Back in April 2019, at the occasion of the final vote on the DSM Directive in the Council, the German Federal Government issued a statement, announcing that it intended to implement Article 17 with a focus on “preventing ‘upload filters’ wherever possible, ensuring freedom of expression and safeguarding user rights”. While the German Government has yet to produce an implementation proposal for Article 17, we may now have gotten a first insight in what such an implementation might look like. Late last month, the Kölner Forschungsstelle für Medienrecht at the University of Applied Sciences in Cologne, published a step-by-step concept for implementing Article 17 of the DSM Directive (“Stufenkonzept gegen Overblocking durch Uploadfilter“).

The paper authored by Prof. Dr. Rolf Schwartmann and Prof. Dr. Christian-Henner Hentsch consists of an implementation proposal in the form of concrete legislative language. The objective of the authors seems to be to stay as close as possible to the objectives formulated in the German statement to the Council. What makes this proposal remarkable is that it is the first proposal (although not an official one) for implementing the Article 17 of the new Copyright Directive that does not consist of more or less literal transposition of Article 17 into national law (as it is the case in the French, Dutch and Belgian legislative proposals). In order to achieve the stated objective of preventing over-blocking by upload filters, the concept proposes a combination of Article 17 with Article 12 of the DSM Directive (which provides Member States the option to introduce Extended Collective Licenses).

The implementation proposal contains modifications of three different acts: the Copyright Act (Urheberrechtsgesetz – UrhG), the Tele Media Act (Telemediengesetz – TMG) and the Collective Management Organisations Act (Verwertungsgesellschaftengesetz – VGG). Specifically the authors propose the following modifications:

In the Copyright Act, they propose to add a new section to the article (§ 19a UrhG) that defines the act of communication to the public. The purpose of this addition is to include acts of giving the public access to copyright-protected user uploaded works by Online Content Service Providers (OCSSPs) in the definition of the existing making available to the public right. This establishes that, in principle, OCSSPs need authorisation from rightholders for such acts. The added section also includes the definition of OCSSPs, which is a literal transposition of the definition used in the DSM directive.

The second addition to the Copyright Act is a new exception covering uses for the purpose of caricature, parody or pastiche by users of OCSSPs (§ 51a UrhG). Notably, this exception only applies in the context of sharing works via OCSSPs (which is highly unusual as copyright exceptions are usually not limited to specific services) and is conditional on remuneration to rightholders via collective management organisations.

The changes to the liability regime for OCSSPs are implemented via the addition of a new article (§ 10a TMG) to the Tele Media Act, which is the German Law that implements the general liability rules from the E-commerce Directive. The new article is a relatively straightforward transposition of the provisions contained in paragraphs (4) to (9) of the CDSM Directive, albeit with a number of important additions that significantly strengthen the position of uploaders.

Firstly, the authors propose to add a provision (§ 10a (3) TMG) that would establish that the measures to prevent the availability of works are only proportionate if they only block evidently infringing uploads.

Secondly, the authors propose to require platforms to establish procedures for identifying trusted uploaders whose uploads cannot be blocked automatically (in § 10a (7) TMG). And finally § 10a (6) explicitly requires OCSSP not to block or remove lawful uses of protected works. It also grants uploaders whose uploads have been wrongfully blocked the ability to file injunctions and claim damages from OCSSPs.

The final part of the proposal contains additions to the law governing the functioning of Collective Management Organisations (CMOs). These additions are based on Article 12 of the DSM Directive that gives Member States the ability to introduce so called Extended Collective Licensing arrangements in their domestic laws. The authors add a new article §49a to the Collecting Societies Act (VGG):

According to §49a (1), CMOs that grant licenses to OCSSPs covering the rights established in § 19a UrhG (2) are presumed to represent the rights of all rightholders from the same category of works. This would enable CMOs to issue licenses for the use of works by non-members and as a result would greatly increase the legal certainty that such licenses provide for OCSSPs. However the proposal stays silent on the fact that Article 12 of the DSM Directive only allows licensing covering domestic uses, which substantially limits the value of such licenses for platforms that also operate outside of Germany.

Strong user rights protections

Taken together these legislative implementations seem to be designed to create maximum legal certainty for users of OCSSPs. A broad parody and pastiche exception combined with a requirement for platforms not to block/remove uploads unless they are evidently infringing and the ability for users to issue injunctions and claim damages in the case of unjustified blocks/removals provide strong safeguards against over-blocking by automated filtering systems. Most of the burden for this would fall on the platform providers who will face legal exposure to both users (in the case of over-blocking) and rightholders (for not blocking enough).

In this context it is worth noting that in their focus on preventing overblocking the authors have missed one of the biggest opportunities to limit the harm that Article 17 will cause for smaller platforms. The proposed literal transposition of the definition of OCSSPs ignores Recital 62 of the directive that makes it clear that the measures introduced in Article 17 “should target only online services that play an important role on the online content market by competing with other online content services, such as online audio and video streaming services”. As we have argued before a more targeted definition of OCSSPs based on this recital would go a long way of limiting unnecessary legal risk for small European platforms.

