling will be of utmost importance for all platforms that are not covered by the new regulation. And should the CJEU also declare Art. 17 DSM-Directive invalid, the ruling would even be decisive for all platforms.

We continue tracking all ongoing developments closely – watch out for further updates!

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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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