01 May 2019

European Copyright Law reform begins for user-generated content

This article was prepared by Cate Nagy, Luke Hawthorne and Jessica Horn.

After a lengthy process of negotiations between the three branches of the European government, the Directive on Copyright in the Digital Single Market (the Copyright Directive) became part of European law on 15 April 2019.

The Copyright Directive has been the subject of fierce debate between governments, corporations, academics, legal practitioners, community groups and independent rights-holders. The controversy revolved primarily around the draft ‘Article 13’ (titled Article 17 in the final text), which requires platforms to filter users’ uploaded content for copyright material.

Article 17 will require companies who host user-generated content and have a European presence or customer base to take responsibility over unlicensed user-uploaded copyrighted material.

Article 17

Supporters of Article 17 praise it as an important mechanism to protect the rights of artists and creators from exploitation and misuse in the digital sphere. Critics argue it will censor creators, limit freedom of expression and increase surveillance within EU Member States. Moreover, they argue, the technological burden of implementing such a system, and the issues of automating subjective decisions, make the Article near impossible to implement.

The final text of Article 17 is summarised here, and available online here:

  • Article 17(1) requires online content sharing service providers to obtain authorisation from rights-holders if the provider wants to communicate material or make it available to the public.

  • Article 17(2) says that the authorisation granted to the service provider extends to people using that service, provided they are not acting commercially or generating significant revenue from the usage.

  • Article 17(3) ensures that a particular limitation of liability (Article 14(1) of Directive 2000/31/EC) does not apply to service providers in relation to Article 17.

  • Article 17(4) makes online content sharing service providers liable if copyright protected works are shared without authorisation. Liability will not be incurred if the service provider can meet the standards set out in of Article (4)(a), (b) or (c). The standards include best efforts to obtain authorisation, best efforts to ensure specific works are unavailable, acting expeditiously to remove infringing material once notified, and acting to prevent future uploads of that material.

  • Article 17(5) sets out the factors to be taken into account to determine whether the standards in Article 17(4) have been met. The factors include the type of material, the audience, the size of the service, the number and type of uploaded works, and the availability and cost of means to meet the standards.
  • Article 17(6) determines to whom Article 17 will apply.  Lighter obligations apply to service providers who have been providing services for less than three years, and who have an annual turnover of less than €10 million. These providers only have to comply with the best efforts to gain authorisation provision (Article 4(a)) and a modified ‘acting expeditiously’ provision.  However, if these service providers have more than 5 million visitors per month on average, then they incur an extra obligation to make best efforts to prevent further uploads of notified works.

  • Article 17(7) sets out the exceptions for quotation, criticism, review, caricature, parody or pastiche. It puts the onus on Member States, not service providers, to ensure that users can rely on these exceptions.

  • Article 17(8) stipulates that Article 17 ‘shall not lead to any general monitoring obligation’. However, online service providers will need to provide rights-holders with information about the service provider’s practices if a rights-holder asks for it. If there is a licensing agreement between the service provider and the rights-holder, then the obligation extends to information regarding the use of content licensed under that agreement.

  • Article 17(9) attempts to set up complaint and redress mechanisms.
    • When rights-holders request the removal of content they must provide reasons;
    • Service providers must process requests for removal without undue delay;
    • Humans must review decisions to remove content or disable access to it;
    • Out of Court redress mechanisms must be available to deal with disputes, but rights-holders shouldn’t be prevented from accessing a court.
  • Article 17(10) requires the Commission and Member States to organise stakeholder dialogues about the application of Article 17, in particular with regard to how Article 17(4) will work in practice.

Does this address critics’ concerns?

The final text of Article 17 shows that the three branches of European government tried to allay the concerns raised in the debate surrounding the article. The final text, however, only partially allays the key concerns of both service providers and rights holders.

  • First, Article 17(6) attempts to alleviate the disproportionate burden on small enterprises by providing that online service providers that meet certain conditions will have lighter compliance requirements. At first glance, the effect of this provision is to focus the force of Article 17 onto medium and large enterprises. However, small enterprises will still have how show they have ‘made best efforts to obtain an authorization’ from rights holders.

  • Secondly, the final text of Article 17 places the power in the hands of the rights holder. The ‘best efforts’ standard in Article 17(4)(a) relates to works ‘for which the right holders… have provided the relevant and necessary information.’ The ‘acting expeditiously’ standard in Article 17(4)(c) comes into play when the service provider receives a ‘sufficiently substantiated notice by the right holders’. Putting onus on the creator addresses concerns about the inability of rights-holders to bring infringing works to the notice of service providers. However, it does place a burden on rights-holders to be aware of the scope of their intellectual property portfolio, and their rights in relation to it. 

  • Thirdly, Article 17(8) increases transparency. It is now incumbent on online service providers to provide general information about their practices, and more specific information if there is a licensing agreement in place. Article 17(8) doesn’t set a standard of detail about their practices that services providers have to provide; this will be developed by Member States over the coming two years.  

  • Fourthly, Article 17(9) requires human review of any automated take-down system. All decisions to remove content will have to be confirmed by a human. This goes some way to mitigating concerns that an automated system cannot understand subjective nature of use. However, human review introduces practical difficulties for the service providers, and will likely reduce the speed and increase the cost of any review system.  

  • Lastly, Article 17(9) also tries to minimise the risk that individuals will rely on litigation to resolve disputes regarding the upload or takedown of material by services providers. As both layers and clients know, litigation can be costly and time consuming. The approved Article 17(9) tackles this issue by requiring Member States to make out of court redress mechanisms available. There is no requirement, however, to set up any specialist body, and realistically, most Member States of the European Union already have generalist out of court redress mechanisms available (for example, mediation, conciliation, arbitration). The introduction of Article 17(9) will probably have little effect: it doesn’t add to the existing systems, adapt them to copyright disputes, or increase the incentives for rights-holders to resolve their disputes out of court.

The final text of Article 17 does not fully remedy the few issues it was intended to address. Moreover, the changes rely heavily on vague language, throwing into sharp relief the issue of ambiguity. The new sections rely on language like ‘best practices’, ‘high industry standard’, ‘professional diligence’, ‘acting expeditiously’ and ‘sufficiently substantiated’. Unless this ambiguous language is clarified in the national legislation implementing the Directive in the Member States, the consequence will be legal uncertainty for both service providers and rights holders.

What next?

The Copyright Directive has entered European Law, and EU Member States have two years to implement the directive in their national legislation.

There will be stakeholder dialogues organised by the European Commission and Member States, but dates have not yet been set. Moving forward, rights-holders must ensure they have a clear understanding of their intellectual property portfolio and their rights.

Service providers, including Australian companies, who host user-generated content and have a European presence or customer base must now begin to consider how to best mitigate their own exposure, and whether they will need to implement the technologies to comply with Article 17.


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