A key element of the proposal is the distinction between “clear infringements” on the one hand (which OCSSPs must prevent via the use of automated tools) and all other uses of protected content (which OCSSPs are not allowed to block automatically). This distinction is very similar to our own proposal that relies on a distinction between “prima-facie” infringements (which can be automatically blocked) and other uses (for which users must be given the ability to override a blocking decision, by declaring lawful use).

In this context it is interesting to see how the authors of the Stufenkonzept define “clear infringements”. For this, they rely on jurisprudence by the German Federal Court of Justice that established that for an infringement to be “clear” it must be possible to determine the infringement without difficulty – i.e. without a detailed legal and factual examination and that no justified doubts must remain. Given the inability of filtering systems to take the context of a use into account, and given the predominance of fraudulent ownership claims this would be a very high bar for any automated filtering system to clear.

The problems are in the details

The general approach outlined in the Stufenkonzept is a very welcome addition to the discussion. It shows that implementations of Article 17 do not need to be limited to more or less literal transpositions of the text of the directive and that there are legislative affordances to meaningfully protect user rights while maintaining a balance between users rights and the interests of creators and other rightholders.

However, this does not mean that the proposal is without its flaws. Most of these flaws are specific to the German legal context but are also interesting with an eye to implementations elsewhere. While the addition of a broad exception covering parody, satire and pastiches will go a long way to protect creative expression, the fact that the exception only applies in the context of sharing works via OCSSPs is highly problematic. Given that Germany does not have an existing exception allowing such uses more broadly (traditionally such uses were considered to fall under the “free use” (“freie benutzung”) provision that was stuck down by the CJEU in its Metall auf Metall ruling last summer), the only way to lawfully share remixes, memes and other forms of so called User Generated Content would be to share them via commercial platforms. Sharing such works on private websites or non-commercial platforms would constitute copyright infringement. Unless the authors of the stufenconcept intend to further entrench the position of commercial OCSSPs they should modify their proposal so that the new exception covers all ways of sharing content. This point applies equally to all other member states that do not have existing parody, satire and pastiche exceptions. Such exceptions need to cover such uses in all relevant contexts.

In addition, the fact that the proposed exception would be remunerated is problematic. Existing exceptions for uses of protected works in the context of parody and satire are not remunerated and it is clear neither parodies or satires should be remunerated. When it comes to pastiches, remuneration does make sense when the concept of pastiche is interpreted broadly enough to enable forms of reuse that are less creative/transformative (e.g. music in the background of a random domestic video) and that are commonly shared via online platforms (as it seems to be the intention of the authors of the Stufenkonzept).

Compared to relying on voluntary licenses and filtering, a remunerated exception has the added benefit that it could create a direct revenue stream for authors and performers (as opposed to licensing revenue going to intermediaries like labels, studios and publishers).

This means that the proposal would need to be modified in such a way that parodies and satire must stay unremunerated and that only pastiches that do not qualify as quotation, parody or satire are remunerated. In a paper published in February, Prof Martin Senftleben (Institute for Information Law, University of Amsterdam) outlines such an approach. He proposes relying on a broad remunerated pastiche exception (in addition to unremunerated exceptions covering quotations, parody and satire) to enable transformative uses that don’t qualify as parody and quotation cases:

Existing EU copyright law, thus, already contains a concept that can serve as a basis for the introduction of a new copyright limitation for UGC that goes beyond the traditional right of quotation and the traditional exemption of parody.[…] EU Member States should take a fresh look at the concept of “pastiche” when implementing the DSM Directive. They should seize the opportunity to supplement their national portfolio of copyright limitations with a pastiche exemption and clarify that this use privilege is intended to cover UGC.

From our perspective the combination of a broad remunerated UGC exception based on the concept of pastiche combined with unremunerated exceptions enabling uses for the purposes of quotation, parody and satire (and incidental inclusion) would go a long way to providing legal protection for transformative uses of copyrighted works. If implemented uniformly in all EU member states such an approach would result in a significant improvement of users rights when compared to the current situation.

The final shortcoming of the Stufenkonzept lies in the idea to require platforms to designate some users as “trusted uploaders” and to treat their uploads differently. While the general principle that uploaders should be trusted, this must apply to all uploaders. As we stress in our own proposal, all uploaders must be given the ability to exercise their rights and overrule automated filtering of their uploads. The ability to exercise one’s right cannot be made conditional on the status awarded by a platform operator as they would be incentivised to assign such a status based on their commercial interests.

An important contribution to the discussion

In spite of these shortcomings, which can easily be fixed, the Stufenkonzept remains an important contribution to the discussion about the implementation of Article 17 in the Member States. It illustrates a path forward to implement Article 17 in such a way that would preserve online platforms as vibrant spaces for creative expression where user rights are protected, while opening up new revenue streams for authors, performers and other creatives. The combination of a broad set of exceptions, broad licenses that provide legal certainty for platforms and strong limits on the use of automated filtering technologies and a meaningful redress mechanism for users whose content has been wrongfully blocked.