In March, the European Parliament approved the Directive on Copyright in the Digital Single Market, Europe’s controversial new copyright law. Now that it has also been approved by the Council of the European Union, member states have two years to pass legislation to implement the requirements. Article 13 of this directive has major implications for “online content sharing service providers,” including e-learning platforms and video services like YouTube.
Article 13 has created controversy due to its potentially onerous enforcement requirements. A company like YouTube or Facebook will have to identify every case of copyright-infringing content, and take steps to prevent such content from being uploaded. Around the world, many are particularly concerned with the impact the law will have on freedom of speech rights, given questions it raises over the legality of uploading content like parody, satire and memes. In particular, the directive takes away the safe harbor protection of such platforms as intermediaries and imposes direct liability for infringing content that users upload.
Who is an “online content sharing service provider?”
The first step for risk managers will be identifying whether the law applies to them in the first place. An “online content sharing service provider” (hereinafter, a “service provider” for short) refers to any platform, including a website or an app, whose primary purpose is to host and provide access to content. Moreover, this must be done for the purpose of making a profit.
There are two key points to keep in mind: First, what is the primary purpose of your platform? Second, is it a venture intended to create profits? On the first point, a video service like YouTube or a social media company like Facebook or Twitter is clearly within the scope of the law, while business-to-business cloud service providers, online marketplaces and open-source software development and sharing platforms are not. Regarding the second point, a not-for-profit educational or scientific center would also be outside the scope.
Do companies outside the EU need to be concerned?
As it is a European law, Article 13’s scope is territorially restricted to content that can be accessed within the EU. The global nature of the internet, however, means that many service providers or content creators will have a large European base, which they cannot afford to lose. Service providers outside the EU will need to comply with the law for any content that is accessible within the EU. Such service providers will need to differentiate between the content that can be accessed within the EU and that which cannot.
What do companies need to do to comply?
Article 13 requires that service providers:
- Receive authorization from the copyright owners, such as through entering into proper licensing arrangements with them;
- Have in place proper arrangements to ensure that content for which they do not have the owner’s authorization is not available on their platform, such as through the use of a content filter;
- Expeditiously take down violative content when notified of it; and
- Have in place a complaint redressal system for the users who are uploading content on their platform.
The amended law specifies that not all use violates the law, such as criticism or review, and that there is no general monitoring obligation. However, in practice, and given the limitations of current technology, such general monitoring will be inevitable. Experience with a content filter like YouTube’s Content ID has also shown that such systems are just as likely to take down legal content as illegal content.
For companies that have been operating in the EU for less than three years and that have an annual turnover of less than €10 million, there will be a small exception from the obligation to have technical arrangements like content filters in place. The other conditions, however, will all still apply.
What happens if companies do not comply?
The current draft does not call for separate penalties, but a service provider that does not comply will be liable for copyright infringement for any content uploaded onto its platform that violates copyright law. This could lead to the content owners filing copyright infringement suits and claims for compensation. It is important to note that the law clearly states that a service provider is no longer protected under safe harbor rules as an intermediary under laws like the EU Directive on E-Commerce. Thus, such rules cannot be used as a defense in a suit against such a service provider for infringement.
Does the Law Impact Content Creators?
Content creators, such as a company that uploads content to a service provider within the scope of the law and that targets a European audience, will have to ensure that their content does not violate copyright law in any way. The main concern will be with the method that service providers adopt to implement the law (e.g., Content ID), and ensuring that any content created does not fall afoul of the systems adopted. Alternatively, creators will need to find a way to differentiate between content that can be accessed in the EU and content available elsewhere.
Protecting Copyright Owners
The law was originally proposed to protect copyright owners and encourage better revenue-sharing arrangements between creators and the companies that derive profit from their works. However, it imposes significant liabilities for companies for any content they create or provide access to, and risk managers will need to be aware of its implications for their company. They will need to be stay up to date on the new law’s final form as measures are adopted by European member-states and of the systems that various service providers will eventually adopt to implement it.