Following various stakeholder meetings, the EU Commission has finally completed its task of developing Guidance for the implementation and application of Art. 17 Directive on Copyright in the Digital Single Market (“DSM Directive”). Article 17 DSM Directive specifies the conditions under which certain online platforms (Online Content Sharing Service Providers or “OCSSPs”) may be liable for copyright infringing acts of their users. However, the conditions of Art.17 were controversial throughout the legislative process and have led to uncertainties on implementation. Poland has even initiated annulment proceedings against the provision (C-401/19).
While the annulment proceedings will probably be decided early next year, Art. 17 DSM Directive had to be transposed into national law by 7 June 2021. Given that only a few EU member states have already complied so far (see here and here for France and Germany), the Commission hopes that its Guidance can still be taken into account by some EU member states when implementing the DSM Directive.
Our DSM Task Force has taken a look at the 26-page Guidance and identified its most noteworthy points for you.
1. Art 17 only applies to new cases
The Guidance clarifies that Art. 17 DSM Directive is intended to take effect as a lex specialis over the provisions in Art. 3 InfoSoc-Directive and Art. 14 E-Commerce Directive. It is not a new sui generis right or a mere clarification of Art.3 InfoSoc Directive or Art.14 E-Commerce Directive. It regulates the act of “communication to the public” in the circumstances covered by the scope of Art. 17. This is important because it clarifies that the DSM Directive only applies to new cases, i.e. does not apply retrospectively.
2. Covered Services
EU member states must explicitly set out the definition of an “online content-sharing service provider” when implementing the DSM Directive, including the list of excluded services laid down in Art. 2(6) DSM Directive, whilst also specifying that this list of excluded services is not exhaustive. Member states are not allowed to either widen or reduce the scope of application. Whether or not a service is covered by Art 17 should be answered on a case-by-case basis, taking the competing role compared to conventional forms of exploitation in the market into account. According to the Guidance, the storage of user uploads must be more than temporary and there is no exact numeric threshold that needs to be exceeded.
The covered services must also be profit oriented, which the Guidance clarifies should not be taken for granted merely because a service is an economic operator as such. Receiving a fee from users to cover the mere operating costs of hosting their content, or soliciting donations from the public are both insufficiently profit oriented. Instead, the intention to make profit must be linked directly to the profits from the use of the copyrighted works – for example, by placing ads next to the uploaded content.
3. Authorization
OCSSPs must demonstrate they have made best efforts to obtain authorisation from rights holders to communicate or make works available to the public under Art. 17. The term “authorization” used in Art. 17 DSM Directive is not defined and will therefore need to be interpreted by the CJEU. However, the Guidance states that licensing is not the only option. Member States can provide for alternative authorization models – a use of a work could be granted in exchange for data or advertising for right holders, for example.
The Guidance acknowledges that not all type of works are currently represented by Collective Management Organizations (“CMOs”). A possible solution could be the implementation of Art. 12 DSM-Directive. Art. 12 provides that when a license agreement is concluded with a representative CMO, there is a rebuttable presumption that a license has been granted on behalf of all right holders for that type of work. However, this is likely to have limited effect because firstly, the presumption can only apply if the specific type of work is represented by CMOs, and secondly, the provision does not have to be transposed into national law. Its effects are therefore still unclear.
Due to the problems of licensing content from all possible rights holders, the Guidance states that OCSSPs should not be expected to proactively seek out rights holders who are not easily identifiable by any “reasonable standard”. As a result the Commission suggests EU member states could encourage the development of registries of rights holders which could be consulted by OCSSPs.
4. “Best efforts”
A critical aspect of Art. 17 DSM-Directive is the term "best efforts". OCSSPs have to make “best efforts” to obtain an authorisation, to ensure the unavailability of specific works and lastly to prevent future uploads of notified works. This term is not defined and will therefore have to be interpreted autonomously under EU law, maintaining proportionality.
