Kluwer Copyright Blog (KCRB) is a publication of Kluwer Law International, providing information and news on European copyright law. They have assembled a group of leading experts, comprising practising lawyers and academics to report on the latest developments.
Almost seven years ago, Directive 2011/77/EU – also called the Term Extension Directive – was passed. As mentioned in the Impact Assessment that accompanied the Proposal for the Directive, its general objective was to promote music production in the EU. The Impact Assessment also referred to specific objectives, which included contributing to enhancing the welfare of performers and the competitiveness of the EU music industry, and increasing the available music repertoire. The Directive contains several measures to achieve these objectives – an extension of the term of protection of performers’ and producers’ rights to 70 years after publication or communication to the public of the fixation of the performance; the “use it or lose it” clause, granting performers the right to terminate the contract with a producer after 50 years where the latter does not exploit the phonogram; the annual supplementary remuneration (20% fund), granting performers who only received a lump sum payment the right to obtain an annual supplementary remuneration from the phonogram producer for each full year following the 50th year of publication or communication of the phonogram; and the “clean slate” provision, which establishes that neither advance payments nor any contractually defined deductions can be deducted from the payments made to performers as from the 50th year after the phonogram was published or communicated to the public.
The deadline for implementing the Directive was 1 November 2013. While not every Member State complied with that deadline, the Directive has now been implemented in all Member States of the EU. A Study conducted by these bloggers at the request of the European Parliament’s Committee on Legal Affairs (JURI) sought to evaluate the status quo of implementation of the Directive, to identify best practices in the Member States, and to consider the potential long- term effects of the term extension of protection, both within and outside the EU. The study provides an overview of implementation in all EU Member States, and carries out an in-depth analysis of the implementation of the Directive in selected Member States (France, Germany, Portugal, Romania, Spain, Sweden and the UK).
The Study drew several conclusions on different aspects of the Directive. This blog post, however, will only tackle the findings concerning performers. The main conclusion from the Study is that the enhancement of the welfare of performers has been modest at best. Performers only enjoy the so-called accompanying measures (i.e., the “use it or lose it” clause, the annual supplementary remuneration and the “clean slate” provision) during the extension period (i.e., from the 50th till the 70th year). However, performers have a weak contractual position vis-à-vis producers throughout the entire period of protection. In this context, Arts. 14 to 16 of the Proposal for a Directive on Copyright in the Digital Single Market (hereinafter, “DSM Proposal”) provide additional safeguards. The provisions would oblige Member States to introduce a much clearer and stronger right for performers to request an adjustment of their remuneration in cases where the remuneration originally agreed is disproportionately low compared to the subsequent relevant revenues derived from the exploitation of the performance. As a consequence, the (optional) right of performers to ask for the modification of their contract (Art. 10a (2) of the Term Extension Directive) might become superfluous. Only one of the Member States surveyed (France) has introduced this right in its national law and, in any case, its regulation is not satisfactory since many questions relating to its exercise remain unanswered.
Moreover, the identification of the performers entitled to the rights provided by the Directive’s provisions is problematic in practice. The role played by Collective Management Organisations (CMOs) in informing performers about their new rights varies from one Member State to another. Producers also play an essential role in identifying performers entitled to the rights, since they hold the necessary information about the performances that are entering the extension period, the performers who participated in their fixation, and the terms of their participation. Good internal organisation of CMOs, the use of advanced and up-to-date electronic databases of their members and good communication schemes, either with CMOs representing producers or directly with producers, seem essential to guarantee the effectiveness of the Directive. The Directive establishes an obligation for producers to provide information on very limited terms: a) information necessary to secure the payment of the annual supplementary remuneration (but not covering any other aspect necessary for the exercise of other rights provided for in the Directive); and b) information only provided upon request. None of the seven Member States surveyed have expanded the scope of this obligation in national law. The obligation of producers to provide information should be reinforced. The general obligation established in the CMO Directive for users (Art. 17) does not apply to producers (however, if adopted, Art. 14 of the DSM Proposal will help to reinforce the obligation of producers to provide information to performers).
Another issue that weakens the position of performers is the way in which the lawful publication or lawful communication to the public are taken into account in the Directive. These events are important in two instances: first, to calculate the term of protection; second, to calculate the beginning of the extension period where performers start to enjoy the rights provided for them in the Directive. Except for the calculation of the term of protection of performers’ rights, the lawful publication prevails over the lawful communication. In relation to producers’ rights, the lawful publication prevails over lawful communication even if it takes place later in time. However, considering the evolution of the music industry, “lawful communication” may soon become the rule and “lawful publication” the exception. In such a scenario, it would be hard to sustain the position that the second should prevail over the first to calculate the term of protection. In fact, record companies could choose to abuse the provision, although the consequences would not be felt in the short-medium term: a record company that made a record available on the Internet in 2008 may decide to wait until 2028 to publish the record as an album. In this case, the term of protection of the phonogram would extend until 2098. Performers would then have to wait until 2078 to enjoy the rights provided by the accompanying measures.
