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The EU digital copyright directive: could it affect your business?

Our IP solicitors are often asked complex questions about digital copyright. And now, the law is changing to better reflect our online communities, so we’re here to explain what that change could mean for your business.

What is the Digital Copyright Directive?

The Digital Copyright Directive (DCD) is a European Union directive that will affect the sharing of copyrighted content on online platforms in Europe, particularly aggregator news services and content sharing sites such as YouTube, as well as the use by organisations of copyrighted material as part of their working practices.

Copyright is an intellectual property right provided to artists and authors that produce original material, as well as performers and broadcasters. It gives the owners of copyrighted content:

  • The ability of to control how their work is used, and the right to receive payment in the form of licence fees for use of that work
  • ‘The ‘moral right’ to be identified as the author of the work in question, and the right to object to any derogatory action in relation to the work

The DCD entered into force on 6 June 2019, so it must be implemented by member states by 7 June 2021, and the European Commission is pressing for all member states to do so in a harmonised fashion.

If the UK is not in the EU at the end of this two-year period, it could choose to adopt the Directive so that its laws continue to align with those of Europe. However, some provisions of the new law have proved to be unpopular, particularly Article 17 that has the potential to affect the sharing of content online. For the moment, the situation is uncertain, but if your business could be affected by the new law, we recommend you familiarise yourself with its provisions, a summary of which is described in this article.

Article 2 of the DCD contains definitions of key terms used in the Directive. These are helpful in terms of understanding the scope of the legislation, and include terms such as ‘research organisation’, ‘text and data mining’, ‘cultural heritage institution’, ‘press publication’ and ‘content-sharing service provider’.

Article 3 provides that text and data mining (analysis of material to detect patterns and trends using potentially copyrighted material) can be carried out for the purposes of scientific research by research bodies (such as universities) and cultural heritage institutions (such as museums), provided the materials are stored securely.

Article 4 allows text and data mining by any user if they have lawful access to the copyrighted material and the copyright holder has not objected specifically to it. This can be overridden in any contract for the use of the work, so that the copyright holder could continue to control how the material is used or introduce a subscription fee.

Article 5 of the DCD provides exceptions to any liability for copyright infringement or to pay royalties if material is reproduced for teaching purposes in recognised organisations like schools and universities. Libraries and museums aren’t included in the exemption although they can apply for recognised status, and the exemption would apply to any teaching these types of body carry out, although they may have to pay compensation to the copyright holder.

The DCD does however give member states the right to undercut the teaching exemption, for example if the copyright material is specifically aimed at education, or is sheet music. It also allows member states to provide that copyright holders can create a simple licence for schools and universities to use if they wish to reproduce material, and impose limitations on the amount of the work that may be copied.

Article 6 allows for the digital preservation of copyrighted content in permanent collections in libraries, archives and museums, and Articles 8-12 provide for licensing of out-of-commerce material by such organisations for non-commercial purposes, although right-holders can contract out of these provisions.

Out-of-commerce materials are those that can be reasonably be presumed to be not available to the public through commercial means.

Article 14 permits the re-use of photographs of original, out-of-copyright works of art in the public domain, such as catalogues, postcards, prints and art books. It doesn’t include any such reproductions that are original, for example, versions of those out-of-copyright artworks that have been created for artistic purposes.

Article 15 prevents press publications from using extracts or ‘snippets’ from news articles without paying appropriate licence fees. Very short extracts are permitted, although in reality this would only amount to a very short sentence.

There is an exemption that should cover private users who share links on social media, provided they are ‘private and non-commercial’ bodies.

Article 17 makes content-sharing platforms liable for copyright infringement, obliging them to check the status of material uploaded and stop the publication of infringing content. Sites such as YouTube will need to filter content in order to realistically comply with these new obligations. There are exemptions for organisations like schools and science establishments who provide online platforms, provided that these are not-for-profit.

