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Another step towards EU copyright reform

The media has recently been overflowing with news about the European Parliament approving a directive on copyright on the internet, including articles about a threat to freedom on the internet or the end of the internet in its current form. What actually happened?

First, it must be said that that the voting in the European Parliament (“EP”) did not involve a final decision but an agreement on the EP’s bargaining position in a trialogue, i.e. negotiations between the European Commission, the European Parliament and the member states regarding the directive’s final wording. However, it is quite likely that the final version will not vary much from the existing version. So what did the EP actually pass?

In addition to provisions regulating text and data mining for scientific research and cultural heritage preservation purposes, Articles 11 and 13 garnered most attention, as they introduce concepts such as a link tax or meme killers.

Article 11 of the Copyright Directive introduces the entirely new right of periodical publishers to obtain fair and reasonable compensation for the digital use of their printed publications by search engine providers such as Google or Under this provision, Google in its search results would not be able to publish the title and lead paragraph of an article without having a proper licence from the publisher. Despite praiseworthy intentions, the draft directive also gives rise to risks, as shown in Germany and Spain that introduced this right in the past. In Germany, this legal regulation led to up to a 40% fall in the visitor numbers for websites that no longer appeared in search results, as Google refused to pay any royalties and decided not to disclose any of them in their search results. The outcome of all this was that a group of more than 200 VG Media publishers, including such significant publishers as Axel Springer or Handelsblatt Media Group, decided to provide licences to Google free of charge. The question is whether the same will happen with the new regulation applicable in the whole of the European Union.

Another controversial article regulates online sharing of copyright works, typically via YouTube or Facebook. Until now, under the e-Commerce Directive, users sharing content were primarily responsible for the content being shared. Website operators must remove content at the moment they learn about its unlawfulness. In practice, the copyright holders (e.g. a film producer) must on their own monitor what files are being shared and alert the website operators if illegal files are shown on their sites. The proposed directive fully removes the existing system and explicitly states that providers of services for online sharing of content are the ones who make the works available to the public, i.e. use the works in the meaning of the Copyright Act. It also explicitly stipulates that, for the above reasons, service providers must enter into fair and reasonable licence agreements with copyright holders. If they fail to enter into such agreements, they may not share copyright works on their websites.

Article 13 is also not risk-free. The definition of service providers involved in sharing content online gives rise to uncertainty. It is especially not clear what will happen with the e-Commerce Directive whose provisions are often at variance with the proposed directive. Another question remains how website operators will discourage users from sharing the protected content. Only large operators such as YouTube have sufficient funds to develop filtering systems. YouTube calls its system Content ID but admits that it is not faultless. At the beginning of this year, the Content ID system marked 10 hours of background noise recorded on YouTube as defective from the copyright perspective, as it judged it to be identical with previously recorded noise. Whatever the directive’s final wording, it is obvious that it will affect the life of each individual internet user.

We will keep you informed about further developments in this respect. You may also monitor the situation via KPMG Legal’s new blog that in addition to copyright will also deal with intellectual property rights, protection of privacy and personal data, and information technologies.