Only Portugal out of the seven Member States surveyed has deviated from the wording of the Directive on this issue. The Directive’s rule is cause for a number of concerns. It opens the door to abusive practices by producers, as they can make new releases available on the Internet and delay the publication of records until the 50-year period from the performance is about to expire (which would mean that the term of protection could expand to almost 120 years). Moreover, there is no justification to apply different terms of protection to performers’ rights (lawful publication or lawful communication of the performance, whichever is first) and to producers’ rights (lawful publication or, if this does not happen, lawful communication). If producers put into practice the abusive practice mentioned above, during the “new” term of protection they would also benefit from the fact that performers’ rights would have expired. In addition, an interpretation of “lawful publication” as the offering of “fixed copies that can be put into circulation as tangible objects” in the sense of Art. 2(e) and the Agreed Statement in WPPT is not adapted to actual practices in the music sector, where the making available of performances on the Internet is increasingly gaining more relevance. These concerns could be adequately addressed by interpreting the term “lawful publication” as including the making available of a performance on the Internet.
In relation to the “use it or lose it” clause, the expression “offering for sale in sufficient quantity” raises interpretation problems that have only been partially addressed in some of the Member States surveyed (UK and Spain). “Offering for sale in sufficient quantity” should be found to exist where the performance is made available on the Internet in a manner that satisfies the reasonable needs of the public, taking into account the nature and aim of the phonogram. The fulfilment of this requirement would need to be established on a case by case basis, although it can be safely assumed that making a new record available on popular streaming services such as Spotify or Deezer, where it can be easily located by the general public, should be enough to comply with the threshold of “sufficient quantity”. Likewise, uploading a new recording of a piano concerto on a website specialising in piano music would also meet the requirement; whereas uploading a pop record exclusively on the website of an independent record company that does not promote products on third parties’ websites or social networks would probably not amount to offering for sale sufficient quantities of said record. This interpretation means that, contrary to what is explicitly or implicitly established in the laws of the Member States surveyed, producers do not need to both release the record in tangible form and make it available on the Internet to make sure that the “use it or lose it” clause is not triggered. The opposite interpretation (where both acts of exploitation are needed) would be more beneficial to performers; however, it would also be unrealistic having in mind actual practices in the music sector.
Considering that music performances involving a plurality of performers is the general practice in many music genres, a deeper analysis of the exercise of the “use it or lose it” clause in these cases seems necessary. Very different solutions exist across the Member States surveyed. These divergences may create obstacles to the functioning of the internal market. In certain Member States, the solution provided by law is so complex that the effectiveness of the measure is at risk. Because of that, a simple rule should be proposed according to which a majority of performers can agree to terminate the contract, and they should select one representative to exercise the right. Such a rule may grant more weight to the vote of featured artists as recognition for the essential role they play in the conception of the performance.
The national expert reports show that clarification is needed in relation to certain aspects of the functioning of the annual supplementary remuneration – e.g., the information that producers are obliged to provide, the person entitled to ask for such information, the measures that can be adopted against those producers who do not provide information or who provide incomplete information, and the method of calculation of the remuneration. This may be easily accomplished by competent authorities in the Member States through the publication of guidelines. Said reports also reveal that the remuneration is not fully working in practice in many Member States (known exceptions at the time of writing the Study were Spain and the UK, where the CMOs were distributing the 20% fund among their members).
In relation to the “clean slate” provision, while the Directive explicitly states the mandatory nature of the “use it or lose it” clause, nothing is said with respect to this provision. As a consequence, Sweden has established that the “clean slate” provision can be derogated by contract. This diminishes the effectiveness of the Directive. Taking into account the objective of the provision, the “clean slate” clause must be understood as an overriding mandatory rule in the sense of Art. 9 of the Regulation 593/2008 on the law applicable to contractual obligations (Rome I): such a clause cannot be derogated by contract and it is applicable even if the parties have chosen the law of a non-EU country. This should have been clearly established in the Directive to avoid other Member States following Sweden’s stance.
Another point of attention concerns audio-visual performers and producers, who are excluded from the scope of application of the Directive. None of the seven Member States surveyed have applied the term extension to this category of performers and producers. Despite the differences between the film industry and the music sector, this does not seem justified, not least because it creates difficulties where the same performance is recorded both on a phonogram and on audio-visual media.
Also relevant to performers are the findings regarding the competitiveness of the European music industry vis-à-vis foreign trading partners. The research shows that from a legal point of view the “comparison of terms” argument used by the Commission to justify the term extension is unfounded. Such argument was based on the premise that non-EU countries were allowed to not grant longer protection to EU right holders, despite granting this to their nationals, thus putting EU performers and producers at a disadvantage. Due to the obligations assumed in the Rome Convention, EU trading partners cannot apply a rule on comparison of terms. The only exceptions are the United States and India, which are not parties to the Rome Convention. However, in the case of the United States, its national legislation does not apply a comparison of terms, with the consequence that its term of protection applies equally to national and foreign sound recordings (provided of course that such sound recordings are protectable under US law). In the case of India, any negative impact on the EU’s exports to India would likely derive from the latter’s weak enforcement and pervasive piracy rather than on the rule on comparison of terms.
All in all, it might be sweeping to say there is a seven-year itch in the workings of the Term Extension Directive, if we take it as accurate that a seven-year itch implies a decrease in happiness after seven years. After all, it’s not like there were unanimous feelings of happiness about the Directive (quite the contrary – see for example here). Still, for those who harboured the belief that the Directive would be a game changer for performers, disappointment is bound to happen.
