Controversial European Digital Copyright Directive comes into force

The EU Directive on Copyright in the Digital Single Market came in to force recently, after extensive controversy and debate. EU member states will have until 7 June 2021 to enact their own laws to implement the Directive. How that will be done, particularly given the UK's ongoing Brexit situation, remains to be seen.

According to the European Commission, the main purpose of the Directive was to make EU Copyright Rules "fit for the digital age".

On the face of it a proposal to achieve this is a positive development in support of our increasingly digital society; however, there are a number of elements which have proved hugely unpopular and controversial, so much so, that they reportedly sparked one of the largest ever petitions of its kind on Change.org.

Article 17 (Draft Article 13)

Copyright is an important intellectual property right as it gives the creators of original works the right to protect them and to prevent others from benefitting from them unfairly.

Prior to the Directive, if a rights holder located infringing material then they were entitled to take action against this and to request Online Content Sharing Service Providers to remove infringing items.

Article 17 has provided additional support to rights holders by imposing new obligations on Online Sharing Providers to take active steps to find and remove infringing content on their platforms - a potentially onerous task.

This means that if Online Sharing Providers do not use their "best efforts" to implement the required action, then they risk liability for the infringement which they have failed to take steps to prevent. This legislation marks a significant change from the previous position regarding liability of Online Sharing Providers for the content which they host.

With platforms such as YouTube reportedly having up to 300 hours of content uploaded every minute it seems likely that the giants affected by the changes will increasingly turn to automatic systems to locate and remove infringing content, although the Directive is not prescriptive about this. Some platform giants already use content ID systems and have had adverse publicity when items are blocked automatically when they should not be.

There is a further requirement under Article 17 for rights holders to be provided with a means of issuing a take down notice for any infringing content; this is similar to the system set out in the US Digital Millennium Copyright Act 1998 and many larger international entities will have systems in place for this; regardless, dealing with requests under EU legislation will require action to be taken and, as above, seems likely to result in wider automation. Google, for example, reportedly receive 2 million takedown notices daily under the US legislation and this is only set to increase under the Directive.

The Directive applies different standards and obligations to smaller businesses where they: are less than 3 years old; make less than €10 million in annual revenue; and have less than 5 million monthly users. This is good news for smaller entities, but there are still obligations to be complied with which, for some, may prove challenging.

Controversial European Digital Copyright Directive comes into force

Articles 18 to 20 (Draft Articles 14 to 16)

Articles 18 to 20 of the Directive also herald changes which could prove expensive for those affected. They aim to increase transparency between rights holders and licensees to ensure that rights holders are given appropriate and proportionate remuneration for use of their original works.

This is clearly a positive and supportive change for rights holders and the Articles impose reporting obligations on any licensees regarding the modes of exploitation used and the revenue and remuneration which they have achieved from use of licenced works.

If the original remuneration agreed under the licence is "disproportionately low" compared to the revenues derived from the copyright use then the licensee would have a claim for increased remuneration.

Whilst these provisions are clearly in the interests of the original creator of any works affected; an initial look at this mechanism suggests that contractual negotiations for use of copyright works may become more complex, and potentially expensive. Potential liability for additional remuneration will need to be considered as part of any new business stream developed in relation to existing works and contracts.

Article 15 (Draft Article 11)

Article 15, is the other criticised aspect of the Directive; it aims to prevent the infringing reproduction of press publications and again focusses on appropriate and proportionate remuneration being paid. It is a way for news publishers to negotiate licences with news aggregators, such as Google, and to impose what has been dubbed as a ‘link tax' on any thing more than an insubstantial part of a work being shared online.

The main anticipated effects of Article 15 are that it may inadvertently disadvantage small publishers who rely on links to reach a wider audience than their own as new aggregators may not approach them or link to their articles as they currently do. The Article is also likely to reduce conversation amongst the readers of publications in comments and on third party sites such as twitter, which will also potentially reduce traffic to the original articles involved.

Our view

As with all directives there is now a two year period for Member States to implement their own legislation and, in the UK in particular, in what form and when the Articles of the Directive are implemented in to national law has yet to be determined.

At the very least the Directive looks likely to require updates to terms and conditions where needed for those who operate in the EU, particularly as Member States take steps to implement the Directive.

Online Sharing Providers are the most likely to be affected by the changes and, at least in theory, smaller rights holder should receive better remuneration for their works; however, it is too early to say whether the Directive will inadvertently impact on rights holders in other ways, for example by limiting the republication of their works and consequently limiting their exposure to wider audiences.