27 May 2021
Download – Copyright update – 3 of 4 Insights
The EC Directive on copyright and related rights in the Digital Single Market (DSM Directive) aims to reform and harmonise copyright law as part of a wider package of proposals to create a Digital Single Market. It is also seen as an attempt to rebalance the relationship between rightsholders and online publishers in favour of the rightsholders.
The most controversial elements of the DSM Directive are:
The DSM Directive must be transposed into Member State legislation by 7 June 2021 but not all Member States have published implementing legislation yet, and the approach from those who have is not uniform.
Here we look at progress on transposition in Germany, Czech Republic and Slovakia. Our overview of the approach taken in the Netherlands is available here.
On 20 May 2021, the German Parliament passed the Law on the Adaptation of Copyright Law to the Requirements of the Digital Single Market.
The Law implements the DSM Directive and the Online SatCab Directive, and updates German copyright law to take account of recent CJEU decisions. It introduces several controversial elements including:
Liability of providers under the Czech Copyright Act is currently based on the EU-wide standard notice and take down principle, which requires providers to remove illegal content once on notice to avoid liability for the content.
Article 17 of the DSM Directive requires that providers not only remove the illegally uploaded content but also make best efforts to prevent further re-uploading of the same work. Although not yet established in the Czech Copyright Act, this was recently partially imposed on a defendant based on general liability principles. In this ground-breaking case – and after lengthy and costly litigation – the defendant (a major file sharing service provider in the Czech marketplace) was ordered by the Municipal Court in Prague to prevent the re-appearance of certain unlawful copies of movies. The key part of the ruling was later upheld on appeal by the High Court in Prague.
Unsurprisingly rightsholders are eager to see the implementation of the DSM Directive make this approach the new normal. At the same time, all stakeholders are looking for clarity on the practicalities of the new rules. Unfortunately, as things stand, we may have to wait some time for this in the Czech Republic.
The DSM Directive will be implemented through a wide-ranging update of the Czech Copyright Act and, to some extent, the Civil Code. The amending Bill was only published on 22 April 2021; it is now ready to be introduced in Parliament for approval. This could happen in the coming weeks but there is no fixed timeline.
The Bill mostly sticks to the DSM Directive's wording including on Article 17, transposed as the new s47 Copyright Act which currently states:
"Online content-sharing service provider shall not be liable for unauthorised acts of communication to the public, (...), if the service provider demonstrates that they have:
a) made best efforts to obtain an authorisation,
b) made, in accordance with high industry standards of professional diligence, best efforts to ensure the unavailability of specific works and other subject matter for which the rightsholders have provided the service providers with the relevant and necessary information; and
c) acted expeditiously, upon receiving a sufficiently substantiated notice (...), to disable access to, or to remove from their websites, the notified works, and made best efforts to prevent their future uploads in accordance with point (b)."
There is no explanation regarding what "best efforts" or "high industry standards" mean, despite requests during consultation to elaborate. The Ministry of Culture argues that interpretation should be decided at the EU-wide level, hoping that clarification will come shortly now that the European Commission targeted consultation is finished. This means that clarity will only come either from Brussels or perhaps from a future case – and that will take time.
Implementation of the DSM Directive will also affect some of the rules that deal with the remuneration of authors and publishers.
The proposed amendment to the Civil Code incorporates the general principle of "appropriate and proportionate" remuneration as set out in Article 18 DSM Directive. The remuneration should correspond to the actual or potential economic value of the licence granted. Moreover, in future, remuneration should only be fixed amount in justifiable cases. Otherwise, some form of profit-sharing model should be set up with the author.
However, as noted in the explanatory material, the option of 'buy-out' licence fee models is not completely excluded. In fact, the explanatory material explicitly refers to motion picture, music production, and computer software production as areas where it is the industry standard to use this sort of fee model. Whether this will be respected when the courts apply the new requirement remains to be seen.
The current right to additional fair remuneration will undergo notable changes. Here, the amendment follows Article 20 DSM Directive with wider scope for rightsholders to claim additional remuneration. Under the proposed amendment, claims will be open to authors on profit share models and not just those on fixed fee as is currently the case. When assessing whether the remuneration is disproportionately low, the revenue (rather than the profit) will now be the relevant marker. There is also an extension to the scope of information licensees may be forced to provide with regards to scope of exploitation and the generated revenue. This may open up significant new claim options for authors and other rightsholders.
Given the current state of the Czech political landscape, there is real uncertainty over whether the Bill will make it through Parliament in time, and even if it does, in what form. Changes to the current wording may be made during the legislative procedure.
Recently, the government lost its already quite unstable majority in the lower house of Parliament. Now, a general election is scheduled for early October 2021 and the DSM Directive’s implementation may become a prominent campaign topic. If transposition is postponed until after the election (regardless of the EU's timings), the newly elected body may take a different position on certain issues.
All this could cause the legislative process to stall, force changes, or result in the June deadline being missed altogether.
Slovakia has not yet published legislation to transpose the DSM Directive. The Ministry of Culture has said it will prepare a new Bill to amend the current Copyright Act by June 2021, but on current progress, it seems unlikely that Slovakia will meet the transposition deadline.
The Ministry of Culture has set up a consultative committee (working group) composed of experts and various stakeholders who have been working together on the preliminary draft. Some information regarding the implementation of the two most discussed and controversial articles of the Directive – Article 15 and Article 17 – has been made available and it appears that a copy out approach will be used which will follow the wording of the Directive.
With the transposition of the DSM Directive into Slovak legislation, it will be essential to amend existing provisions on commercially unavailable works and collective licences. It will also be vital to create a new copyright law specifically for newspaper (print) publishers.
As this snapshot shows, many Member States are unlikely to achieve transposition on time and controversies and uncertainties remain. It seems the EU is still some way off harmonisation.
To discuss the issues raised in this article in more detail, please reach out to a member of our Copyright & Media Law team.
by Multiple authors