UK: EC Proposals For A Directive On Copyright In The Digital Single Market

Last Updated: 6 February 2017
Article by Paul Herbert

Implications for book publishers

Context

"The evolution of digital technologies has changed the way works... are created, produced, distributed and exploited... even though the objectives and principles laid down by the EU Copyright framework remain sound there is a need to adapt it to these new realities...". 

This is how the EC set the scene for the publication of these Proposals. However, contrary to expectations, they do not entail a rewriting of EU Copyright Law but rather some piecemeal tweaking in a few specific areas. We have selected those which are of most relevance to book publishers, though it will be seen that these favour users and authors rather than the publishers.

1. Digital and cross-border uses in the field of education

Here the EC feels there is a need for greater clarity to ensure that educational establishments have certainty when using works in digital teaching activities and distance learning. The EC's concern is that Member States don't universally allow for online use and distance learning, especially in a cross-border context. They propose to rectify this in Article 4 which would introduce an exception to allow for the digital use of works for the purpose of illustration for teaching at education establishments or through their secure networks provided that the source and the author are credited (unless that is impossible for reasonable of practicality).

Comment

While this may have significant impact on a pan-EU basis it is of very marginal impact as far as UK Copyright Law is concerned. Section 32 of the Copyright, Designs & Patents Act 1988 already permits fair dealing for the purpose of illustration for instruction for non-commercial purposes. Would digital online and/or cross-border use disqualify reliance upon the fair dealing exemption?  I think that is highly unlikely, and I am certainly not aware of any litigation on the point which suggests otherwise. Therefore any such provision would have little or no impact in the UK.

2. Text and Data Mining in the field of Scientific Research

Text and Data Mining (TDM) typically involves copying electronic information such as articles in online scientific journals and analysing the data they contain for patterns, trends and other useful information. Because these technologies typically involve wholesale copying of entire works this tends not to be covered in the subscription contracts for the journals in question and again the question arises as to whether this could be said to be fair dealing. The EC proposes to clear up this uncertainty with its proposed Article 3 which would introduce an exception to allow for reproduction and extraction by research organisations to carry out text and data mining of works for the purposes of scientific research. This would only apply to research "in the public interest" irrespective of whether such research is for commercial or non-commercial purposes. 'Scientific' is not defined, but it is accepted that this would not be limited to science, but include humanities, economics, law and so on.

Again the UK is already fairly compliant in this area. S.29A CDPA permits the making of a copy of a work in order that a person who has lawful access to it may carry out computational analysis of anything recorded in the work for the sole purpose of research for non-commercial purposes, provided there is a sufficient acknowledgement. Clearly the fly in the ointment here is the limitation for non-commercial research.

3. Greater transparency for Authors and Performers

Authors and performers usually have to rely on others to exploit their works by licensing or transferring their rights. As they tend to be in a weaker contractual position when they make these disposals they need information to assess the continued economic value of their rights. Due to a lack of transparency these creators are often unable to monitor the measure of their success, especially due to the increased complexity of online distribution. Thus the Commission proposes a provision (Article 14) which would give creators the right to receive regular information on the exploitation of their work from licensees particularly in relation to exploitation, revenue and remuneration due.

Comment

Clearly this right would not need to be relied upon where the creator already has a contractual right to this effect. In the publishing context there is a 'transparency lite' practice, typically an author may be entitled to receive twice yearly statements of sales with a right of audit, albeit at the author's expense. However the EC's proposal appears to envisage something more granular than this.

4. Fair Remuneration for Authors and Performers

This is a significant corollary to the transparency right. The Commission is keen to create more of a level playing field between those who create the content and those who exploit it. They are concerned that rights agreements of long duration rarely offer creators a right of renegotiation. Hence Article 15 would give creators the right to request additional remuneration for licensees where the remuneration is disproportionately low compared to subsequent revenues.

Comment

This is otherwise known as a bestseller clause, creating a form of contract adjustment mechanism triggered presumably by the information provided under the new transparency arrangement. This is clearly of great potential significance (and cost) to publishers. Would an author's royalties which are paid on a ratchet according to sales be vulnerable to being disproportionately low? Again it may be that these conventional arrangements are not sufficiently granular for the purposes of the EC's proposals. Or would they only apply where the author has received a fixed fee rather than a royalty based payment? In any event they are certainly at variance with the UK's long established freedom of contract principle. They also create many potential uncertainties, not least if the licensee has sold on the rights and no longer benefits from them. Would the right then attach to the sub-licensees?

Although this is expressed as a right to make a request, the Commission clearly intends it to have real teeth since Member States would also be required to create a dispute resolution mechanism to deal with this. Equivalent provisions are already in force in Germany and The Netherlands and this has doubtless influenced the Commission in seeking to roll them out on a wider basis.

The draft Directive has now gone through the first stage at the European Parliament and is now with the Council of Ministers. If the Council finds the proposals unobjectionable the Directive is likely to become effective within the two year notice period which the UK is required to give in order to achieve Brexit. However, it will still be for the UK to decide whether or not it wishes to implement the Directive by means of enacting domestic legislation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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