Strafford CLE Webinar Recap: New European Copyright Directive: Fundamental Shift from U.S. Policy

On March 26, 2019, the European Union passed the Directive on Copyright in the Digital Single Market, a new copyright directive aimed at affording more legal protection to news publications, ensuring that online platforms are held accountable for infringing activity. Much like the way in which music is fiercely protected in the United States, the directive increases penalties for online platforms that disseminate copyrighted material from the European Union without the appropriate licenses. Instead of individual users being held accountable for uploading copyrighted materials, the platforms themselves will be held completely responsible for infringement.

Articles 15, 17, and 19 of the Directive pose the biggest challenges to US companies, as they stray most from US policy.

Article 15 affords news publishers the right to negotiate licensing agreements with news aggregators and other online platforms should users choose to upload articles from their publications. This does not apply to acts of hyperlinking or “the use of individual words or very short extracts of a press publication”. Like much of the Directive, there is an ambiguity issue. So far, the phrase “very short extracts” is undefined, opening the door for varying interpretation by countries implementing the Directive.

Article 17 holds companies fully liable for the content uploaded to their platforms, which encourages licensing agreements and upload filters to prevent infringing material from being uploaded. This article requires that platforms “make best efforts” to: (1) obtain an authorization from the content creator, (2) prevent the upload of unauthorized content and (3) act quickly to remove unauthorized content and prevent future infringement. The phrase “make best efforts” has yet to be defined and its implementation by member states may determine its ultimate (and possibly variable) definition.

Article 19 contains within it a “transparency provision”, in which the contracting party receiving rights in protected works must provide complete statistics to authors and performers regarding the exploitation of their works. On at least a yearly basis, the licensee/assignee must provide the modes of exploitation, revenues generated, and remuneration due on revenues to the content creator, with these obligations extending to sub-licensees. This Article increases the accountability of entities that use copyrighted work that is not their own but may also result in a need to invest in new accounting technology, further develop human resources, or hire royalty experts or auditors experienced in managing these kinds of financial issues.

U.S companies that operate platforms in EU member states will be required to follow the rules set forth in the directive. The tricky part, however, is that each EU member state has two years to implement the directive into their country’s laws. This means that unilateral implementation is not certain. Countries may interpret the Directive differently, resulting in differences in language that may lead to variable policies.

Considering the implicated costliness of this Directive, the EU carved out liability exceptions for platforms that meet all the following criteria: (1) the platform is less than three years old, (2) the platform generates revenue less than 10 million euros, and (3) the platforms has less than 5 million monthly users. While these exceptions are not helpful to US companies such as YouTube, Google, Facebook, etc., it may aid start ups (for a short period of time).

In connection with the Directive, Vivid IP has several recommendations for U.S. companies with digital news-aggregating platforms operating in EU members states.

1.       Be familiar with each EU member states’ laws once they have been implemented. Because of language ambiguities, there is a significant potential for difference in policy that could result in major ramifications if not fully understood.

2.       Invest in filter technology. YouTube’s Content ID system effectively prevents copyright infringement from occurring on the website. Although the technology is massively expensive and not always precise, the investment is worth it.

3.       “Make best efforts” to acquire licenses from publishers. Although this phrase is unspecific, it would be beneficial to find out what news publications are most frequently uploaded onto the platform and obtain a license from that publisher. If the company is aware of lots of content uploaded from popular publications, then obtaining a license from that publication will allow for the continued, legal use of that material.

4.       Hyperlink! Avoid fines or litigation by allowing users to hyperlink to news publications with only the ability to add a completely unique caption relating to the content. Although “short extracts” of press publications are allowed, this ambiguous wording could potentially result in non-unilateral implementation across countries.

While the EU intended to aid content creators in increasing their legal rights over their creations, new Copyright Directive will also pose compliance challenges to US businesses that will require preventative steps to avoid fines and litigation. Click the link below to access the CLE!