More conclusions from the Study can be found here.
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A lawsuit brought by figure skater Oksana Baiul accusing NBC Sports of failing to pay her royalties owed for a video production of her ice skating performance in “Nutcracker on Ice” was barred by res judicata, the U.S. Court of Appeals in San Francisco has held. A decision of the federal district court in Los Angeles, dismissing Baiul’s lawsuit, was affirmed. There was an identity of the claims, the parties, and a final judgment on the merits against Baiul in an earlier suit filed in New York court, in which Baiul, as in this suit, asserted state law claims against NBC for failure to pay royalties in connection with audiovisual works featuring her skating performances (Baiul v. NBC Sports, April 27, 2018, per curiam).
A recent decision of the Munich Regional Court marks the first-ever blocking order in Germany against a copyright infringing website (judgment of 1 February 2018 – BeckRS 2018, 2857; English translation available here). If confirmed by higher courts (the judgment is subject to ongoing appeal proceedings), the decision will indeed have paved the way for a much-needed legal means against pirate websites in Germany.
In essence, the court held: (1) Despite the 2017 amendments to the German Telemedia Act (TMA), it is still possible to bring website blocking claims against access providers on the basis of a breach of duty of care (Störerhaftung – see below); (2) implementation costs of EUR 150,000 may be deemed acceptable to a provider; and (3) in preliminary injunction proceedings, there shall be no overly strict criteria placed on subsidiarity.
Facts of the Case
The applicant is the distributor of a successful German cinema film. This film was available via the illegal streaming service kinox.to even while it was still in the cinema exploitation phase. With its application for an injunction, the applicant took action against a German access provider and requested that it be prohibited from providing its customers access to the film on kinox.to.
The Court’s View
The application for an injunction was successful.
The Regional Court granted the applicant’s claim for injunctive relief under copyright law on the basis of the so-called Störerhaftung, i.e. legal liability of persons who are neither the perpetrator nor directly participating in a right infringement but nevertheless shall be held liable for a wilful and causal breach of duty (as specified for access providers, in particular, by the German Federal Court of Justice, BGH, in its decision “Störerhaftung des Access-Providers”, GRUR 2016, 268).
According to the Regional Court, the Störerhaftung had not been excluded pursuant to the new version of Sec. 8 I 2 TMA which had been reworded in the course of the 2017 TMA Amendment. While the Regional Court found that the wording of this provision did indeed suggest a limitation to liability, it followed that, from a historical and systematic interpretation, Sec. 8 I 2 TMA only applied to providers of WLAN networks. Such an understanding, in the eyes of the court, derived from the legislative documents pertaining to the TMA Amendment. Furthermore, the court stated that an exclusion of all claims for injunctive relief against access providers would in fact contradict European law, namely Art. 8 III of Directive 2001/29/EC. The Regional Court therefore concluded that the Störerhaftung was applicable.
In this respect, subsidiarity was required, meaning that the rightholder must first have attempted, using all reasonable means, to effect legal action against the operator of the service and its service providers (e.g. hosting providers). The Regional Court found that the applicant had done this to a sufficient extent. In the court’s opinion, it would not have been reasonable to expect the applicant to pursue even more time-consuming measures against rights infringers that are often based in a foreign country and are difficult to reach out to.
The Regional Court did not see any preclusion of the applicant’s claim in the fact that the blocking measures could possibly be circumvented.
According to the court, the respondent was also unable to cite unreasonable costs for the website block and the necessary adjustments to the system. This was the case even if one took the EUR 150,000 costs asserted by the respondent (and disputed by the applicant who instead had stated a four-figure sum) as a basis. In this context, the Regional Court noted that the information provided by the respondent in relation to their costs did not only relate to the blocks themselves but also covered the installation of the blocking system. These costs could not be asserted in full, however, since otherwise the first legal action against an access provider would always fail on the grounds of the comparatively high installation costs. Moreover, the Regional Court stated that the financial outlay must be seen in the context of the access provider’s total revenues as well as the number of customers it has. Thus, even costs in the amount of EUR 150,000 were not seen as disproportionate.
A Content Protection Perspective
The Regional Court of Munich’s judgment allowed – for the first time in Germany – legal action to block a copyright infringing website.
The court’s argument, according to which claims against access providers (on the basis of the Störerhaftung) remain possible even after the most recent TMA amendment, is compelling.
Moreover, a future in which the blocking of rogue websites will finally be possible in Germany over a broad scope should be welcomed. Blocking claims are already recognised in numerous other EU states. Experience in those places has shown that “website blocking” can be performed effectively, at reasonable financial cost and without any illegitimate impairment of users (keyword “overblocking”). In this respect, it comes as no surprise that since the implementation of the blocking of kinox.to the respondent’s customers have not yet demanded any right to access this copyright infringing site.
Finally, the court’s approach is logically consistent in concluding that the assessment of the costs for the initial setup must also take into account any additional, later blocking that has been made possible through said setup. With that, the court avoids a situation whereby, on the one hand, the initial expense for implementing the system is considered unreasonable and, on the other hand, individual blocks – which in themselves would be reasonable – are technically not possible due to the (not adjusted) setup.
The court applies the requirements of subsidiarity in a practice-oriented manner. The operators of pirate websites often act conspiratorially and through a number of international service providers that are very hard to even make contact with. In line with the court’s approach to the subsidiarity requirement, blocking claims against access providers can be enforced in expedited protection proceedings with comparably low cost.
