The EU Copyright Directive Changes the Rules for the Exploitation of Copyrighted Works by Internet Service Providers

April 19, 2019 - The Directive on Copyright in the Digital Single Market (the « Directive ») approved on April 15, 2019, by the EU Council, creates a new and substantially modified framework for the online exploitation of copyrighted works. 

The Directive aims to have a deep and far-ranging impact on the actors involved in the online exploitation of copyrighted works. At the forefront, the intent is to redistribute revenue generated by the online exploitation of works from the large online content sharing service providers (“OCSSPs”) to right holders, including content producers, authors and performers. A further economic purpose is to facilitate the negotiation of collective rights management agreements in order to improve the bargaining position of right holders and make it easier for text and data mining businesses, research organizations, and cultural heritage institutions to be copyright-compliant.

A new category of Internet service provider and new obligations

The Directive defines an OCSSP as a “provider of an information society service of which the main or one of the main purposes is to store and give the public access to a large amount of copyright-protected works or other protected subject matter uploaded by its users, which it organizes and promotes for profit-making purposes”.  Online marketplaces are expressly excluded from the definition of OCSSPs.

The recognition of OCSSPs as a special category of Internet Service Providers (ISPs) is arguably a significant development in EU copyright law. By requiring OCSSPs to obtain licenses for the online exploitation of copyrighted works posted by users and by substantially restricting large OCSSPs’ ability to benefit from the general limitation of liability for ISPs, the Directive aims to lead to a redistribution of revenue generated by the online exploitation of copyrighted works.  It could however also lead to an excessive reduction of user-generated content beyond what copyright protection requires.

 - Use of copyrighted content (Article 17 of the Directive)

Large OCSSPs will be required to obtain licenses from right holders covering copyrighted content posted by users. Absent appropriate licenses, large OCSSPs will be liable for infringing content posted by users even if the OCSSPs take down the content promptly upon notification from right holders. Small OCSSPs will still benefit from the existing limitation of liability for user-generated content that includes copyrighted works.

The Directive provides that the authorization requirement for OCSSPs shall not lead to a general obligation to monitor user content, nor require the identification of users or the processing of personal data except in accordance with the General Data Protection Regulation, nor result in the unavailability of works that do not infringe or are covered by a copyright exception or limitation. As practical matter, however, OCSSPs will likely use automated content filters.

OCSSPs will also have to implement effective and expeditious complaint and redress mechanisms in the event disputes over disabling access to or the removal of copyrighted works.

 - Use of press publications (Article 15 of the Directive)

The Directive also creates a new neighboring right for news publishers for the online use of journalistic works.

In a nutshell, news publishers would be provided with two years of protection calculated from January 1 of the year following publication. This new right would not apply to acts of hyperlinking, use of individual words, or very short extracts of these press publications.

Transposition into national laws

EU Member States are required to transpose the Copyright Directive into their respective national laws within two years starting from its publication in the Journal Officiel. France is expected to be among the first EU Member States to transpose the Copyright Directive.

However, Recital 64 of the Directive states that « It is appropriate to clarify in this directive that online content sharing service providers perform an act of communication to the public or of making available to the public when they give the public access to copyright protected works […] Consequently, online content sharing service providers should obtain an authorization, including via a licensing agreement, from the relevant right holders » (emphasis added).

Some commentators have argued that the Directive’s provisions on OCSSPs do not require transposition and could be immediately enforced since Article 17 does not change existing law: it merely clarifies existing law.

Under this view, no transposition of Article 17 is required to allow copyright holders to enforce immediately their copyrights against large OCSSPs for user-uploaded content, whether by licensing demands and/or litigation, in situations where the OCSSPs only comply with the general limitation of liability requirements of ISPs.

In practice, right holders and OCSSPs should prepare for the implementation of the new framework by assessing their position and operations in light of the new rules.