EU Copyright Directive - Mind the Value Gap

The Copyright Directive has been several years in the making, forming a central part of the EU’s 2015 Digital Single Market Strategy, writes Kathy Berry, senior lawyer at Linklaters.

It is intended to curb the power of big tech by levelling the playing field between content creators and those who exploit content online.

The Directive has proved to be one of the most controversial pieces of EU IP legislation in recent history. It has been described as both an “end to freeloading” and a “censorship plan”. It has sparked fierce lobbying, public demonstrations, open letters from Google and YouTube and even Wikipedia blackouts. This controversy is part of an ongoing “Hollywood v Silicon Valley” tension between content creators who want a high level of copyright protection based on traditional models, and the tech industry that wants to clear the path for new and innovative ways to use and share content.

Addressing the “Value Gap”

Article 17 (previously Article 13) is easily the Directive’s most controversial provision. It addresses the perceived “value gap”, i.e. the idea that online content sharing platforms obtain unreasonable value from enabling their users to share copyright content, without ensuring that the underlying rightsholders receive their share.

Notice and Takedown+++

Article 17 makes online platforms to which it applies directly liable for their users’ copyright infringements (e.g. uploading pirated films or music) unless the platform:

obtains authorisation from the rightsholder or makes best efforts to do so;
failing that, makes best efforts in accordance with “high industry standards of professional diligence” to ensure that works of which it is notified by rightsholders are not made available on its platform; and
operates an expeditious notice-and-take down procedure.

In determining whether an online platform has complied with its obligations, the type, audience and size of the service and type of work uploaded by users, as well as the availability and cost of suitable and effective means, will be taken into account. So, the bigger the platform, the more they will have to do.

Content Recognition Technology

Online platforms will not be required to monitor every piece of content shared by their users, but they must make best efforts to prevent users sharing content that infringes copyright works that are specifically identified to them, e.g. by the film company or record label that owns them. Effectively, therefore, Article 17 shifts the burden of policing the internet from rights holders to online platforms – at least in respect of specifically identified copyright works.

While not expressly mentioned in the Directive, content recognition technologies are likely to be a suitable means to achieve this, at least for larger platforms, although they may be considered disproportionately expensive for smaller ones.

Content recognition technology is controversial as it risks blocking works that incorporate copyright content for legitimate (and non-infringing) purposes such as criticism, review or parody. This has significant implications for freedom of speech and open internet.

The Directive stresses that it should not prevent the upload of non-infringing works, including those that are covered by an existing exemption, but lacks guidance on how online platforms are intended to achieve this important balance.

Who is Affected?

Article 17 does not apply to all online platforms. It applies only to those which allow users to share a “large” amount of content which is organised and promoted for profit. So, it will bite on YouTube, social media platforms, music-sharing and video-game streaming platforms and many others. It does not apply to not-for-profit online encyclopaedias, educational repositories, open source software platforms, online market places or private cloud platforms.

Much more limited obligations apply to start-ups (i.e. services that are less than three years old, with an annual turnover of less than ten million Euros and no more than five million unique visitors per month).

Noble Aims but Lacking Clarity

While Article 17 may have noble aims, it currently functions as little more than a set of ideals, with very little clarity on exactly which platforms will be caught or what they will be required to do. There is likely to be an ongoing lack of legal and commercial certainty until the details are fleshed out, either by the Commission’s Guidance or by European case law.

A Done Deal?

The Directive is not yet law. On 26 March, it was approved by the European Parliament. On Monday, the Council of the EU will also vote on whether to adopt it. If they do, it will be signed, published in the EU’s Official Journal, and will come into force 20 days after that. EU Member States will then have two years in which to implement it into their own laws. So, this new regime is unlikely to apply before May 2021.

Brexit

While little is certain when it comes to Brexit, the deadline for implementation of the Copyright Directive (probably May 2021) may fall after the date on which the UK leaves the EU. If so, the UK is unlikely to be required to implement its provisions. However, UK businesses providing online services in the EU may still have to comply, and it is conceivable that the UK will choose to implement the same or a similar regime regardless of Brexit.