Article 21 September 2016

EU copyright reform unveiled: a step closer to digital single market?

The EU Commission issued on 14 September 2016 the proposals for the new Digital Single Market Copyright Directive and the Regulation on online transmission of broadcasts. The proposals, if adopted in their current form, will have an impact on media companies, content distributors and internet intermediaries and may cause changes to the licensing practices of audiovisual content in Europe. In this article, we outline some of the key features of the large and somewhat controversial package.

The proposed Digital Single Market Copyright Directive: A sea change for hosting platforms and news aggregators?

The proposed Digital Single Market Copyright Directive ("Directive") consists of a set of rules aiming to reach the objective of the Digital Single Market Strategy, i.e. to reduce differences between national copyright regimes, as well as to allow for wider online access to content across the EU. The most central elements of the Directive are as follows:

  • Neighbouring right for press publishers

The Directive introduces a neighbouring right for press publishers, enabling them to authorise the online use (including reproduction and making available) of their publications. The proposal is intended to give publishers better control over their content online as they will have rights essentially similar to those currently held by e.g. music and film producers. The new right is expected to give publishers more leverage against e.g. news aggregator platforms and the opportunity to monetise their content more effectively.

  • Hosting services no longer safe from harm?

The Directive imposes a new obligation on intermediaries that store and provide access to works uploaded by users (e.g. video platforms and other user generated content aggregators), to conclude agreements with the copyright holders for use of their work and additionally an obligation to take measures for preventing the availability of works that are not covered by an agreement on the services.

Said provision seems to be in potential conflict with the current legal framework provided in the E-Commerce Directive (2000/31/EC), which provides the hosting services a "safe harbour" status provided that certain criteria is fulfilled. Further clarification on this new obligation should be reasonably expected from the Commission. The proposal, if adopted, may impact profoundly the operation of e.g. popular video platforms.

  • New mandatory exceptions to copyright

The Directive establishes three new exceptions to copyright, which are proposed to be mandatory for the Member States. According to the proposal, text and data mining of legally accessed works conducted by research organizations for scientific research purposes will be allowed without the right holder's consent, and the right cannot be overruled by contractual provisions.

The two other new exceptions to copyright will apply to educational activities and research as well as for preservation of cultural heritage and for the benefit of the blind and disabled.

  • Fair compensation to authors

Member States are also required to ensure that authors and performers receive fair remunerations of exploitation of their works by enabling their contracts to be adjusted when the remuneration is disproportionately low and to ensure that authors and performers receive timely, adequate and sufficient information on the exploitation of their works. It should be noted that the Finnish Copyright Act (404/1961) already contains provisions regarding unreasonable terms in copyright assignment agreements.

The proposed Regulation: Country of origin principle extended to online transmissions

The other main element of the reform package released on 14 September is the proposal for regulation on certain online transmissions of broadcasting organisations and retransmissions ("Regulation"). The Regulation introduces the country of origin principle, familiar from the Satellite and Cable Directive (93/83/EEC), to online transmissions and retransmission of copyright protected works.

The extension of said principle, which would apply between the broadcasting organisation and right holders, means that the rights for transmitting and retransmitting TV and radio programmes online need to be cleared only for the country of origin of the broadcasting organisation and not for the countries of reception. The clearance rights for retransmission purposes is also facilitated by introducing rules on mandatory collective management for digital retransmission services, akin to those set out in the Satellite and Cable Directive.

Notably, however, the rules would apply only to online services that are "ancillary to broadcasts", leaving on-demand services or webcasting services, which are not linked to a broadcast, outside the scope of application. Furthermore, the proposed Regulation would not apply to retransmissions over the open internet, but rather only to services provided over closed IPTV, mobile or other similar networks

Furthermore, the proposed rules do not mandate the broadcasting organisations to provide their services across borders, nor does the proposal expressly address the widely debated issue of geo-blocking. Broadcasters and distributors should therefore stay alert to any further developments in this respect.

Further legislative amendments on the horizon

The Commission communication presents additional objectives for a copyright enforcement system and according to the communication, further evaluation of the legal framework for the enforcement of IPR, including copyright, is still needed. The final results of the evaluation are anticipated to be published this autumn and additional amendments to the legislative framework to be proposed based on the results.

It is safe to say that new legislative initiatives and clarifications of the existing copyright framework are still on the way and companies providing services in the EU should keep a lookout for the future developments.

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