That said, the judgment – while being a welcome step forward – is only a first-instance decision. It now remains to see what the Munich Court of Appeal will say on the matter.
The High Court of England and Wales recently gave judgment in Cantel v Arc ( EWHC 345 (Pat). Of most interest for this blog is the aspect of the case which considers when an infringing party has the requisite knowledge to be liable for secondary acts of infringement (such as importation and sale). The case concerned UK unregistered design right (UDR) but the decision will also be applicable to future UK copyright cases involving secondary infringement.
A brief reminder; in the UK, copyright is not available to protect three dimensional functional designs, and registered design law explicitly excludes protection for features consequent to a product’s technical function (s.1C Registered Designs Act 1949 (RDA)). To protect the functioning or internal aspects of a product, designers were having to rely on the copyright in the underlying drawings for a product. This was contrary to the intention of UK copyright law and afforded the designer an extensive period of protection, much longer than they would be entitled to under design law. To resolve this conflict, parliament legislated to create UDR in order to complement the protection afforded by copyright and registered design rights in the UK. Effectively, UDR is a quasi-copyright and has similar requirements to copyright, such as the need for the work to be original and for copying to have occurred. It subsists automatically in an original design of three-dimensional shapes or configurations, whether internal or external, and for whole or part of an article.
Cantel brought the claim to clear the path for lawful marketing of a product called the AmplifEYE. Arc counterclaimed for infringement. AmplifEYE and the equivalent Arc products (the ‘Endocuff’ and the ‘Endocuff Vision’) are “cuffs” which are fixed to the end of a colonoscope to assist the colonoscopy procedure. As well as the allegations relating to infringement of UDR, the claim also included allegations relating to patent infringement and infringement of Registered Community Design right, but for the purposes of this article, we will just consider the UDR claim.
UK Unregistered Design Right
UDR can be infringed by carrying out primary acts (such as making an article to exactly or substantially the same design) and also by carrying out secondary acts (such as importing into the UK or possessing for commercial purposes). For secondary acts of infringement to be proven, a party must know or have reason to believe that the article he is dealing with is an infringing article (s.227 CDPA).
Cantel’s position was that it had only carried out acts which would qualify as secondary acts of infringement of UDR, and Arc did not raise any evidence to dispute this.
The Court therefore had to consider whether Cantel had the requisite knowledge to be liable for secondary acts of infringement. The authorities are clear that a mistaken belief that an act is not an infringing act does not serve to deprive a defendant of knowledge under s.227, provided the defendant is aware of all the relevant facts. This includes a mistaken belief of law that the claimant has no enforceable design right, which could be inferred from the facts. For example, in a recent case concerning UDR in lockers, Action Storage v G-Force,  (reported on this blog here) the Defendant was said to be fixed with the requisite knowledge for acts of secondary infringement from a date 21 days after they were put on notice by a letter of claim (the 21 days being considered a reasonable period for investigation of the allegations after receipt of the letter before action).
In the present case, the Judge had no doubt that Arc’s products were copied in the course of Cantel creating the design for the AmplifEYE. It was also clear from the documents which were disclosed in the proceedings that Cantel was fully aware of the Arc product which it copied. By way of example, one of the internal emails sent by Cantel during the process of designing its cuff said: “We really cannot come out with a Endocuff clone, nor do we want to [sic]” Similarly, when Cantel applied for regulatory approval for its product it told the USFDA that “AmplifEYE is directly based on and substantially similar to…Arc Endocuff…and Arc Endocuff Vision.”
However, crucially, no one in the Cantel design team was aware that design rights existed and in fact it was part of Arc’s case that Cantel did not know anything about design rights. It appears that no letter before action was sent to Cantel in order to ‘fix it’ with the requisite knowledge of Arc’s right (as happened in the Action Storage case referred to above). Indeed, the judgment says that Arc’s only pleaded case on Cantel’s knowledge was based on “common knowledge in the trade”, a point which was not explored at trial, and an allegation that an inference could be drawn from the terms of a distributor agreement. The Court found that Cantel did not have the requisite knowledge to be liable for any secondary acts of infringement until the date of the judgment. Arc’s UDR were therefore not found to have been infringed before that date.
This is an interesting, if somewhat unusual, case which demonstrates the importance of fixing a defendant with the requisite knowledge in order to succeed in a claim for secondary acts of infringement. This is an issue which is relevant both to UDR claims and copyright claims.
It is of particular relevance in cases such as this, where the action commences not with a letter before action, but with an ‘infringing’ party commencing proceedings in an attempt to clear the way to market their own product.
A failure to fix the defendant with knowledge could become an issue in the event that significant damages were accruing. If the defendant is only found to be infringing from the date that knowledge is fixed, which could be the date of judgment as per the present case, then the claimant could miss out on a potentially significant accrual of damages (if harm was occurring over that period). To prevent that, it pays to send a notice letter in UDR and copyright cases.
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 See, for example, the summary at paragraph 88 of Action Storage v G-Force,  EWHC 3151 (IPEC)
Sampling is a technique used in the music industry which utilises parts of pre-existing recordings in order to create a new music composition. Although sampling has been a common practice and a widely-used method in many modern music productions, its legality under EU law is still to be determined.