The Guidance acknowledges that technology is limited and therefore it is sufficient in certain cases that an OCSSP takes action only after a take-down notice from the right holder. A take-down notice is not the same thing as the “relevant and necessary information” that must be submitted by right owners for automated blocking of infringing content. A notice must be precise and sufficiently substantiated to allow the service operator to locate the content (ideally through its URL) and take an informed decision on its lawfulness .“Relevant and necessary information”, on the other hand, is the information needed by the OCSSP to ensure the unavailability of specific works, and what is “necessary” will vary depending on the precise tools and solutions used by the OCSSP to automatically block or filter specific content.
5. “Earmarked content” and “manifestly infringing uploads”
In order to prevent the blocking of legitimate content by OCSSPs, the Guidance states that automated blocking (e.g. using filtering technology) shall only apply in cases of “manifestly infringing” uploads. Any uploads which are not “manifestly infringing” shall in principle go online – but of course remain subject to a human review if a right holder issues a take-down notice. Exact matches of entire works or of significant proportions of a work shall normally be considered “manifestly infringing”. This does not apply to memes and short excerpts used as quotations.
However, rights holders can also “earmark” specific content for special protection. In such cases “particular care” should be taken by the OCSSPs, which may include “if proportionate, possible and practicable” expeditious ex ante human review, i.e. a manual review of the content before making it available. The Commission says this would apply to “time-sensitive” content (e.g. broadcasting of sports games or pre-leased music or films). However, earmarked content shall be limited to “cases of high risk of significant economic harm” to the right holder.
It is not yet clear whether right holders could earmark every piece of their content. Such a solution would not be practical, considering the sheer volume of data uploaded every minute, but would also undermine the special focus on earmarked content. German legislation (see our blog post here) has taken a similar but somewhat more restrained approach in its Copyright Service Provider Act and has deemed certain content to be particularly worthy of protection - however, human verification before upload is not required.
6. User rights as new exceptions
In order to balance the fundamental rights of users, the user exceptions in Art. 17(7) DSM-Directive (e.g. for quotation, criticism and review) are mandatory for EU member states to implement. According to the Guidance, these user exceptions are autonomous user rights and apply only for the purposes of the DSM-Directive and therefore should not contain any further conditions (such as the conditions that apply to the existing equivalent exceptions in Art. 5 InfoSoc-Directive, e.g. indicating the source of the work). This view of the Commission is surprising. It had been widely assumed that Article 17 (7) of the DSM Directive was intended to make what are optional exceptions in Article 5 of the InfoSoc Directive mandatory. However, it is now unclear whether the substance of the exceptions in Art 17 (7) DSM-Directive should be defined differently and which additional conditions should no longer apply.
7. Outlook
Whilst the Guidance has no binding legal effect, it is to be expected that the first decisions following national implementation will be closely based on it. The Guidance shows encouraging trends for achieving proportionate solutions. The common theme of the Guidance is that “cooperation is key” between right holders and OCSSPs. The Guidance provides some clarity on ambiguous areas of Art. 17, such as what amounts to “best efforts” and the scope of the services caught by the provisions. In addition to it, national courts will also take into account this week’s judgement of the CJEU on the liability of online platforms for copyright infringements under the regime of Art. 3 InfoSoc Directive, which will apply to all platforms not covered by Art. 17 DSM Directive (joined cases C-682/18 and C-683/18, on which we have blogged here), where the CJEU made some remarks on reasonable due diligence efforts.
Doubts remain, however, as to whether it is compatible with EU law that uploads of “earmarked content” should be checked manually by service providers before publication. So far, the CJEU has only said that automated filtering is generally permissible (C-18/18). It remains to be seen whether this approach will hold in the wake of the Polish annulment proceedings.
The next set of guidance on Art 17 will come from the Advocate General’s Opinion in the Polish annulment proceedings, which will be published on 15 July 2021. As the Commission already acknowledged, a revision of the Guidance may become necessary after the CJEU’s subsequent ruling – we will keep you posted!
Authored by Nils Peters, Morten Petersenn, Penelope Thornton, Anthonia Ghalamkarizadeh and Florian Richter.
