European Council adopts digital single market copyright directive

The controversial Copyright Directive (2016/0280), which aims to modernise EU copyright rules ensuring development of a “robust and well-functioning digital single market” has been approved, backed by 19 countries at an EU Council Vote. Six countries voted against the Directive. The Directive will now be published in the Official Journal of the EU following which member states will have two years to bring in local laws implementing the Directive.

Two of the most controversial parts of the Directive, Articles 11 and 13 (renumbered to Articles 15 and 17) have attracted fierce debate.

Article 11 (now Article 15) – The so called ‘link tax’ – allows publishers of news articles to charge for the use of the publications when snippets of this content is displayed, for example when more than “single words or very short extracts” of news articles are reproduced.

Article 13 (now Article 17) – Imposes obligations on providers to take action against content which has not been authorised for upload (for example a movie uploaded to a video streaming platform without the consent of the copyright owner). Anyone sharing content must get permission from rights owners (or have made best possible efforts to obtain permission).

Why is the Directive controversial?

The legislation has been criticised by campaigners for internet freedom and tech companies such as Google, YouTube and Facebook who are concerned about internet censorship. Tech firms have a right to be worried, given that Article 17 makes platforms liable for uploaded content that breaches copyright and requires them to obtain licences.

One of the main concerns is that “filtering systems” which block unauthorised materials before they are uploaded to the platform will need to be used, however these may fail to differentiate between infringing and fair use content.

The link tax could also result in online sources, such as search engines and news aggregators ceasing to display results from news companies rather than paying money to licence these snippets. Critics of this provision argue that this may result in online news companies actually losing their audiences and revenue, given that large amounts of web traffic is usually driven to their companies due to the availability of these news snippets.

On the other side of the argument, there are a large number of celebrities in creative fields, such as Paul McCartney and Debbie Harry, and organisations such as PRS (Performing Right Society) who favour the reforms. This is on the grounds that artists are losing out on revenue streams due to the uncontrolled sharing of their work on online platforms. They argue that large tech companies have built up what are essentially advertising business worth billions of pounds through featuring unauthorised content, while paying artists almost nothing in return.

Brexit

As an EU Directive, local legislation Is required to bring this law in to effect. If the UK remains in the EU or has an agreement to follow EU laws (such as the proposed Withdrawal Agreement) then the UK would be bound to legislate to bring the Directive in to effect in the UK. If the UK has exited the EU before the two years are up there may not be a requirement to bring the Directive in to UK law, however UK firms and content creators may be caught be or able to benefit from the law in individual member states where they are active or where they have rights.

The effect on businesses

The Directive excludes businesses with less than 50 employees and less than 10 million EUR annual turnover however the effect on larger businesses remains to be seen. Obtaining licences from copyright owners for any materials featured on their website may be a costly and lengthy exercise, particularly if the business model relies on third parties uploading content (such as social media and content sharing websites) to a degree that makes absolute control of all content difficult.

Given this, running a platform where third parties can upload content may be made increasingly complex, making it more difficult for challenger platforms to enter the market and potentially increasing the dominance of the existing players.

As above, the Directive does not clarify which measures online platforms should use to achieve preventing unauthorised content from being made available, however previous versions have referred to “content recognition technologies”. Critics of the Directive fear that these will be too heavy handed, blocking any content in order to avoid liability which may capture fair use (such as articles reviewing copyright protected works and featuring screenshots). Businesses who produce creative content and rely on these platforms to share it may therefore run the risk of having content blocked, particularly if this relies on the use of third-party content.

Businesses which display news snippets from other sources on their webpages (such as websites featuring industry news) may have to pay for the use of this content or think carefully about whether to include it on their websites.

For rights holders, the Directive will provide greater scope for them to obtain payment for the use of their material however larger rights holders are likely to experience a greater benefit overall.

If you would like further advice on the effects of the Directive on your business or copyright in general please get in touch.

This update was prepared by HGF IP Solicitors Chris Robinson and James Talbot. If you would like further advice on this or any other matter, please contact Chris or James. Alternatively, you can contact your usual HGF representative or visit our Contact page to get in touch with your nearest HGF office.