From the perspective of European copyright law, extracted fragments of sound recordings can amount to infringement of neighbouring rights of phonogram producers and other relevant right holders, namely the right of reproduction. To be sure, some national laws may allow a degree of authorial self-copying as a limitation to copyright claims against sampling. This is, for example, the case for the German concept of ‘free use’ (freie Benutzung), codified in Article 24 of the German Copyright Act. However, at EU level, the closed list of exceptions in Article 5 of the InfoSoc Directive does not include a similar notion. Furthermore, nowhere in EU law is it possible to find a uniform definition of sampling or concrete guidance on how to carry out this practice without running afoul of copyright, while enabling artists’ freedom of creative expression.
In Germany, the tension between copyright and artistic interests arising out of the ambiguous legal position of sampling has played out for almost twenty years in the Metall auf Metall case, which has now been referred to the Court of Justice of the European Union (the CJEU). The dispute has its roots in the copyright claim of the members of Kraftwerk, electronic music pioneers, against Moses Pelham, a music producer, over a two-second sample dated from 1977. The main subject of the three legal proceedings concerned the extraction of a two-second sequence of rhythms from the composition ‘Metall auf Metall’ by Kraftwerk and the inclusion of the rhythm in the song ‘Nur Mir’ (written by Moses and performed by Sabrina Serlur). Kraftwerk claimed that using their sample in a loop and including it in a song constitutes an infringement of their producers’ rights and therefore asked for an injunction against further distribution of the song.
Since 1999, the case has been tried by all judicial instances in Germany. After having occupied the lower courts, the case initially reached the German Federal Court of Justice (I ZR 112/06) (Bundesgerichtshof or BGH) and was subsequently referred back to the Higher Regional Court (Oberlandesgericht). In the second round of the proceedings, the case was appealed once again to the BGH (I ZR 182/11). These decisions were all favourable to the plaintiffs.
In 2012, after a series of unsuccessful attempts, Mr Pelham and others lodged a constitutional complaint (1 BvR 1585/13) against the second decision of the BGH. In essence, the Federal Constitutional Court (Bundesverfassungsgericht) was asked to clarify the extent to which music artists may rely on the right of artistic freedom (Article 24 of the German Copyright Act), while facing a copyright-related claim from phonogram producers. The Constitutional Court criticised the lower instances for not giving sufficient consideration to Mr Pelham’s freedom of artistic expression provided in Article 5(3) of the German Constitution which, in some cases, (‘creation of artistic dialogue’) may indeed outweigh the exploitation interests of phonogram producers under Article 85 of the German Copyright Act. It is within the powers of the Constitutional Court to reverse unconstitutional laws or court decisions, but not to enact or rewrite them. Consequently, the Court decided to set aside all the previous judgments and refer the case back to the BGH.
Although the domestic proceedings assessing the legality of sampling have been ongoing for almost twenty years, there is yet to be a final outcome. Since the provisions on copyright and neighbouring rights are largely harmonised under EU law, it is questionable whether there is room left for the application of national law. For that reason, the BGH decided to seek guidance from the CJEU. The questions referred primarily concern the interpretation of Articles 2(c) of the InfoSoc Directive and 9(1)(b) of the Rental and Lending Directive (2006/115/EC) – on phonogram producers’ rights of reproduction and distribution – and their relation to the concept of sampling, as well as the potential application of the quotation exception (Article 5(3)(d) of the InfoSoc Directive) and the role of the Charter of Fundamental Rights of the European Union.
More specifically, the primary concern of the BGH was to seek guidance on how to determine whether a two-second sample falls within the notion of reproduction in the InfoSoc Directive and, if so, whether the German ‘free use’ exception is compatible with EU law. Furthermore, the BGH wants to know whether sampling fulfils the conditions of the quotation exception, as well as the role of the EU Charter in determining the scope of phonogram producers’ exclusive rights and applicable exceptions.
The decision of the CJEU in Metall auf Metall should have a significant impact for the digital music industry. In theory, the Court has a number of ways to determine the extent to which unlicensed sampling may constitute a copyright infringement. In doing so, it should take into account different factors relevant to the definition of the practice of sampling under the right of reproduction or the quotation exception, namely the degree of recognition of the original music sample and the possibility of making associations with a previously existing composition. Depending on whether the CJEU interprets the reproduction right and the quotation exception broadly or narrowly, two main outcomes are foreseeable.
Firstly, the CJEU may follow the approach of previous judgments and interpret the reproduction right broadly. This would probably lead to a decision that favours phonogram producers. When considering past judgments like Infopaq, it should come as no surprise if the CJEU rules that the extraction of a sequence no longer than two seconds amounts to infringement of the reproduction right of the phonogram producers, as it constitutes a partial reproduction under Article 2(c) of the InfoSoc Directive. In this scenario, the chilling effect of the potential copyright claims would be substantial for newly rising music artists, as well as for established artists relying on sampling.
