ARTICLE

To print this article, all you need is to be registered or login on Mondaq.com.

The text for the much anticipated Article 13 of the European Copyright Directive (the "Directive") has finally been agreed upon as of 13 February. Last year the European Parliament voted through the initial draft version of the new Directive, complete with the controversial Article 13 provision which aims to make user-upload services legally responsibility for copyright infringement on their platforms. Now widely referred to as the "meme ban", Article 13 would mean sites such as Vimeo, Instagram, Facebook, Twitter and Soundcloud (sites which host user-generated content) will become liable for the copyrighted material they host. For many online content sharing service providers ("Online Platforms"), this is the vast majority of their content.

Providers of cloud services for individual use which do not provide direct access to the public, open source software developing platforms and online market places whose main activity is online retail of physical goods, need not necessarily worry as they should not be considered Online Platforms within the meaning of the Directive. As a result of Article 13, Online Platforms would have to actively police their sites, rather than relying on rights holders noticing infringements and using the notice and take-down systems that are currently in place.

The current position

The previously scheduled trilogue negotiation meetings of 18 January, where the final wording of the Directive was to be confirmed, were cancelled due to member states' disagreement on the final wording – in large, as a result of France and Germany's inability to agree to such. However since then, following the subsequent Franco-German compromise which came to light through a leak by Poltico, European negotiators have reached an agreement on the final text of the Directive. The agreed compromise means that Article 13 will now apply to every Online Platform (being defined as "a provider of an information society service whose main or one of the main purposes is to store and give the public access to a large amount of works or other subject-matter uploaded by its users which it organizes and promotes for profit-making purposes") website unless it meets all of the following three conditions:

A start-up that has been active for less than three years; An annual turnover below €10 million; and A website with less than 5 million monthly unique visitors.

This together with the additional requirement that such Online Platforms need to illustrate they have undertaken "best efforts" to obtain licenses from rights holders (e.g. record labels, book publishers and stock photo databases) for anything its users might upload, means that upload filters will now have to be applied to every website which fails to meet the narrow exclusions stated above.

In effect, the Commission's strict proposal for mandatory employment of automatic upload filters will ultimately result in all Online Platforms having to accept whatever licence a rights holder offers to them in order to avoid any conflict with Article 13.

Licensing

Online Platforms will be required to conclude fair and appropriate licensing agreements with rights holders. Such licenses will need to cover the liability for works uploaded by the users of such Online Platforms in line with the terms and conditions set out in the licensing agreement, provided that such users do not act for commercial purposes.

However, where rights holders do not wish to conclude licensing agreements, member states will need to ensure that Online Platforms and right holders cooperate in good faith in order to ensure that unauthorised protected works or other subject matter are not available on their services. Cooperation between Online Platforms and rights holders should not however, lead to preventing the availability of non-infringing works or other protected subject matter, including those covered by an exception or limitation to copyright. Article 13 has been dubbed the "meme ban" for the simple reason that no one is entirely sure whether memes, which are often based on copyrighted images, will fall foul of the Directive. Supporters of the Directive argue that memes are protected as parodies and so won't need to be removed, while others argue that upload filters won't be able to distinguish between memes and other copyrighted material so they'd end up being caught in the crossfire in any case. In either instance, there appears to be a general consensus that the Directive does not catch legitimate use of content, such as permitted quotations or parodies.

Furthermore, in accordance with Directive 95/46/EC, Directive 2002/58/EC and the GDPR, such cooperation should not lead to the identification of any individual users nor allow for the unlawful processing of their personal data, and this may lead to further practical issues implementing the Directive.

Disputes

In parallel with the above, member states will also have to ensure that users have access to an independent body for the resolution of disputes as well as to a court or another relevant judicial authority to rule on the use of an exceptions or limitations to the copyright rules.

Members states will need to ensure that Online Platforms put in place effective and efficient complaints and redress mechanisms that are available to users in case the abovementioned cooperation leads to unjustified removals of their content. Any complaint filed under such mechanisms would need to be processed without undue delay and be subject to review. It is important to note that right holders will have to reasonably justify their decisions to avoid arbitrary dismissal of complaints.

So who does this affect most?

Video-sharing Online Platforms ("VSOPs")

Unsurprisingly, some of the leading consumer-facing lobbyists on the matter of Article 13 have been VSOPs. They have been warning their European users of the possibility of unintended consequences that Article 13 could have on their freedom to enjoy their platforms, with some stating that although they support the goals of Article 13, the version written by the European Parliament could have large unintended and far reaching consequences that would change the internet as we know it.

For creators and artists that build careers out of publishing remixed or transformative works on VSOPs, the Directive could prove to be a stranglehold on content created by them. Gaming vloggers, for example, could become much harder to find (or at least would have to post content without game visuals/audio) if VSOPs feel forced to restrict showing copyrighted material to avoid paying the respective rights holders. Gaming vloggers could perhaps argue their content is exempt from Article 13 as they have included their own review, criticism and commentary; however, such defences have been largely untested in the courts within this context.

One of the current methods of monitoring copyright infringement utilised by some VSOPs, puts the onus of responsibility on rights holders; for example, where the VSOP becomes aware of a copyright issue, it sends a takedown request to the user. Creators then have the opportunity to present a counter-argument and, if the video in question is determined transformative enough, the video is re-uploaded. This often happens with memes, gaming videos, reaction videos as well as many other video genres that appear on VSOPs.

