With the European Commission’s consultation on copyright underway, Adam Rendle assesses its potential implications for rights online.
In December 2013, the European Commission launched a consultation on the EU copyright regime. It aims to ensure that the copyright system “remains appropriate and is adapted to the new environment ... ensuring that it stays fit for purpose in the digital environment”. It left almost no stone unturned and asked for responses on 80 questions, taking into account issues including cross-border licensing, the ‘making available’ right, exceptions and private copying.
The premise of a number of the commission’s questions is that there are problems with how copyright operates in the digital environment, and it is asking for examples of and reasons for them.
It is a curious approach to take: seemingly prejudging the consultation’s outcome. It seems to overlook that digital marketplaces and business models are still rapidly evolving. The biggest players (eg, Spotify, Amazon, Google, etc) have been providing their current digital copyright services for a relatively short time and business models are still evolving, against the backdrop of piracy undercutting their offerings.
The approach also downplays the significance of the legislative changes the commission seems to pre-suppose are required. Without convincing and widespread evidence justifying reform, the commission should be very wary of upsetting the copyright status quo.
To the extent that significant practical problems are identified, the commission should allow the solution to match the problem and be practical rather than legal (apart from where existing laws, such as competition law, allow for specific administrative interventions). Licensing rather than legislation should, at least in the short-to-medium term, be a generally preferred way of reforming how the Internet operates.
The commission asked why it is “not possible to access many online content services from anywhere in Europe”. Copyright remains territorial in the EU, enabling rights holders to license services on a territory-by-territory basis. As a result, a particular member state’s online service is unlikely to be available simultaneously in other member states.
The commission has, in fact, opened an antitrust investigation concerning the crossborder provision of pay TV services, which illustrates the problems the consultation is looking to identify. That investigation is assessing the restrictions in agreements between film studios and pay TV broadcasters that ensure the films licensed by the studios are shown exclusively in the member state where each broadcaster operates. The agreements, in the commission’s view, prevent access by subscribers who are located outside the licensed territory.
If problems identified in the consultation are sector-specific and economically and culturally insignificant, legislation applied to all sectors in a blanket way would be inappropriate. If this were the case, it would prove very difficult to legislate in a way that is proportionate to, and accurately targeted at, the identified problems.
Nevertheless, if the commission does determine that the problems justify legislation, the required legislation could be radical. Resulting legislation might prohibit the means through which digital cross-border sales that do not actively target the particular territory in which the crossborder sale happened—known as passive sales—are restricted, unless those means were objectively justified. The effect would be an active/passive sales distinction in the digital copyright marketplace.
The following example illustrates how such a reform could operate in practice. If an on-demand movie service were available in and targeted at member state A, the rights holders and service providers could not take any measures (contractual, technical or otherwise) to prevent a citizen in member state B from passively accessing that service, provided that citizen accessed the service on the same basis as did the citizens in member state A (for example, by paying the appropriate fee).
It would also have to be provided that such passive access did not infringe any copyright in member state B if it did not in member state A. The service provider could, however, be restricted from actively marketing the service in member state B without a licence.
While that result might be consistent with a wide reading of some of the logic and reasoning behind the FAPL/Murphy decision, it should not be introduced without a detailed consideration of its boundaries and implications. A licensed act in member state A would, in effect, automatically license the equivalent act in member state B without reference to the rights holder in that territory (who might be different).
The conceptual and practical implications of that result are significant. Licensing solutions would be better suited to bringing about this result, assuming there is sufficient economic demand for them. The commission should investigate whether rights holders experience sufficient consumer demand for cross-border access to make it worthwhile developing licensing models that meet that demand.
If there is insufficient demand, then it’s no wonder that rights holders have not developed products for it—why should legislation be introduced to meet a theoretical problem, especially as that legislation could unpick the territorial nature of copyright?
The scope of the ‘making available’ right
The ‘making available’ right is the exclusive right that underlies digital copyright exploitation. The commission is concerned that the right is not sufficiently clear in crossborder situations. For example, what is covered by the right and where does the act take place? The commission’s concerns seem misplaced and should become increasingly outdated, particularly in light of Court of Justice of the EU decisions in cases such as Football Dataco v Sportradar and Svensson.
The approach the court has taken to these questions is as clear and easy to apply as we could hope for, without undertaking a substantial reassessment of the nature of the ‘making available’ right, which has not been proposed and would probably need treaty reform. Legislation will inevitably struggle to find a solution that would apply satisfactorily and predictably to all factual situations.
What is less clear from the case law is the extent to which a licence covering one member state is sufficient to cover acts in other member states. There appears to be a conflict between Svensson, which provides that the making available happens when a new public may access a work, and Football Dataco, which says that it happens at least where that access is targeted.
A single act, which may happen simultaneously in more than one member state, may therefore require licensing more than once (ie, at source where the access is provided and at destination where the access is targeted). This result appears inconsistent with the nature of the single market. The commission could therefore introduce legislation that says if a single act has been licensed in one member state, it should not need licensing again in another member state. However, the commission should be slow to legislate in a way that removes the control of a rights holder’s copyright in one member state as a result of actions taking place in another.
The two possible legislative developments discussed above that could conceivably result from the commission’s consultation would need considerable evidence to justify their introduction and would, if the evidence justified them, radically alter how copyright operates on the Internet in the single market. It is for the commission to determine whether such an upheaval is warranted in light of the still-maturing online marketplace for digital content.
It might be too soon for such a result, without allowing licensed solutions the opportunity to develop to meet any concerns and consumer demand.
References are available on request to the author. Adam Rendle is an associate Taylor Wessing LLP. He can be contacted at: email@example.com
This article was first published on 27 March 2014 in World IP Review