Alternatively, the CJEU may carry out a proportionality test and attempt to strike an appropriate balance between competing fundamental rights, allowing the freedom of artistic expression to prevail over the interests of copyright owners. However, justifying such an approach may turn out to be tricky, due to the lack of a solid legal basis. The InfoSoc Directive provides an exhaustive list of exceptions, which do not include the notion of ‘free use’. Considering sampling as a type of quotation is also challenging, as this exception must be for purposes of criticism or review, and must relate to the quoted work. Even disregarding the purpose requirement, in many instances of sampling, the use of the sampled work is not evident. In this light, it may be argued that the right to artistic freedom is not sufficiently recognised by the existing legal framework.
In sum, the case emphasises the need to clarify and harmonise the ambiguous legal position of sampling at a supranational level. Regardless of the outcome, the most important task for the CJEU is to provide clear guidelines for national courts on how to interpret the applicable rights and exceptions to digital sampling and, in particular, the best approach to strike a balance between the fundamental freedom of artistic expression and the copyright interests of the relevant right holders. Until then, both artists and record companies will remain in a sampling limbo.
People within the European Union travel more than ever before for professional or personal reasons. When they do so, the four freedoms enshrined in the TFEU guarantee that they can take with them their siblings, professional qualifications, goods and money. One of the things they could not take with them, however, was their subscription to online content services such as Netflix, Spotify or any other streaming service allowing to access audio-visual content online. Due to the differences in copyright regimes in the different Member States, the diffusion of audio-visual works has traditionally been limited to one single Member State. To give a concrete example, a Belgian subscriber to Netflix would not be able to have access to his favourite Belgian TV-show available within his Belgian subscription available on Netflix when staying temporarily in the Netherlands for professional reasons during the week. That person would either have access to the Dutch content offered by Netflix or receive a message that ‘this content is not available within this territory’.
In light of its Digital Single Market strategy, the Juncker Commission had wanted to do away with this kind of geo-blocking based on the (temporary) residence of the content viewer. Proposing to move forward, the Commission ventured out to ensure online content portability. Portability in that context means the ability of subscribers to online content to take their subscription with them all across the European Union and to have access to it as if they were in their home Member State. From a technical point of view, that means registering a customer in one Member State and ensuring he has access to the same content whenever he logs on to the website from anywhere within the European Union. From a copyright point of view, it means introducing a legal fiction that access to the online content takes place in the Member State of residence of the subscriber, even when that subscriber accesses the content from another Member State.
Regulation 2017/1128, which entered into force on 20 March 2018, turns this portability proposal into legislative reality. It targets in the first place audio-visual service providers of online content (the BBC iplayer or French-speaking Belgian RTBF streaming service) or providers giving access to works, copyright-protected content or transmissions of broadcasting organisations, whether in a linear or an on-demand manner (e.g. Netflix or Spotify). Those providers can offer those services either for payment (Netflix) or for free (RTBF player) within the territory of an EU Member State. The Regulation defines a subscriber to those services as any consumer who, on the basis of a contract for the provision of an online content service with a provider, whether against payment of money or without such payment, is entitled to access and use such service in the Member State of residence.
Providers for payment are obliged to allow consumers to take their online content with them when temporarily residing in another Member State. They have to be able to access and use the online content service in the same manner as in the Member State of residence. That means that the online content provider needs to offer access to the same content, on the same range and number of devices, for the same number of users and with the same range of functionalities as the ones included in the home state subscription. In that case, the provider may not take action to reduce the quality of services offered and may not charge consumers more for this service. When the online content is provided without payment, content providers are not obliged to enable access in other Member States, although they may do so after having informed their subscribers. RTBF player from Belgium in that regard has indeed chosen to offer this service for its free online audio-visual content.
The right to portability only applies to situations where a subscriber stays for a limited time in an EU Member State without giving up his residency in another Member State. Residence in a third country or permanent residence in another Member State removes the benefit of the portability right. More concretely, it is only meant to apply in case of holidays, temporary work visits or individuals working in one Member State during the week and returning to another Member State for the weekend. It will fall upon content providers to verify what the state of residence of the subscriber is on the basis of specific indications. Whenever a person is no longer resident in that first Member State, the right to portability of his content subscription will end. Per Article 7 of the Regulation, contractual provisions limiting the portability of such online content within the European Union shall be unenforceable, no matter what law is governing the contractual relationships between the parties to the subscription agreement.
The Regulation in itself is an important step forward in ensuring the movement of online content across the EU. At the same time, however, only limited attention has been devoted to its practical application and enforcement. From an enforcement point of view, the Regulation only states that contractual provisions limiting the right to online content portability are unenforceable. In so doing, the EU essentially tasks national courts to apply and enforce that provision. In addition, the Regulation does not provide for public authorities – such as consumer protection authorities – overseeing online content providers and imposing sanctions in case they do not meet their obligations. The Regulation only seems to confer a role on data protection authorities to guarantee that data regarding the residence of subscribers are only used for the purposes of verifying whether the right to portability can still be relied on.
As a consequence, it would not be unlikely that the application of the Regulation will be overseen by different authorities with different enforcement powers within different Member States. That may result in a lack of coherence in the interpretation and enforcement of its provisions, which in the mid to long run may hamper the effectiveness of the portability right. The enforcement of this Regulation therefore deserves to be taken more seriously and a more streamlined EU enforcement approach would be desirable in that regard. Although the acknowledgment of a portability right is paved with good intentions, it may very well become a road to hell for both providers and subscribers if enforcement of the regulation is not taken more seriously.
