Jusletter IT

On 15 April 2019 the Council of the European Union adopted¹ the new Directive on Copyright in the Digital Single Market² («Directive»), which had been approved previously by the European Parliament on 26 March 2019³. The Directive aims, among others, to harmonise EU law applicable to copyright within the EU, taking into account, in particular, digital and cross-border uses of protected content (art. 1 Directive).

The Directive comprises 32 articles with three main measures: (i) to adapt exceptions and limitations to the digital and cross-border environment; (ii) to improve licensing practices and ensure wider access to content; and (iii) measures to achieve a well-functioning marketplace for copyright⁴.

The two most controversial provisions of this new Directive are articles 15 (protection of press publications concerning online uses) and 17 (use of protected content by online content-sharing service providers).

First, art. 15 stipulates a new protection of press publications⁵ for publishers. The goal of this provision is legal protection for press publications in respect of online uses by information society service providers⁶, e.g. Google with its search and news engines. This provision requires the online platforms to request publication approval for full or partial (re-) publication, incl. abstracts and snippets, but generally excluding individual words or very short extracts⁷ of press publications⁸; and possibly to pay a license fee therefor (aka «link tax»)⁹.

It is questionable whether this provision will yield the desired result foreseen by the Directive, i.e. among others, to achieve a well-functioning marketplace for copyright. For instance, in the past, Google has shut down its news portal in Spain¹⁰ due to a statutory link tax¹¹; and in Germany VG Media, the collecting society for German news publishers, introduced a tariff of 11% on all ad revenue derived from news search and news aggregation activities after introduction of a law for ancillary copyright for press publishers¹² in 2014. However, to allow Google News and Google Search to continue linking to their news articles, the online publishers subsequently waived their right to any tariff vis-à-vis Google¹³. A subsequent complaint by VG Media at the German Competition Authority alleging Google’s abuse of its dominant market position was decided in favour of Google. The German Competition Authority stated that Google's threat of shortening the search results to linked captions was not an unjustified intervention into the search results, particularly in light of avoiding potential damages claims. Google’s interests outweighed, with a high degree of probability, the conflicting interests of the online publishers.¹⁴

There are technical solutions¹⁵ that online publishers can apply to avoid that their articles are aggregated by information society service providers. However, online publishers do not seem to implement such solutions. This is an indication that the perceived benefits of aggregation exceed the costs.¹⁶

According to the study of the European Commission, online publishers are eager to distribute their content through aggregators because they actually benefit from the news aggregation platforms by increased traffic to their newspaper websites and by more advertising revenue.¹⁷

Second, the Directive also stipulates in art. 17 that online content-sharing service providers¹⁸, e.g. YouTube, shall be required to obtain a license from the rightholders if and when they give the public access to copyright protected works or other protected subject matter uploaded by their users. The burden of obtaining a license and of liability in case of any copyright infringement lies with the online content-sharing service provider (paragraph 4), unless it can be demonstrated that the online content-sharing service provider (i) made best efforts to obtain an authorization; (ii) made best efforts to ensure the unavailability of specific works for which the right holders have provided the online content-sharing service provider with the relevant and necessary information; (iii) made best efforts to prevent such future uploads; and (iv) acted expeditiously to remove from their websites the notified work.

The provision also foresees exceptions for new¹⁹ and small²⁰ online content-sharing service providers. First, they must only act with best efforts to obtain an authorization (point (i) in the previous paragraph). Second, if they have more than 5 million unique monthly visitors, they shall also demonstrate best efforts in preventing further uploads of notified works (point (iii) in the previous paragraph).

Admittedly, the initially foreseen draft provision introducing a mandatory upload filter has been removed from the Directive²¹. Nonetheless, the most efficient way of avoiding liability under art. 17 of the Directive seems to remain the implementation of such upload filters. Concerns have been raised that the upload filters are technically not capable of accurately recognizing copyrighted content, or whether the content can be used legally. Internet pioneers, such as Vint Cerf and Tim Berners-Lee, have noted the European Ecommerce Directive already foresaw a balanced liability model, under which those who uploaded content to the Internet bore the principal responsibility for its legality, while online content-sharing service provider were responsible to take action of removing such content once its illegality had been brought to their attention. However, the Directive now reversed this well established model impacting the business models and investments of such online platforms. The damage to the free and open Internet as known to its users is hard to predict, but in their opinion the Directive could «take unprecedented step towards the transformation of the Internet from an open platform for sharing and innovation, into a tool for the automated surveillance and control of its users». The impact could be substantial.²²

Whether and how Google, YouTube and Co. will function in the future is yet to be seen. The EU member states will have 24 months’ time to transpose the Directive into national law (art. 29 Directive).

And in Switzerland? The Swiss Copyright Act²³ has been in revision since 2011²⁴. On 29 April 2019 the competent Swiss Council of States Commission decided that, unlike in the EU, no ancillary copyright for press publishers shall be introduced in Switzerland²⁵. Based on the introduction of the EU Directive on 15 April 2019, the Swiss legislator shall further observe the developments regarding the upload of online content in the EU.

Daniel Ronzani