Implementing articles 14 and 17 of the Copyright Directive: Opinions of the European Copyright Society

The European Copyright Society (ECS), a group of prominent European scholars, has published two opinions on the implementation of the Directive on Copyright in the Digital Single Market into national law: the Opinion on Implementation of Article 14 and the Opinion Addressing Selected Aspects of Implementing Article 17.

Member States have till 7 June 2021 to transpose the Copyright Directive into their national laws. Article 17 is among the most controversial and most complex provisions of the Copyright Directive. To date, none of the Member States implemented this provision. You can check the current state of the Copyright Directive implementation on the CREATe’s resource page available here, and read our previous blog post on the transposition of article 15 here.

In its opinion, the ECS calls article 14 “a remarkable provision which, for the first time in the EU, grants a positive status to works belonging to the public domain, by prohibiting any regaining of exclusivity therein”. The opinion considers objects covered by article 14 (works of visual art), rights which the provision cuts back on (with emphasis on related rights), non-original reproductions (reproducing the original faithfully), as well as the temporal dimension of the provision. Several CREATe academics and fellows signed the Opinion.

The core aspects of article 17 discussed in the ECS’ opinion include: the definition of the online content-sharing service providers (OCSSPs); licensing and moderation duties of the OCSSPs; copyright limitations supporting the transformative and user-generated content; configuration of complaint and redress mechanism; the possibility of implementing direct remuneration claims for authors and performers; and the private international law aspect of applicable law.

The full text of both opinions is available here on the European Copyright Society’s website.

The opinion on article 17 CDSM Directive, makes a number of recommendations for the transposition of the provision into national laws. Key points of the opinion include:

On definition of the OCSSPs:

Member States implementing Article 2(6) and 17 DSMD should make clear in their legislation or in the official memorandum that online sharing services that do not organize and promote the materials uploaded by their users are not held liable for copyright infringement in accordance with Article 17(1), (4) DSMD. There are numerous simple sharing services which offer users the mere function of uploading materials for the download of specific other users, without any focus on pirated content, search function, structured streams of suitable contents etc. For those simple upload and sharing services, the DSM Directive does not require any of the proactive duties of care as now stated in Article 17 DSMD. Since the level of control and advantages taken from the uploaded contents are much less intensive for those services than for OCSSPs, Member States should continue to apply the general rules for secondary liability combined with a notice-and-take-down approach. In this regard, the safe harbour rules for hosting services as laid down in Article 14 E-Commerce Directive, the ban of general monitoring obligations in Article 15 E-Commerce Directive and the fundamental freedoms of OCSSPs must be respected without restrictions of any kind. The CJEU will have an opportunity to develop a tailormade regime for those services in the currently pending case Elsevier/Cyando.6 Timely publication of legislative drafts of Member States which propose rules along these lines for the future regime of simple sharing services could also be helpful for the CJEU.

On the necessary efforts of the OCSSPs to obtain a license from the right holder to avoid liability pursuant to articles 17(1) and 17(4)(a) of the CDSM Directive:

To sum up, the cascade of licensing duties under Article 17(1) and 17(4)(a) should be analysed according to the following scheme:
1) Article 17(1): license agreement concluded, no further best efforts required
Article 17(4)(a); […]
2) Article 17(4)(a): no license agreement concluded, obvious protected materials and publicly known rightholders → best efforts: OCSSP must actively contact these known rightholders and offer serious negotiations on licensing terms;
3) Article 17(4)(a): no license agreement concluded, non-obvious protected materials or rightholders → best efforts: OCSSP can remain passive until rightholders (including CMOs) give notice but must react immediately after receiving such notice.

On the required use of filtering technology or other efforts to ensure unavailability of not licensed works:

Based on the final wording of Article 17(4)(b), member states will be well advised to implement a technology-neutral provision which may include filtering technologies as long as they represent the best efforts and high industry standard of professional diligence, but which also allows courts to oblige OCSSPs to use different technical (or other) means once they are available on the market. As the technological development stands today, it would be incompatible with Article 17(4)(b) to ban filtering technologies. Vice versa, member states should also abstain from designating filtering technologies as the only possible way to comply with Article 17(4)(b).

On Members States’ discretion in implementing article 17:

Given the fact that the DSM Directive is a full harmonisation instrument, every specification of the rights and duties of the parties under Article 17(1) and (4) by the legislator is at risk of being overruled by the CJEU. Most of the terms of the Directive are subject to an autonomous interpretation by the CJEU. Member States should therefore consider carefully whether they should deviate or specify the provisions on the national level or whether they should choose a language similar to the DSM Directive and give further explanation, such as guidance on underlying objectives and interpretative preferences, in an official explanatory memorandum or other legislative materials. Even a full harmonisation instrument leaves some room for manoeuvre for Member States which should be used for a fertile regulatory competition among different approaches, be it codified in the legislative measures of Member States or in explanatory memoranda or case law.

On the use privileges envisaged in article 17(7) CDSM Direcive and their impact on freedom of expression:

In implementing Article 17(7) DSMD, Member States can benefit from guidance which the CJEU has already provided with regard to concepts of “quotation” and “parody.” In Painer, the CJEU underlined the need for an interpretation of the quotation right following from Article 5(3)(d) ISD that enables its effectiveness and safeguards its purpose. The Court clarified that Article 5(3)(d) ISD was “intended to strike a fair balance between the right of freedom of expression of users of a work or other protected subject-matter and the reproduction right conferred on authors.”