The fight for the new press publishers’ right is continuing in the European Parliament. It was proposed by the European Commission in the draft Directive on Copyright in the Digital Single Market in 2016 and since then has attracted extensive discussion involving different groups. It is certainly not the first attempt by publishers to seek exclusive rights that would help them protect their interests in the changing technological and business environment. As one example, publishers were successful in getting the so called ‘right to published editions’ introduced in the UK Copyright Act 1956, Australian Copyright Act 1968 and some other countries. The right to published editions was introduced to protect the typographical arrangements of published editions of, essentially, out-of-copyright works and lasts for 25 years. It remains in the copyright statutes today. It is interesting to look at the history of this right and see whether there are lessons that could be learned for the purposes of the current discussion on the proposed press publishers’ right.
The proposed rationale for a new press publishers’ right is not novel.
The arguments that publishers today are using closely resemble the arguments voiced by publishers almost a century ago. When the UK Publishers Association started lobbying for the right to published editions in the 1930s, they referred to new technologies, such as photolithography and offset printing, and the threat that these new technologies posed. Namely, they enabled ‘unscrupulous publishers’ to reprint published editions of out-of-copyright works without the need to invest in expensive typesetting and without the need to share profits with the original publishers. They also referred to other exclusive right holders, such as record producers, and argued that due to the similar functions they perform, publishers should be granted a similar scope of rights. Today, press publishers argue that new technologies, namely the Internet, have enabled ‘unscrupulous competitors’ such as news aggregation services and social websites to disseminate publishers’ content, make unfair profit from this and not share it with press publishers. They also refer to other neighbouring right holders – record producers, broadcasters etc (the list is longer today) that perform similar dissemination functions and undertake similar investment – and suggest that publishers deserve similar exclusive rights.
The same rationale is not necessarily valid in different countries.
The history of the published editions right shows that the proposed rationale for the right was not necessary true in all countries where it was introduced. While UK publishers’ fears of “unscrupulous competitors” free-riding on their investments may have had some basis, the situation in Australia was different. When the Copyright Bill 1967 was discussed, the Australian Book Publishers Association did not express any concerns about possible ‘piracy’ of out-of-copyright works, nor did they show any interest in the right. Since local publishers showed no opposition to this right, and as a result of the tradition of following British law, the right was transposed into the Australian Copyright Act 1968. It is still questionable whether it provided any benefits to the local Australian publishing industry. Today, similar concerns could be identified in the EU discussion on press publications. While publishers in large EU markets, such as Germany and France, could possibly provide evidence as to the need for the right, publishers in smaller markets, such as small Central-Eastern European countries, apparently do not see news aggregation services or social media platforms as a threat to their existence online; they rather think that these platforms help readers to locate news websites and thus increase traffic to these websites. If this right is introduced across the EU, in some Member States it is likely to be one more ineffective black letter rule.
Measuring effectiveness does not get easier with time.
Today, one of the main arguments that the critics of the proposed press publishers’ right put forward is that the right will not be effective: It has failed in Germany and Spain; it is not likely to produce additional income for publishers in other EU countries either. Such forward-looking assessments are always speculative. Interestingly, even when talking about the previous rights, measuring effectiveness is a similarly difficult task. Some publishers argue that the published editions right was extremely important for those publishing out-of-copyright classical texts. Others disagree by suggesting that although it could have provided some comfort for such publishers, it was never determinative in whether to engage in particular publishing projects; other considerations and costs, such as marketing and distribution, played a much more important role. What became clear is that rights intended to address specific situations become quickly outdated as technology and business models develop. After Desktop Publishing (DTP) software became available in the 1980s, the published editions right essentially lost its relevance. Keeping in mind the fast-evolving Internet technology and business models, one may wonder whether a similar destiny awaits the proposed right for press publishers.
New rights tend to be applied to unexpected situations.
The intriguing fact in the history of the right to published editions is that there has not been a single case where an entity from the book publishing industry tried to rely on this right. Rather, quite unexpectedly, other industries, and in particular newspaper publishers, tried to rely on it to protect their interests. In the 1980s they were rather successful but soon the courts in both the UK and Australia became more careful in extending this right to new situations. The courts acknowledged that this right is broad enough to cover editions of newspapers (as well as software manuals!) but concluded that infringement will be found only when the focus of copying is the layout of the edition and not merely the content. It is very likely that the press publishers’ right could gradually expand beyond its initial scope. For instance, book publishers may want to ask for a similar right that would allow the monetisation of snippets on the Google Books platform.
A new right may lead to new frictions.
The opponents of the press publishers’ right suggest that another layer of rights over press articles would cause further difficulties in the licensing market. They might be right. The published editions right has caused similar friction. In the 1990s, Australian press monitoring companies complained that press publishers threatened them with the right to published editions, even though they had licensed the rights to press articles from the appropriate collective societies. As a result, they requested the abolishment of the right or limitation of its scope.
Hopefully, these 5 lessons from the history of the published editions right will be of use in the current debate on the press publishers’ right.
The Consultation Paper now asks for further views on:
the expansion of flexible exceptions to copyright infringement – in particular, whether an open-ended ‘fair use’ exception similar to that in the United States should be introduced in Australia or, alternatively, if the existing list of ‘fair dealing’ exceptions should be expanded to accommodate changing community, technology and business standards;
identifyingcurrent or proposed exceptions that should be protected against ‘contracting out’ – in particular, whether ‘contracting out’ of copyright exceptions should be unenforceable for all exceptions or limited to some exceptions for a prescribed purpose.
reforming access to orphan works – in particular, whether remedies for copyright infringement of orphan works should be limited when the user has conducted a “diligent search”.
