Insights EU Commission consults on the future of copyright

On 5 December 2013, the European Commission gave an early Christmas present to stakeholders in the copyright sector – which is basically everyone given the role copyright plays in incentivising the creation of new content as well as the nature of the internet and digital technology. This gift, which the Commission calls the ‘Public Consultation on the review of the EU copyright rules’ is comprised of some 80 questions. Indeed, the Commission was apparently worried that stakeholders might be bored over the holidays so it set a deadline for filing written submissions for 5 February 2014 and released a nearly 600-page document entitled the ‘Study on the Application of Directive 2001/29/EC on Copyright and related rights in the Information Society’ (the ‘Copyright Directive’) (the ‘Study’) that it had commissioned from an outside law firm. The Study’s intent is to assess the extent to which the Copyright Directive is ‘appropriate to the economic and technological realities of digital markets’ and whether ‘further harmonisation in some areas of copyright is needed in order to enable the EU to capitalise on the opportunities of a digital single market.’

It seems that the main issue for this Public Consultation is whether the EU should weaken its copyright regime. There is considerable political pressure for the Commission to take action particularly with respect to copyright territoriality and exceptions. Rightholders are generally resistant to a weakening of the current regime and there is more than enough on the table to engender serious division. While two recent copyright directives (Orphan Works and Collective Rights Management) were adopted relatively smoothly and quickly, broad copyright reform is likely to be highly contentious and politicised. Meanwhile, the Commission’s competition arm is not idle and the Court of Justice (‘CJEU’) has already made an important decision that concerns both the issues of territoriality and exceptions.

Reportedly, the Commission intends to prepare another gift by March 2014 but this time for the next Commission. The plan is to issue some kind of legacy document on copyright that it would leave behind for its successor which should be in place by 1 November 2014 after the election of a new European Parliament in May 2014. There are several possibilities for this legacy. Likely, it will be either a Communication to the other EU institutions (more of a nonbinding instrument) or a White Paper (containing proposals for EU action in a specific area) – or even a quickly cobbled together legislative proposal, which seems improbable politically at this stage. The terms of the next Commission and Parliament will run until 2019; during that period there is scope for a range of EU level actions.

The Consultation Document, which covers a lot of ground, is divided into six main chapters: rights in the EU Single Market (territoriality, cross-border availability of content, the exclusive right of making available, linking and browsing, digital exhaustion, rights database, digital identifiers and term of protection); copyright exceptions and limitations (mandatory or optional exceptions, new exceptions and fair use); private copying; fair remuneration of authors and performers; enforcement, and the Single EU Copyright Title (one copyright law to rule them all). Many of the questions cut to the heart of fundamental right of copyright in the EU and have potentially far reaching consequences for all stakeholders including in particular rightholders. In this regard, it is worth recalling that several CJEU decisions have confirmed that Article 17 on the right to property in the EU Charter of Fundamental Rights and Freedoms extends to copyright and of course must be balanced against the protection of other fundamental rights.

It seems clear that the Commission is considering the dilution of important exclusive rights and the introduction of new exceptions in an effort to force the creation of pan-EU services and to facilitate rights clearance or in some cases render it unnecessary. The consultation period is short: six weeks comprising a major holiday break. Copyright reform coming?!

One question is who stands to benefit the most from such a reform. EU rightholders would lose out and consumers would probably not fare much better. The big winners would likely be mostly non-EU internet titans but ultimately there could also be gains for large international content companies who are better placed than many other rightholders to adapt to an evolving legal landscape and the structural changes that this would entail for the content sector.

One would expect any major modifications to EU copyright law to be underpinned by a substantial evidence-base with the burden on those seeking change to prove it is needed. Yet, in the UK, where some proposals were released last summer (and should soon be laid before Parliament), the plan to weaken copyright law is well underway despite some questions about the numbers. Achievement of the policy goals behind the Consultation Document actually involves a range of issues beyond copyright law relating to other provisions of EU law, market realities, cultural policies, VAT norms, consumer protection rules and so on. While the Commission could propose further harmonisation in the copyright sector, content distributors would still have to face a myriad of varying rules in other areas across the EU.

In an effort to look more closely at some of the copyright issues raised by the Consultation Document, the rest of this article sets out brief possible answers to Questions 8 and 9 from a rightholder point of view:

Q. ‘Is the scope of the “making available” right in cross-border situations – i.e. when content is disseminated across borders – sufficiently clear? (Question 8)’ YES – The scope of the making available in cross-border situations is sufficiently clear – particularly in light of recent jurisprudence of the CJEU.

First, it is worth making a few observations about EU-level legislation. Directives only ever deliver a certain level of clarity. Indeed, EU legislative compromises are not generally known for their legal certainty. The fact that Member States and national courts are left room to manoeuvre is an important part of the system. Finally, the CJEU, whose role it is to interpret EU law and ensure it is applied uniformly, is well-positioned to provide additional clarity. Indeed, the CJEU has already made many rulings on issues raised by the Consultation Document and several important decisions are pending.

