After years of lobbying and months of fierce debate following a failure to obtain parliamentary agreement in July, the European Parliament voted in its plenary on Wednesday 12 September, by a large majority, to approve the revised draft of the proposed new European directive on Copyright in the Digital Single Market (the “Directive”). The proposal adopted by the European Parliament (the “Text”) contains a number of controversial provisions, several of which we will review in more detail over a series of articles. For now, we focus on arguably the most controversial proposal – Article 13.
Article 13 of the Directive seeks to address the ‘value gap’; that is the perception that content-sharing platforms derive unreasonable value from enabling their users to make available content embodying copyright-protected works, without having obtained prior permission from the underlying rights holders of those works.
While the vote represents an important step forward for the Directive, the Text does not represent a final agreed position and we can expect further debate and public pressure in the coming months as the Directive passes through trilogue negotiations before it is ultimately approved and enacted. Nonetheless, it is possible to analyse some of the most significant potential impacts of the Directive, if it is adopted in its current form.
A new category of Information Society Services
Like the original proposal by the European Commission, the approved draft of the Directive proposes to create a new category of Information Society services named ‘online content sharing service providers’. The new category would sit within the family tree of “hosting” services, from which it borrows its main features (i.e. the storage of information) while addressing a much narrower set of services, namely those ‘giving access to the public to a large amount of copyright protected works which the service optimises and promotes for profit making purposes’.
A closer look at the new service’s definition reveals the European legislator’s intention to codify some aspects of the European Court of Justice’s (“CJEU”) case law relating to the liability exemption created by the e-commerce directive for hosting services (the “Safe Harbour”) but also its intention to depart from it, in particular, by shifting the burden of proof from rights holders to the services.
The acts of ‘promoting and optimising’ content have indeed been used by the CJEU on numerous occasions to find that intermediary service providers had ventured too far outside their initial remit and should be denied the benefit of the liability exemptions provided by the Safe Harbour regime. However and contrary to the CJEU, the Text doesn’t require the demonstration of a link between the promotion / optimisation and the actual ‘knowledge’ gained as a result of such acts by the service; rather, it creates a presumption of knowledge where a service promotes and optimises content. As a consequence, it might prove increasingly difficult for services likely to fall under the new definition to prove that they are “ignorant” of the content they host and therefore that they may not be captured by the new definition.
Ultimately, the consequences of such codification will also depend on the extent to which the expression “which the service optimises and promotes” is construed in the future and whether it might be possible for services “giving access to content” whilst not promoting content, to coexist with the new category. Recital 37(a) provides further details in that regards by listing “amongst others” the acts of “displaying, tagging, curating, sequencing” content, “irrespective of the means used therefor” as evidence of the fact that a service is promoting and optimizing content. This list goes further than the actual case law of the CJEU and seems to have been drafted broadly to encompass a wide range of activities – even merely displaying content. Should the list be adopted in its current form, it seems unlikely that another category of services will be able to coexist with the ‘promoting’ services.
Communication to the public: a new chapter
In addition to defining a new class of ‘online content sharing service providers’, the Text goes on to state that ‘Without prejudice to Article 3(1) and (2) of Directive 2001/29/EC, online content sharing service providers perform an act of communication to the public’. This is consistent with a recent decision of the European Court of Justice and would make it impossible for any online content sharing service to argue in the future that it is the user, rather than the service itself, that performs an act of communication to the public. However, the Text is unclear about whether the communication to the public is performed solely by the online content sharing service or jointly, together with the user. This uncertainty is potentially compounded by Article 13(2) of the Text, which refers to online content sharing service providers concluding licensing agreements with rights holders that “shall cover the liability for works uploaded by the users”. It remains to be seen whether this language is intended to refer just to the act of “copying” by users or also to the joint act of communication to the public that might be performed by the user.
Reconciling the Directive with the e-commerce directive
One of the reasons why the proposed Article 13 has been so fiercely debated in recent months is due to the way in which it interplays with the existing ‘Safe Harbour Regime’. In fact, in notable contrast to the Council’s approved text, the Parliament’s version of Article 13 does not expressly reference the existing Regime at all. Nonetheless, its influence on the drafting of the Text is palpable and there are various questions and potential conflicts with the E-Commerce Directive that arise from the Text.
We have already seen that Article 13(1) confirms that online content sharing service providers will be deemed to perform an act of communication to the public. The text then goes on to state that ‘they shall therefore conclude fair and appropriate licensing agreements with right holders’. It is unclear whether the use of the word ‘therefore’ is used merely to acknowledge the obvious correlation between the existence of a copyright-relevant act and the contractual tools that are capable of legitimising such act, or if the intention is to connect the existence of an act of communication with the the (im)possibility to benefit from the e-commerce’s directive liability exemption regime. On the face of it and in the absence of clear guidance in the Directive, the existence of an act of communication to the public, taken in isolation, does not appear to automatically disavow a service of the Safe Harbour liability exemption regime. However, as noted above, the Text creates a presumption that online content sharing service providers play an ‘active’ role in the content that is on their service and this may make it difficult, practically speaking, for such services to rely on the Safe Harbour regime. Given the significant differences between the Text approved by the European Parliament and that previously approved by the Council, we expect this will be a source of further negotiation during the trilogue phase.
Notwithstanding this difference and as a minimum, Article 13(2a) of the Directive appears to impose additional requirements on online content sharing service providers ‘to ensure that identified unauthorised protected works or other subject matter are not available on their services’ through “cooperation” with rights holders, thereby superseding the terms of Article 15 of the E-Commerce Directive, which expressly provides that no general obligation to monitor content should be imposed on internet intermediaries. The content, scope and effects of these requirements are as yet uncertain as they, too, diverge significantly from the text adopted by the Council and the European Parliament.
What comes next?
Whilst the European Parliament has finally approved the Directive, this is not the end of the story. Trilogue negotiations will now open between the European Parliament, the European Commission and the Council of the EU (which represents the individual EU member states). The Council published its draft text for the Directive earlier this year and some of the significant differences between the two will need to be resolved before the final Directive is agreed upon.
We expect there to be more lobbying and debate over the coming months as companies, politicians and the general public learn more about the impact that these proposals might have on the future of the digital world.
As the trilogue phase opens, we will be following Article 13’s future developments with great interest, hoping to see further clarity emerge on these issues and many others.
- See e.g. L’Oreal v eBay (Case C-324/09) 12 July 2011.
- C-610/15 - Stichting Brein 14 June 2017.
Client Alert 2018-190