The position in previous publications on these topics can be summarised below:
It appears that, at the very least, a consensus is forming around the limitation of remedies for infringement of orphan works, in certain circumstances.
Still, the Government is cautious around the difficulty in managing the competing interests of rights holders and copyright users, particularly on the controversial issue of a proposed fair use exception.
Submissions are due by 4 June 2018 and the Government has proposed a series of roundtables through April-May with stakeholders. The result of this consultation may finally crystallise the Government’s view on what reforms, if any, should be implemented.
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At the end of 2017, HADOPI published an important survey on its activities for the period 2016-2017. It gives interesting and useful information on the graduated response created by the French legislator to fight online infringement directly at the source, by educating internet users and dissuading them from unlawfully downloading and/or sharing (and if possible accessing) works and elements protected by neighbouring rights.
HADOPI is the High Authority for the distribution of Works and the Protection of Rights on the Internet, created by the French legislator in a Decree of 29 December 2009. The authority has several missions: the development of lawful provision of works (e.g. HADOPI has created a website which identifies the platforms where works are lawfully available: http://www.offrelegale.fr); the regulation of the implementation of technical protection measures; and the protection of works from infringement, through the graduated response procedure.
The French legislator created an original graduated response system intended to stop the use of an internet access connection for infringing purposes. The provisions and sanctions are controversial in France and have been modified several times. The graduated response, which concerns the liability of internet users, is partly administrative and partly criminal (as the users may be fined). Article L.336-3 IPC provides that a person with access to internet services has an obligation to ensure that his connection is not used for infringing reproductions or communications to the public. Until the Decree No. 2013-596 of 8 July 2013, the holders of an internet access connection could have their internet access suspended. This is no longer the case. The offence is not qualified as a misdemeanour and the only possible sanction is a simple fine of up to EUR 1,500. The holder of an internet access connection may be sentenced by a court if, without legitimate reason:
he has not secured his access to the internet (e.g. by restricting access via the Wi-Fi system, thus stopping a neighbour from using the access to download works unlawfully) or has lacked diligence in the implementation of the means to secure the access;
he has been recommended, by letter and/or email, by the committee of Article 331-25 IPC (HADOPI’s ‘Commission de protection des droits’) to implement a means of securing access; and
his access is used for infringing activities within the year following this recommendation.
The procedure is the following: (1) rightholders (collecting societies, record companies, etc.) who have established the existence of unlawful exchanges or downloading on or via certain websites file a case before HADOPI, and the ISPs are asked to identify the holder of the internet subscription; (2) within 2 months HADOPI sends a recommendation by email to the internet user; (3) if the internet user is found to have continued unlawful activities, a second recommendation is sent by email and registered letter; (4) if, within 12 months from the second recommendation, unlawful activities carry on, HADOPI can decide to lodge a complaint with the prosecutor. It must be noted that the internet user can also be sued or prosecuted for copyright infringement.
HADOPI’s survey presents statistics that show that this system is efficient, since it is indeed largely dissuasive:
between 1 October 2010 and 31 October 2017, HADOPI sent 9,427,718 recommendations, and 1,853,323 between 1 November 2016 and 31 October 2017,
between 1 October 2010 and 31 October 2017, HADOPI sent 846,018 second recommendations, and 160,000 between 1 November 2016 and 31 October 2017,
between 1 October 2010 and 31 October 2017, 7,886 internet users were found to have continued unlawful activities after the second recommendation, and 2,497 between 1 November 2016 and 31 October 2017,
2,146 cases were filed with the prosecutor between 1 October 2010 and 31 October 2017, and 847 between 1 November 2016 and 31 October 2017,
since the launch of the graduated response, 2,146 files have been sent by HADOPI to the prosecutors for possible prosecution, and 189 sentences have been handed down.
In a country of 67 million people, these figures are quite impressive. In practice, the survey notes that after a first recommendation is sent, HADOPI does not need to follow up on 60% of the cases. Approximately two-thirds of those interviewed (65%), who are exposed to a graduated response procedure, either personally or in their immediate circle, report that they have decreased their illicit consumption following the receipt of a recommendation.
Interestingly (and amusingly), from time to time I personally hear that friends or people I know have received an email from HADOPI, and that they have therefore decided to stop downloading works from unlawful websites. And the figures speak for themselves. Of course, the graduated response is not in itself sufficient to fight online copyright and neighbouring rights infringement, but this survey shows that it is a useful additional enforcement measure.
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Whether the online real estate brokerage Redfin exceeded its license to use Alexander Stross’s copyrighted property photographs raised a question of fact for the jury, a panel for the U.S. Court of Appeals determined, reversing the federal district court in Austin’s decision that Redfin’s license was a complete defense to Stross’s claim of copyright infringement. The Eighth Circuit panel also reversed the district court’s finding that because Stross was not a party to the licensing agreement between Redfin and a multi-listing service, he had no standing to pursue his copyright claims (Stross v. Redfin Corp., April 9, 2018, per curiam).