The CJEU’s line of reasoning stemming from quotation and parody cases sheds light on a common denominator of the copyright limitations listed in Article 17(7): these user rights strike a balance between copyright protection and freedom of expression. This rationale is particularly relevant to transformative UGC. As long as UGC is the result of creative efforts that add value to underlying source material, user-generated remixes and mash-ups of third party content can be qualified as a specific form of transformative use falling under Article 11 CFR and Article 10 ECHR.

On the possibility of introducing a broader pastiche limitation covering the wide spectrum of user-generated content (UGC) in the context of article 17(7) CDSM Directive implementation:

Until now, EU Member States have not made effective use of this opinion to regulate UGC. Implementing Article 17(7), they could take a fresh look at the concept of “pastiche” and clarify that the exemption of pastiches is intended to offer room for UGC. In this clarification process, Member States have several opinions depending on the scope of the UGC exemption which they consider appropriate:

– with regard to UGC that constitutes a “genuine” mix of styles and materials in the sense of an artistic “pastiche” that sufficiently plays with all underlying source materials, a mere clarification may suffice that the exemption of “pastiche” is intended to offer breathing space for UGC. This focus on “genuine” pastiche cases, however, may fail to cover widespread forms of UGC, such as funny animal videos with unmodified, copyrighted music in the background. As the music is not part of a transformative mix with other forms or styles of music, this limited version of a pastiche exemption may require a license and related measures under Article 17(1) and (4) DSMD. The animal video as such, however, testifies the creative efforts of the uploading user. Against this background, the regulation of this creative form of UGC on the basis of Article 17(1) and (4) DSMD may appear too harsh in the light of the described need to reconcile copyright protection with freedom of expression and information – in this case, the freedom of expression of amateur creators;

– alternatively, the concept of “pastiche” could be broadened to encompass not only uncontroversial pastiche scenarios with a “genuine” mix of styles and materials but also “not-genuine” forms of mixing pre-existing content, such as the combination of a self-created animal video with protected third-party music. As, in this scenario with a “non-genuine” form of pastiche, the music is simply added, but not mingled with other materials, it seems worth considering to introduce – with regard to this extension of the scope of the “pastiche” concept – an obligation for OCSSPs to pay equitable remuneration. In this alternative scenario, the remuneration would thus not follow from licensing deals under Article 17(1) and (4) DSMD. Instead, the remuneration would follow from statutory remuneration rules that are administered by CMOs and lead to the distribution of remuneration payments in accordance with applicable repartitioning schemes.

On the payment of equitable remuneration in case of introduction of a broader pastiche limitation covering “non-genuine” forms of pastiche:

A remunerated UGC privilege would have the advantage of creating a continuous revenue stream for authors and performers. While licensing and filtering agreements between copyright owners and OCSSPs may predominantly benefit the content industry (as to the option of introducing direct remuneration claims of authors and performers, see section 5 below), the repartitioning scheme of collecting societies receiving UGC levy payments could ensure that authors and performers obtain a substantial part of the UGC remuneration, even if they have transferred their copyright and neighbouring rights to exploiters of their works and performances.

On adopting the reverse filtering logic, involving filtering systems looking for creative user input that may justify the upload, instead of focusing on traces of protected third-party content that may render user uploads impermissible:

The exemption of quotations, parodies and pastiches paves the way for a markedly different approach to the assessment of content. Instead of focusing on traces of protected third-party content in UGC (and starting points for blocking content), it becomes critical to establish whether the user has added sufficient own creativity to arrive at a permissible form of UGC.

On complaint and redress mechanism envisaged in article 17(9) CDSM Directive:

Against this background, it is advisable to make the submission of a complaint against content filtering as simple as possible. If users must fill in a complicated form and add lengthy explanations to substantiate their request, Article 17(9) will remain a dead letter. To avoid this loss of an important safeguard against excessive algorithmic enforcement, the blocking of UGC should automatically lead to the opening of a dialogue box with a menu of standardized complaint options, such as “The content blocking is unjustified because my upload is a permissible pastiche,” “…my upload is a permissible parody,” “…is a permissible quotation” etc. The user should then be able to launch the complaint by simply clicking the box with the applicable argument supporting the review request.

If these checks and balances are in place, however, the contested UGC should become available on the OCSSP platform. Otherwise, the potentially lengthy procedure for clarifying the status of the UGC at issue may frustrate the goal to safeguard freedom of expression and information which, as explained above, underlies the user rights of Article 17(7) DSMD.

On direct remuneration claims of authors and performers:

Members States should consider implementing direct remuneration claims for authors and performing artists which guarantee that the creative persons receive a fair share of the expected additional revenues obtained by rightholders under Article 17 DSMD. The Directive does not foresee such claims but tries to strengthen the position of authors and performers by contractual means under Article 18-23 DSMD. However, experiences with existing national legislation in this area show that it is doubtful whether these contractual means will suffice to redirect the revenue streams at least partly to the creative workers.

On the point of private international law:

Questions of private international law are not covered by the DSMD, which leaves some room for manoeuvre for EU member states. However, Article 8 Rome II Regulation must be taken into account. If one follows the approach suggested here, the law applicable to ubiquitous infringement of OCSSPs is arguably not dealt with in Article 8 Rome II Regulation. Therefore, member states may determine the law of the closest connection as being applicable instead of multiple laws under a territorial approach. At least for the procedural safeguards of Article 17(9), it should remain possible for member states to apply only one law. Whether the legislature or the courts apply such an approach, it will finally be up to the CJEU to decide whether this solution is compatible with the Rome II Regulation.

The opinion on article 17 CDSM Directive was drafted by Prof. Axel Metzger (Humboldt-Universität Berlin) and Prof. Martin Senftleben (IViR, University of Amsterdam).

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