However, a no-deal Brexit is by no means certain. An emergency ruling regarding Mr Johnson’s prorogation of Parliament is being sought from the English courts and an appeal is being mooted in the Scottish courts. Even if neither results in a successful interdiction, the possibility of an extension of the current Article 50 deadline being mandated by the UK Parliament remains a possibility. Mr Johnson may also succeed in agreeing revised terms for the UK’s withdrawal from the EU with the EU and passing this through Parliament; in such a case, the UK will likely remain subject to EU law for a transitional period of several years following Brexit.
It is therefore important to keep one eye firmly on new EU legislation coming down the line as part of the EU’s digital single market (DSM) strategy, announced in May 2015, comprising a number of directives and regulations aimed at improving access for customers and businesses to digital goods and services EU-wide, creating an environment of innovation, and maximising the growth of the digital economy. Some directives and regulations are already in effect, such as the Portability Regulation, but many will need to be implemented within the next two years – such as the revised Audiovisual Media Services (AVMS) Directive (covered below) and the revised Cable and Satellite, or “Cabsat”, Directive (covered in a previous alert). Other directives and regulations are currently being drafted and negotiated, such as the proposed Digital Services Act.
In this two-part client alert, we provide an overview of some of the key DSM strategy directives and regulations which the UK may well need to transpose, depending on the outcome of the Brexit process. Part 1 covers the revised AVMS Directive and one of the less-discussed articles of the Copyright Directive: Article 20, concerning the remuneration of authors and performers.
Revised AVMS Directive
An updated draft of the AVMS Directive (formally, Directive (EU) 2018/1808), governing the EU-wide coordination of national legislation across audiovisual media, came into force on 18 December 2018 and will need to be implemented by the UK, should it remain subject to EU law, by 19 September 2020.
The revised directive expands the scope of the original directive, which applied to traditional broadcasters and on-demand services, to cover video-sharing platforms where the “essential functionality” is to provide programmes and/or user-generated content to the public, with a view to informing, entertaining or educating. In addition, the “establishment test” (which determines whether an entity is established in a particular member state) has been clarified – with “editorial decisions” (undefined in the previous directive) being defined as “decisions taken on a regular basis for the purpose of exercising editorial responsibility and linked to the audiovisual media service’s day-to-day operations”.
More controversially, Article 13 allows member states the option of imposing a financial contribution on media services providers, to pay towards production of European works, and guarantees a 30 per cent share of European works in on-demand catalogues. However, the UK government made clear when launching its consultation on the implementation of the directive that it has no plans to impose a financial contribution, and that, while UK law will need to be revised to reflect this quota, in practice most UK-based VOD services already meet this.
The UK consultation sought views on the effective implementation of the revised directive in relation to the protection of minors from harmful content and inappropriate advertising, increasing the accessibility of linear television and VOD services for people with disabilities, country of origin rules, and potential commercial communications. The consultation closed on 22 August 2019, and the government’s official response is expected shortly.
Copyright Directive – a proposed ‘contract adjustment mechanism’
The UK will need to implement the Copyright Directive (formally, Directive (EU) 2019/790 since its publication in the Official Journal on 7 June 2019) by 7 June 2021 if it remains subject to EU law on that date. There has been great focus on Articles 15 (which provides press publishers and the authors of journalistic works the right to be compensated fairly) and 17 (which imposes a stringent licensing regime on specific online platforms, covered in a previous client alert); however, less attention has been paid to the equally important Chapter 3 – and in particular, Article 20. This introduces the concept of a ‘contract adjustment mechanism’, offering authors and performers the possibility of adjusting payments under a contract if they believe that the value they have received is disproportionately low compared to the value generated – e.g., increased remuneration commensurate with subsequent success.
There is little guidance within the directive as to how member states should implement this mechanism. The national laws of certain states, such as Germany, already include similar provisions (highlighted in the famous ‘Pirates of the Caribbean’ case, where the German dubbing artist for Captain Jack Sparrow secured increased remuneration as the fee he received was not deemed to be ‘fair consideration’) and these will no doubt influence implementation.
However, this concept could prove particularly challenging under English law, which contrasts sharply with the long-standing common law principle that the freedom to contract should not be subject to retroactive regulatory alteration – to put it simply, “a bad deal is a bad deal”. English law does contain limited concepts of unfair business-to-business contract terms, such as those under the Unfair Contract Terms Act, but these are far more restrictive and objective. Article 20 has already faced opposition from several record companies; several authors and performers have also questioned its practicality, likening the process to that of suing an employer, the reputational damage of which can limit the individual’s potential to work with other organisations (e.g., broadcasters or social media companies) in future, particularly in a close-knit sector such as the media.
Conclusions
All DSM measures will affect the legal framework governing the digital sector in some way, with some – such as the revised AVMS’s 30 per cent quota for European works in on-demand catalogues, and the concept of a ‘contract adjustment mechanism’ under Article 20 of the Copyright Directive – having the potential to bring about significant change. With the timing and ultimate type of Brexit being particularly uncertain, it remains possible that the UK will be required to transpose several of these measures depending on the terms of any Brexit deal, whether the UK leaves in a no-deal scenario, or whether the UK ultimately stays in the EU.
In Part 2, we will discuss the impact of the ‘sister directives’ – the Digital Content Directive and the Online Sale of Goods Directive – alongside the recently announced Digital Services Act.
Client Alert 2019-215