Current tools utilised by some VSOPs include systems which identify content uploaded by users that uses copyrighted work, and finds re-uploaded versions of content on other channels. In 2016, these kinds of systems have reportedly identified enough misuse to pay out more than $2 billion to copyright holders. Although undoubtedly these tools do an effective job of identifying videos infringement on copyright, there is much more at stake for VSOPs. If the Directive passes, VSOPs would be liable for every copyright issue that pops up on their platforms. Users upload more than 450 hours of video every minute on some VSOPs, and many of those videos contain copyrighted material.

Sports and Movie Trade organisations

Furthering the feeling of disunity around Article 13 is the fact that some movie and sports trade organisations are calling for the current version of Article 13 to be omitted from the Europe Copyright Directive; or, at least, only applied to the music sector where many feel the value gap is most apparent. This so-called 'value gap' is a term used to express the imbalance between the average amount paid by VSOPs to rights holders per-stream and the amount that VSOPs retain – which the music industry says is much smaller than the pay-outs per stream from platforms such as Spotify or Apple Music.

A group including the Premier League and the Motion Picture Association wrote an open letter in December of last year, stating they were "extremely concerned about the direction of ongoing trilogue discussions on Article 13 [...] of the proposed Directive on Copyright in the Digital Single Market".

It claimed that "the proposal would further muddy the waters of jurisprudence in this area in light of the German Federal Court of Justice (Bundesgerichtshof) referral to the CJEU in a case involving YouTube/Google and certain rightholders, addressing this very issue".

They further suggested that the current proposals "wrongfully undermine current law and weaken right holders' exclusive rights by, among others: creating a new liability privilege for certain platforms that have taken specific steps to avoid the availability of infringing copyright content on their services (but have failed to do so effectively), and conditioning protection of copyright online on right holders bearing the full burden of identifying and notifying copyright infringing content to platforms. These would constitute gifts to already powerful platforms, and would de facto constitute the only real change to the current status quo in legal terms, thus improving the position of platforms, but not of right holders."

They concluded by urging the Commission "to disapply the entire value gap provision to our respective sectors. This could simply be achieved by making Article 13 specific to musical works and phonograms".

However since then, some of the signatories (such as the Premier League and La Liga) have slightly changed their approach by banding together with bodies from the European music industry in an attempt to influence European Negotiators.

The music industry

Although the general reaction to Article 13 from the music industry has been a positive one, there have been some voices from within the industry that see some serious problems for artists should Article 13 come into force. The rift within the industry became apparent following an open letter dated 7 February and signed by a group of organisations representing European creatives and rights holders in the music, audio-visual, broadcasting and sports industries.

The letter states "As rights holders we are not able to support it or the impact it will have on the European creative sector [...]

Far from levelling the playing field, the proposed approach would cause serious harm by not only failing to meet its objectives, but actually risking leaving European producers, distributors and creators worse off.

Regrettably, under these conditions we would rather have no Directive at all than a bad Directive. We therefore call on negotiators to not proceed on the basis of the latest proposals from the Council"

Among the signatories are music business organisations including the IFPI, which represents the global recorded music industry, the ICMP and independent music trade body IMPALA.

Pascal Nègre, former CEO of Universal Music France, has expressed the view that the passing of Article 13 would be detrimental to artists as "user-generated content platforms like YouTube, Vimeo, and Soundcloud have lowered barriers for musicians to share their works, connect with fans, and be discovered [...] to become a renowned-star, an artist begins as an enlightened amateur, uploading his work to assess the audience's reactions and start building a fan community."

This opinion is somewhat supported within the music industry in so far that artists continue to have the ability to block content or leave it up – essentially supporting the current reactionary option offered by Online Platforms such as VSOPs, as opposed to the proposed pre-emptive one of the Directive. However, many within the industry still support the legislation, such as the five music-maker bodies within the UK who issued an open letter of their own the next day (8 February) calling on negotiators to proceed with the Directive negotiations as a solution to issues such as the value gap and protection of artists' rights.

What about Brexit?

The next few months will see the EU Council pass the Directive into law - potentially before Brexit. The Directive is intended to act on copyright in the digital single market; so therefore, any impact on the UK would depend upon its relationship with the EU. With Brexit looming and the upcoming EP elections in May 2019 when the text would be adopted, if the UK leaves the EU with a deal and the Directive becomes law, it would apply to the UK during any transition period; however, any no-deal outcome would mean that any EU law which has not yet been adopted will fall away and will not be incorporated into the UK legal system.

Irrespective of the above, it's important to note that the Directive isn't solely a European issue. Anything that concerns the daily ongoings and future innovations of the internet is not a localised issue. This is inevitably a global issue; to fail to acknowledge that fact is to not appreciate one of the internet's very core foundations.

Summary

What repercussions will occur is still anybody's guess. The introduction of filters could very possibly lead to Online Platforms geoblocking Europe altogether - as shown after the introduction of the GDPR. In the words of Tim Berners-Lee, this would accelerate the balkanisation of the web, as the regulatory landscapes of different geographical locations begin to drift away from one another.

Speculatively speaking, is it possible that the UK could, by escaping the reach of Article 13 in exiting the EU before the Directive's implementation, become a safe-haven within Europe for Online Platforms who find the Directive's impositions too draconian? Online Platforms could perhaps circumvent the need to block their content to the millions of reported users of their services within the UK, under such circumstances.

Article 13 continues to be a highly contentious provision. We will most likely see the impositions of such apply to Online Platforms such as Vimeo and Facebook, however we will have to wait and see what this will practically mean in terms of consequences for both the Online Platforms as well as the artists whose work the Directive seeks to protect.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.