What Does EU’s New Copyright Law Mean for Online Service Providers?

A new copyright directive approved by the European Union on February 13 might fundamentally change the landscape for online service providers (OSPs). While the bill still awaits confirmation from European Parliament, once formally approved, it will compel OSPs to either obtain licenses or affirmatively screen for uploads of copyrighted materials.

Article 11 and Article 13 are the most controversial provisions in the new directive. According to the final text (compiled by Member of the European Parliament Julia Reda, Article 11, Article 13), Article 11 will require OSPs to get a license from news publishers for even snippets of news, and Article 13 will make content sharing platforms accountable for unlicensed uploads made by users.

Implications for Article 11 seems to be more clear-cut. OSPs would choose to limit their display to headlines of news, obtain a license, or more dramatically like Google suggests, shut down news service completely.

Article 13 poses a more complicated question as it challenges the safe harbors that are currently provided to OSPs against direct and indirect liabilities under EU’s Electronic Commerce Directive 2000 (E-Commerce Directive). Following the United States’ innovative exemption established through the DMCA, the EU adopted similar provisions. Article 12 to Article 15 of the E-Commerce Directive provides OSPs with exemptions regarding transmitting, caching, hosting and obligations to monitor. The burden is on the copyright holder to detect and enforce their rights.

Now pursuant to Article 13, the burden is shifted to OSPs.  If OSPs do not obtain licenses from copyright holders, they will be liable for the infringing uploads unless they have made “best efforts,” (Article 13, §4(b)) which can be interpreted as requiring OSPs to adopt effective measures to filter infringing material. If OSPs obtain licenses, such licenses will also cover acts carried out by users (Article 13, §2).

Adopting an effective screening technology seems a viable alternative at least for big OSPs, especially given that YouTube, a name condemned often by musicians in support of the new law, already has in place a system called Content ID. Content ID is now available to major artists to facilitate the identification of infringing materials, it is still the duty of the artists to report and enforce their rights.

However, criticism, review, parody and other fair uses carved out from the new law complicates the issue. This is especially true in the case of parody, where literal copying or substantial similarities abound so that audience can relate to the original work, as it is inherently required by the nature of parody. Line-drawing can be difficult as the context of creation rather than the work itself needs to be analyzed for determination. Not only is it questionable if technology like Content ID is already capable of such a task (Content ID now instructs the copyright holder to review for fair use), but whether to entrust at all the decision to machines, or fundamentally OSPs, is debatable.

OSPs are obligated under Article 13 to provide an “effective and expeditious complaint and redress mechanism available to users” (Article 13, §8). If OSPs choose to err on the side of caution for fear of infringement suits by copyright holders, they will effectively have to censor uploads based on a stricter fair use doctrine. If the censorship does not chill creations, OSPs will have to devote considerable time and effort to resolving disputes with uploaders.

The complications of filter application might incentivize licensing as a solution, which provides more certainties for OSPs and reduces friction with users especially for websites whose business models rely on content sharing. The new copyright law seems to nudge OSPs in the intended direction of growing the licensing market (Article 13, §9 (37)), but a lot of questions still remain as to how such licensing will work in practice. Do OSPs have to proactively license all copyrighted works in the world? In a fair use case, can OSPs unilaterally take down content when they decide the revenue produced does not compensate for the licensing fee? What do OSPs do with the content when a licensing negotiation is stuck, and how does it affect a user’s right to effective redress mechanisms? The adoptions of DMCA, E-Commerce Directive and the like are out of concerns of overburdening OSPs. It appears reasonable to shift the burden back to OSPs to police infringing activities once they have the ability to supervise, otherwise, they unfairly benefit at the expense of artists. We need more information to decide if the burden-shifting is pre-mature. If the new law is to be formally adopted, many important practical questions would have to be addressed first.

Enid Qin is a JD candidate, 2020, at NYU School of Law.