Content-sharing platforms would not include:

  • Not-for-profit online encyclopaedias such as Wikipedia
  • Not-for-profit educational and scientific repositories
  • Open source software developing and software sharing platforms
  • Electronic communication service providers
  • Online marketplaces
  • Business-to-business cloud services and cloud services that allow users to upload content for their own use

Articles 18-23 give authors and performers the right to receive proper remuneration for licences, including the right to re-negotiate compensation if the original payment is too low. There are also transparency requirements so that authors and performers can receive reports from those to whom they have given licences.

Why is the Digital Copyright Directive important for business?

Two articles of the new law, Articles 15 and 17, are likely to have the most impact on businesses.

Article 15
If you are in the business of journalism, or run a press publication, then you would be caught by this new legislation. The aim is to provide publishers the right to claim licence fees if their work is reproduced on your site, even if only a small portion is shared.

The definition of press publication covers journalism published in any media as an economic activity, so it would not appear to cover your company website or blog for example, provided you are not under the editorial responsibility of a service provider such as a news publisher.

There is also an exemption for private and non-commercial sharing by individual users so the sharing of news stories on Twitter would not be caught.

The law is option to interpretation however, and as many online ‘social influencers’ do make a profit from their accounts, it is questionable whether they could be charged a licence fee for sharing online content.

Hyperlinking is exempted from the scope of Article 15, provided that only the link itself appear – if a snippet of text is also included, then this could be caught by the legislation.

Article 17
Under current law, sites such as YouTube, Twitter and Facebook that contain material uploaded by users aren’t liable for copyright infringement, although they must either block the material if the copyright owners ask them to do so, or allow the owner to monetise the content in some way. The new law would require them to take such material down, and as a practical matter, that would mean applying an automatic filter to block it before it appears.

If you run a website hosting user-generated content, the only way you could escape being caught by the new law is if you fall within the following category:

  • You are a new business (fewer than three years old)
  • You have an annual turnover of less than €10million
  • You have fewer than 5 million unique monthly visitors

Memes and gifs are not included within the scope of the new law, as they are intended as ‘quotation, criticism, review, caricature, parody or pastiche’.

If your business uploads videos to online sites for sales purposes, or as demonstrations of your products or services, you may find your content is blocked if these are accompanied by music clips for which you don’t have an appropriate licence. There are music services that provide copyright free clips, so as a matter of good business practice, and to avoid problems in the future, we would recommend you regularly review your sales content for potential copyright issues.

Does the Digital Copyright Directive affect how you supply digital content and services?

If you are an online news publisher, you will definitely be affected by the new legislation, although if you are not in the journalism business, but have an online presence such as an online marketplace or have a news feed on your website, you won’t be affected by Article 15.

Schools and other teaching establishments should monitor the implementation of the DCD carefully, and review their practices to make sure that they have the right to share materials, particularly those that are intended for teaching purposes, and sheet music that is subject to copyright.

If you regularly upload material to the internet as a sales tool using channels such as Twitter, YouTube or Facebook, you should be aware that content will be closely monitored in future, and may be blocked if it contains music which is under the copyright of the original creator.

If you are a journalist, a musician or an artist, or produce original content as part of your business, it is definitely worth keeping an eye on the progress of the legislation. Even if the UK leaves the EU, you may find your ability to charge a licence fee for your original work is significantly enhanced by these new laws.

Do your contracts for digital content need to change?

It remains to be seen whether, and to what degree, the UK implements the Digital Content Directive into national law in the future, given the status of Brexit. For now, we would advise you keep a watching brief.

One provision of the new law is of particular note however the ability of copyright holders to renegotiate licence fees where these are deemed to be no longer uneconomic. If your business relies heavily on copyrighted content, or you produce such content yourself, then a spring clean of your licensing arrangements might be in order, as well as a review of pricing arrangements if and when the new law comes into effect.

About our expert

Lindsay Gledhill

Lindsay Gledhill

Intellectual Property Partner
Lindsay Gledhill is an Intellectual Property Partner at Harper James. She has specialised in intellectual property exploitation and dispute resolution since 1997. She trained and qualified in Cambridge’s top intellectual property firm during the 'dot com boom', then spent four years at top 50 firm, Walker Morris.

What next?

If you need legal advice on copyright usage for your business, our intellectual property solicitors can help. Call us on 0800 689 1700, or fill out the short form below with your enquiry.

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