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|The EU Copyright Directive has now been approved and will need to be implemented by EU member states in 2021. Many of the most controversial aspects of the legislation remain, including the requirement for platform providers to proactively prevent the upload of infringing content. How platform providers are to do this is not prescribed by the legislation, and many fear that the use of automated ‘upload filters’ will be inevitable – resulting in huge amounts of legitimate content being blocked from the internet before it is ever uploaded. But the fight isn’t over yet as the European Commission is to publish guidance on the implementation of the directive and has promised to canvas stakeholders’ views. We can therefore expect the lobbying efforts of big tech to continue as they push for the least onerous interpretation. Ultimately, however, it will be for the national law makers and courts to decide the lengths to which platform providers will need to go in order to comply.|
On April 15, the well-publicised fight between Hollywood and Silicon Valley seemingly came to an end as the European Council ratified the European Parliament's vote to pass the Copyright Directive. The most controversial aspects of the directive – the "upload filter" and the "link tax" – remain, although in a form that is aimed at appeasing the tech giants that will be most affected. As reported by Managing IP in April, many stakeholders within the digital sector still feel that the directive is nothing short of an attack on internet freedom, and have promised to fight on. However, with the directive due to be implemented into national law by member states by (probably) May 2021, is there really anything left to fight for?
What does the final text actually say?
The most impactful and controversial articles in the directive are 11 and 13 – although, somewhat confusingly, they have now been renumbered Articles 15 and 17 in the final form directive. Commentators and sections of the press have so far been resolute in their commitment to the previous article numbers but, for the purposes of this article, we'll adopt the new numbering.
Article 15 affects all "information society service providers" who make "press publications" available to the public, and requires them to make a fair and proportionate payment to the original publishers. The apparent rationale here is that news aggregation services (e.g. Google News, Feedly) should be required to adequately compensate the original publisher and author of the content that they use. The financial impact of this on news aggregation service providers will be huge. Since the directive was first proposed, many of the industry's big players have voiced their concern – with at least one threatening to pull its European news aggregation service altogether.
The lobbying has had some effect, and the directive now contains express carve-outs for the use of hyperlinks, scientific and academic periodicals, and "very short extracts" from press publications. What is meant by "very short extracts" isn't spelled out, and it will be up to member states to interpret this through national implementing law, and through the national courts. For example, if a national court deemed that anything longer than a sentence was not a "very short extract", then the operation of Article 15 would preclude service providers from referencing or quoting any substantive press content without a licence. Such an interpretation would surely render the exception for "very short extracts" redundant.
Article 17, which many see as requiring platform providers to apply an upload filter to all third party content, is arguably the most controversial aspect of the directive. The article applies to "online content sharing service providers" whose main purpose (or one of their main purposes) is to store and give the public access to a "large amount" of copyright-protected works uploaded by its users. Some providers are expressly excluded, including not-for-profit online encyclopaedias (e.g. Wikipedia), not-for-profit educational and scientific repositories, and open-source software developing and sharing platforms. And while the likes of YouTube and Facebook will clearly be affected, other well-known platforms that display a lot of user-generated content (e.g. TripAdvisor, Tinder) will also be firmly in scope.
The most impactful and controversial articles in the directive are 11 and 13 – although, somewhat confusingly, they have now been renumbered Articles 15 and 17 in the final form directive
Currently, service providers can rely on provisions in the e-Commerce Directive, which mean they are not liable for content uploaded onto their platform by third parties, provided certain requirements are met. Following implementation of Article 17 of the directive, this will no longer be the case for service providers communicating copyright-protected works which have been uploaded by users. Service providers will therefore be liable for content stored on their platforms without authorisation unless they can demonstrate that they have:
1) made best efforts to obtain authorisation from the rights holders;
2) made "in accordance with high industry standards of professional diligence" best efforts to ensure the unavailability of specific works identified by right holders and prevent the future upload of content which has been the subject of a notice and take down request (i.e. notice and stay down); and
3) executed notice and take down requests expeditiously.
This effectively shifts the burden of monitoring and policing copyright-infringing material online from rights holders to service providers.
As all for-profit service providers are within scope, irrespective of their profit margin, the directive has introduced a carve-out specifically aimed at start-ups which have (i) annual revenues of under €10 million ($11 million); (ii) fewer than five million monthly users (on average); and (iii) whose services have been available for less than three years. Qualifying start-ups will be subject to lighter take-down requirements. Although the aim of this is clearly to protect start-ups, the thresholds for qualification mean that emerging companies won't benefit from the lighter regime for long. Knowing that they could quickly become liable for infringement in the same way as YouTube and Facebook could become a significant hurdle for start-ups at a critical time in their expansion.
The directive does not expressly set out a requirement for pre-emptive content filters, but stakeholders and commentators fear that it will effectively push service providers into implementing them to detect infringing content. The administrative cost of implementing such filters will presumably need to be borne by the service provider, and this gives the big tech companies (who have the resources to develop sophisticated technical solutions) a competitive advantage against smaller companies.
And of course content filtering systems are far from perfect. For example, how will content filters identify copyright works that fall outside the infringement regime (e.g. parodies and works constituting a review), and how will content be managed where there is a dispute over ownership of the rights? Stakeholders have expressed concerns that the unintended consequence of the directive is that vast quantities of non-infringing content will be blocked from being uploaded, or indeed that consumers and content owners will be adversely affected because service providers may choose to limit or geo-block their content offerings to the EU.
What's next for the tech companies?
With the final text of the directive now locked in place, is this the end of the road for the tech industry's lobbying efforts? Probably not. Stakeholders and lobbyists (such as the Electronic Frontier Foundation) have been quick to highlight the lingering ambiguity in the directive. For example, there is still no clarity on what constitutes "best efforts" for the purposes of Article 17, and the practical and technical implications of compliance remain far from clear. The provisions will not come into force until they are enacted into national law by the member states, but there is one last opportunity for stakeholders to affect how the directive will be interpreted.
The directive stipulates that the Commission is required to issue guidance on the implementation and application of the measures that are required to be put in place by service providers. The guidance will not be binding on the CJEU, but it will no doubt be highly persuasive and is likely to set the bar for what will constitute the "high industry standard". The timetable for the Commission to publish the guidance is not clear from the directive, although it is mandated that the Commission shall first enter into stakeholder dialogues to discuss best practices for cooperation. This represents what must be the last opportunity for stakeholders to shape the discussion around how the directive will be interpreted in practice. We expect that service providers will apply significant pressure on the Commission to avoid a technically onerous interpretation of Article 17.
The impact of Brexit
With Brexit now unlikely to take place before Halloween this year (October 31), questions remain over whether the directive will ever be implemented into national law in the UK. Under the terms of the "deal" as currently proposed, all EU legislation will have to be transposed into UK law. However, if the UK leaves the EU with no deal in place, then there is currently no strict obligation on the UK to transpose EU law into national law. Of course, it remains open to the UK government to adopt the law regardless of the UK's status within the EU.
Charlie Winckworth is a partner and Andrew Linch is an associate at the London office of Cooley.