New EU Copyright Directive creates modern rules to fit the digital environment

The new Directive on copyright and related rights in the Digital Single Market (DSM Directive) was approved in the EU in April 2019, and it must be implemented into Member State’s national legislation by latest in 2021.

In summary, the Directive’s objectives are:

• to ensure fulfillment of copyrights on the internet;

• to improve rights holders’ opportunities to practice their rights in the digital environment;

• to enhance users’ opportunities to utilize copyrighted works in education, data-mining and cultural heritage; and

• to ensure freedom of impression on digital platforms

The Directive has sparked objection throughout its preparation. It was suspected of limiting freedom of expression on the internet and forcing companies to filter out content shared on their platforms in unnecessary amounts. Critics have especially opposed Articles 15 and 17, also known as the “link tax” and “meme ban”.

Article 15 requires news service providers, such as Google News, to pay publishers for using snippets of their articles on their platforms. The new rules are not intended to prohibit the use of hyperlinks, and the use of very short extracts from press publications is also allowed as long as the service provider does not abuse this opportunity.

Article 17 makes internet platforms, such as YouTube, Facebook and Twitter, directly responsible for contents shared on their platforms. According to the new rules, content-sharing service providers should obtain licenses from rights holders for contents downloaded on their platforms in advance. If no license is obtained, service providers have to use their ‘best efforts’ to ensure that unauthorized content is not available on their websites. The new rules affect especially larger content-sharing platforms that profit off of contents shared by users on their platforms. Start-up platforms are subject to lighter obligations.

The Directive does not create new rights or obligations, so all content that is legal now, will also be legal and free to be shared in the future. Posting copyright-protected material on internet platforms for the purposes of e.g. quotation, criticism, review, caricature or parody is also possible in the future, as is sharing of memes and GIFs. The rules also do not apply to downloading content from non-commercial online encyclopedias or open source software platforms, nor do they apply to individual users of the internet.

The reform is significant especially from copyrights holders’ point of view since the changes enhance rights holders’ opportunities to demand reasonable contracts and fair remuneration for the use of their works on digital platforms. Producers and performers are able to demand additional compensation from distributors who benefit from their works, e.g. if the initially agreed remuneration is unreasonably low in comparison to the benefits gained by the distributor.

In practice, platform service providers should obtain licenses to contents in advance, instead of blocking infringing content or obtaining necessary permits retrospectively. Until now, internet companies have had little incentives to make fair licensing deals with copyright holders because they have not been held liable for contents posted on their platforms.

The Directive sets direct obligations for e.g. tech giants, requiring them to distribute income to artists and journalists in the future. However, online platform service providers are not limited to just Google and Facebook, and the new legislation may also have significant implications for other companies that provide online platform services. The new legislation will in any case require companies to make investments and develop new technical solutions to ensure that copyright rules are followed on their platforms.

Member States are currently preparing the implementation of the Directive, which should be transposed into their national legislation by June 2021. It remains to be seen, how exactly the new rules will affect the national laws of each Member State and what the final implications to the digital single market will be.

Links: Directive (EU) 2019/790