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New Digital Copyright Rules set for the EU

European Parliament, the Council of the EU and the Commission reach political agreement

22 February 2019

In today's digital age, end-users can find almost every service they need online and at the touch of a button. We are spoilt for choice with entertainment streaming services (e.g. Netflix; Spotify), user-uploaded content platforms (e.g. YouTube; SoundCloud) and news aggregators (e.g. Google News). However, with greater access to digital content, there is a concern that the current copyright regime in the EU is no longer fit for purpose and that many artists, musicians, publishers and other content creators are not being adequately compensated when their work appears online with or without their permission.

In light of the above, the European Parliament has spent the past few years working on proposed wording for a new directive, known as the Directive on Copyright in the Digital Single Market 2016/0280.

On 13 February 2019, the EU Parliament, Council of the EU and the European Commission reached agreement on the final draft of the Directive, which is expected to be put to the vote before the EU Parliament for approval in either March or April this year. If approved, the Directive would be implemented by EU Member States over the following two years.

What's the purpose of the Directive?

The Directive aims to limit how copyrighted content is shared online and make digital service providers liable for the material they host on their respective platforms. By forcing companies to take greater responsibility, it is anticipated that the level of copyrighted material shown illegally on digital platforms will decrease.

According to the EU Parliament, part of the problem under the current regime is that service providers have little incentive to sign fair licensing agreements with rights holders since they are not considered liable for the uploaded material. A provider must simply remove infringing content when reported by the rights holder, which has proven to be a time-consuming and laborious process for the rights holder. The Directive therefore aims to increase the likelihood of rights holders securing fair licensing agreements and being remunerated by the service providers for showing protected content.

What are the big changes?

It has not been a smooth journey and certain provisions in the Directive have been considered controversial by the digital platform industry and wider online community. Indeed, the technology industry and wider internet community have been lobbying against some of the proposed changes. In particular:

Article 3 – text and data mining for the purposes of scientific research

Also known as the "text-and-data-mining (TDM) exception", Article 3 proposes a mandatory exception in which certain bodies (e.g. research bodies;  education institutions) will need to obtain a licence in respect of TDM. This is good news for developers as mining content on large datasets plays a critical role in the context of developing artificial intelligence and machine learning – a rapidly growing field with increasing application across industries.

Article 11 – protection of press publications concerning online uses

Also known as the "link tax", Article 11 will largely affect news aggregators and media monitoring services (e.g. Google News). It requires providers to obtain licences from publishers to show content that is under two years old.

The agreed draft of the Directive makes clear that hyperlinks to news articles, accompanied by "individual words or very short extracts" can be shared freely.

Article 13 – use of protected content by online content sharing service providers

Also known as the "upload filter" or "meme ban", Article 13 will largely affect service providers using content sharing platforms (e.g. YouTube). It requires certain providers to use "best efforts" to filter and/or remove copyrighted material uploaded illegally. A provider that hosts user-generated content will not be required to install an upload filter if the provider:

a)      has provided services in the EU for less than 3 years;

b)      has an annual turnover below EUR 10 million; and

c)      has less than 5 million unique monthly visitors.

Larger corporations with established software that searches for copyrighted works on its platform (e.g. YouTube's Content-ID software) will likely satisfy this provision. However, there is still some debate over how smaller to medium sized companies will be able to satisfy Article 13 without the benefit of copyright search software.

Will there still be 'freedom of expression' online?

There have been concerns raised that the Directive, particularly Articles 11 and 13, would inhibit online expression and that fair use of copyrighted material such as parody videos, memes or GIFs would not be accounted for by the new regime. However, the Directive and accompanying press release from the EU Parliament make clear that there is an exemption for content uploaded for "the purpose of caricature, parody or pastiche", meaning certain content, such as GIFs and memes, could still be shared freely.

In addition, sharing snippets of news articles will not infringe the rights of the publisher that produced the article. There is currently a question mark over how long or short a "snippet" may be. The Directive in its current form states that "very short extracts" will not infringe the publishers' rights, meaning we may have to wait for case law to provide guidance.

Will the Directive apply to everyone?

The Directive is aimed at "commercial" digital service providers and expressly excludes not-for-profit services providers and open source software development and sharing platforms. In addition, start-up companies will be subject to lighter obligations under a modified regime applicable to new service providers with a small turnover and audience.

Next steps?

The Directive will need to be approved by the EU Parliament, following which Member States will have two years to implement the Directive as national law. Businesses operating online and providing digital services will therefore need to give careful consideration to their circumstances. In particular, whether or not they will be required to amend their current operating systems and internal policies to ensure compliance with the Directive.