Following adoption by the JURI Committee (Legal Affairs) of the European Parliament of the text of the Report on the proposed Directive of the European Parliament and of the Council on Copyright in the Digital Single Market (DSM Directive) as drafted by its Rapporteur, Axel Voss, the European Parliament will tomorrow vote in plenary sessionon the next steps for adoption of the proposed Directive, released by the European Commission on 14 September 2016, The proposal establishes the criteria for harmonizing current rules with the digital world, in order to optimize the relationship between copyright protectionand free access to online content, providing a list of exemptions toand limits on copyright which must be adopted by Member States.
Articles 11 and 13 are among the most hotly debated articles of the proposal.
Article 11 provides for the introduction of a new form of publisher’s “fair compensation” (dubbed contentiously, but incorrectly, the “Linktax”) in exchange for commercial use of links to snippets of content, according to a system which is analogous to the current system of compensation for private copying, whereby those who buy a medium or device which can also be used to copy a copyright-protected work pay a certain sum to copyright owners to compensate them for not receiving any payment for said work due to the fact that it has been copied.
The drafters of the proposal are of the opinion that large online platforms, such as Google, profit from sharing third party content without, however, sharing either costs or proceeds with content creators. Moreover, with the diffusion of content through links and snippets users tend not to read the complete original articles and thus publishers are penalized. Most European publishers also believe that the new legislation will ensure greater protection of content and the valorisation of the cultural and creative industry.
Although it is not, as has been argued, a tax but rather compensation for using protected content, the proposed measure has come in for strong criticism from scholars, activists and operators. By way of example in the last few days Wikipedia has obscured its website in Italy as a sign of protest. Attempts to introduce publisher’s fair compensationin Germany and Spain have met with little success. In Germany publishers have failed to have Google abide by a 2013 law introducing said compensation. Google stopped displaying news snippets and this resulted in an around 80% decrease in traffic to traditional German news publishers, the upshot being that such publishers had to grant Google temporary exemption from payment in order to appear once more on Google News. In Spain a 2014 law provided for an obligation on the part of publishers to demand compensation from news aggregators. Google refused to pay and closed Google News, causing a marked drop in internet traffic to Spanish news publishers.
In the opinion of the proposal’s detractors, possible hostile conduct on the part of Google and other large online players would thwart fair compensation rules and render them counterproductive for European news publishers which might well no longer appear on the most common news aggregators. Non-European content producers would thus be at an advantage. Moreover, while large aggregators like Google or Facebook would be able to avoid payment of fair compensation, smaller players would be required to abide by the new rules, suffering further competitive disadvantage.
Article 13 of the proposal is also the subject of wide-ranging discussion and criticism. It addresses the much-debated issue of the value gap (i.e. the gap in value accruing to copyright owners between average proceeds generated by, for example, YouTube and those generated by other streaming services such as Spotify, Apple Music, etc, the former being much lower than the latter and inversely proportional to the number of active users).
According to the most recent text of Article 13 (and of Recitals 37-39c) online content sharing service providers (i.e. ISPs one of the main purposes of which is to store and give access to the public or to stream copyright-protected content uploaded/made available by their users and that optimize content) are subject to this rule, since the activity they conduct is deemed an act of communication to the public. They are therefore responsible (and potentially liable) for the user uploaded content (UUC) made available through their services. Non-commercial service providers (for example on-line encyclopaedias), providers which allow content to be uploaded with the permission of copyright owners, open source software developing platforms and online marketplaces whose main activity is online retail of tangible goods are outside the scope of the definition of online content sharing service providers and therefore of Article 13 of the DSM Directive. Providers within the scope of the definition are therefore under an obligation to enter into “fair and appropriate” licence agreements with copyright owners and adopt proportionate and effective measures to prevent the availability of infringing content. The effect of the provision is, therefore, to exclude online content sharing service providers from the safe harbour exemption which is applied to ISPs whose activity is limited to the technical process of operating and providing access to a communication network, within which the information made available by third parties is transmitted or stored temporarily, the only aim being to make the transmission thereof more efficient.
Another criticism levelled at this article is that it obliges websites which host UUC to equip themselves with a form of automated pre-filtering content mechanism to prevent any breach of copyright.
It would thus no longer be the copyright owner which would be required to demonstrate violation of its rights but the party publishing content which would be required to pre-monitor content for potential copyright infringement. Such an automated system is seen as being unsustainable for small websites and tremendously costly even for big players such as Google and Facebook.
However, the proposal as regards the “value gap” is in line with trends in decisions bothof the EU Courts (14 July 2017 “The Pirate Bay”, C610/15, in which the CJEU ruled that for-profit online platforms had an ex ante duty of diligence), and of the courts of some Member States, including Italy.
The campaign against the proposal has been massive. The European Parliament is consequently very divided and the outcome of tomorrow’s vote rather uncertain.