The making available right is deployed on a daily basis to license content on a territorial and multiterritorial basis as well as to enforce rights online.  The Commission’s Terms of Reference for the recently published Study (see above) observe that ‘the act of making available is in all likelihood an act relevant in each of the Member States where the content is accessed (plus, probably, the country in which the content is uploaded).’

The exclusive right of ‘making available’ in Article 8 of the WIPO Copyright Treaty, as implemented in the EU by the Copyright Directive, extends to the offering to the public of a work for individualised streaming or downloading as well as the actual transmission of a work to members of the public – from a place and at a time individually chosen by them, irrespective of the technical means used for making available. The making available right for copyright works is characterised by the fact that it occurs both where the offer is made and where it is capable of being accessed by consumers. This reflects the interactive nature of the right. It is also vitally important to the licensing of content and to determining the jurisdiction and/or the applicable law for rights enforcement online.

The Study released by the Commission concludes that the making available right is ‘not entirely clear’ as to its ‘constitutive elements’ and finds ‘some legal uncertainty’ as to its ‘territorial reach.’ However, the ‘alternative approaches’ (one of which is based on CJEU case law) discussed in the Study to address so-called  ‘bottlenecks’ would not only create ‘new bottlenecks’ and significant legal uncertainty but also require extensive additional harmonisation of copyright law. Furthermore, the Study questions whether these alternative approaches are well suited to attaining the Commission’s policy objectives. From a practical point of view, there is a risk of undermining the utility of the making available right as a licensing and enforcement tool. It should also be recalled that limitations on the exercise of exclusive rights are also subject to conditions imposed by international copyright treaties. Moreover, it is possible that any reduction in the scope of the making available right could be construed as an expropriation that runs contrary to the EU Charter of Fundamental Rights and Freedoms as well as national constitutions.

Q. ‘[In particular if you are a right holder:] Could a clarification of the territorial scope of the “making available” right have an effect on the recognition of your rights (e.g. whether you are considered to be an author or not, whether you are considered to have transferred your rights or not), on your remuneration, or on the enforcement of rights (including the availability of injunctive relief)? (Question 9)’ YES – ‘Please explain how such potential effects could be addressed.’ As noted above, a ‘clarification’ which would limit the scope of the making available right is neither necessary nor justified. The so-called ‘targeting approach’ would have a minimal impact on the matters relating to authorship/initial ownership of copyright and transfer of rights. This approach seems to be based on the recent CJEU decision in Sportradar. However, the ‘country of origin’ approach would harm rightholders.

In the audio-visual sector, for example, the rights required to produce and exploit a film or TV programme are generally consolidated in the producer – the question of who is the author of the film should not arise in this context. This consolidation means that the producer is usually in a position to exploit the work on a multi-territorial basis. Indeed, it should normally limit the potential impact of any ‘clarification’ on matters concerning ownership, transfer and remuneration. However, in many cases, the producer (or his assign) does not have worldwide or even pan-EU rights (leaving aside the issue of music and other forms of content). The ‘country of origin’ could thus harm rightholders in the country of reception particularly in the case of independent films which rely heavily on the pre-sale of exploitation rights and especially co-productions where the rights are split between the coproduction partners in different EU Member States. The impact would be felt not only by producers but also authors and performers.

As far as enforcement is concerned, the ‘country of origin’ approach could seriously impede the ability of rightholders to take legal action to address structurally infringing websites which tend to operate anonymously and/or outside the EU. The sites themselves quickly relocate from country to country. Indeed, their ‘business’ operations are spread out over several territories, i.e. hosting in one country, payment structure in another, DNS registrar in another, advert broker in yet another, and so on.

Legal action is generally directed at online intermediaries based on Article 8 (3) of the Copyright Directive. This provision which provides for injunctions against intermediaries has developed as an important tool to fight online copyright infringement – particularly due to the fact that structurally infringing sites rarely operate openly in the EU anymore (see the AG Opinion in the kino.to8 case). Where the conditions in Article 8 (3) are fulfilled, the Court will then consider matters related to proportionality, freedom of expression and other fundamental rights before issuing an order against the intermediary. An important component of the decision to bring action against an intermediary is based upon where making available takes place. The introduction of a country of origin principle could constrain the ability of rightholders to secure injunctions against intermediaries who are ‘best placed’ to bring infringing activities to an end. As a result, this ‘clarification’ could undermine enforcement online and generally weaken copyright protection in the EU. The beneficiaries would be structurally infringing sites which operate either in third countries or anonymously and, to a lesser extent, online intermediaries, although EU law stipulates that the cost of compliance with court orders has to be reasonable.

This article first appeared in E-Commerce Law and Policy January 2014.