The European Parliament's legal affairs committee, JURI, recently voted to approve Article 11 and 13 of the proposed EU Directive on Copyright in the Digital Single Market. The legislation seeks to clamp down on the misuse of copyrighted material and has been widely heralded by publishers as providing long overdue protection.
Academics and industry leaders see things differently. A set of recommendations published by 56 leading academics describe the Copyright Directive as "incompatible with the guarantee of fundamental rights and freedoms".
Then, in an open letter published last month, tech entrepreneurs warned that the proposals could transform the internet "from an open platform for sharing and innovation, into a tool for the automated surveillance and control of its users". Signatories of that letter include Wikipedia founder, Jimmy Wales and the inventor of the World Wide Web, Tim Berners-Lee.
In this article we will take a closer look at the recent controversy surrounding Articles 11 and 13 and explain its importance to individuals and businesses alike.
The "UGC" Loophole
In the context of such criticism, the rationale behind the new Directive is surprisingly innocuous. Around two years ago, the European Commission began investigating complaints that tech monoliths, such as Facebook and Google, were systematically exploiting copyrighted works published online.
As it stands, users of these websites are allowed to upload any content they wish to their platforms. This "User Generated Content" often contains material that infringes upon the copyright of authors, artists, journalists and so on.
As these websites do not pay users for uploading content, the platforms profit from a near unlimited supply chain of free "User Generated Content". The copyright owners, whose works have been used to drive traffic to the platform, are left uncompensated.
This system is allowed to operate because the current Ecommerce Directive places legal responsibility on the uploader. Online platforms are only required to take action once illegality has been brought to their attention.
The Solution: Articles 11 & 13 of the Copyright Directive
The Commission is now seeking to close the UGC loophole in the proposed Copyright Directive.
Article 11 would make platforms liable to compensate publishers for quoting from, linking to, or displaying snippets of copyrighted content. This has been portrayed by critics as a "link tax".
Article 13 goes further and requires platforms to take "appropriate" measures to prevent copyrighted material from ever appearing on their website. This is to be achieved by the use of "effective content recognition technologies".
Behind the vague terminology is an obligation on internet platforms to install filters that either prevent users from uploading potentially copyrighted materials, or verify that content is properly licensed. This seems like a reasonable policy position. Why, then, have the proposals proved so controversial?
Killing the Competition?
A major problem with Article 13 is its potential effect on competition. Critics argue that the only companies with sufficient resources to comply would be those that the legislation is intended to target. Facebook and Google have already developed complex filtering technologies that employ a mixture of artificial intelligence and human review. They can also endure any financial penalties should copyrighted material slip through the net.
The issue for potential competitors is that developing smart content filters is an expensive and imperfect process. Even the filters implemented by Facebook and Google are fraught with difficulties and often criticised for their lack of effectiveness. Critics predict that the result of mandating such filters across the board will be to discourage competitors from upscaling to the point of being caught by the Directive. If, on the other hand, companies try to outsource their filtering obligations, they will likely be handing over control to centralised systems built and operated by their tech giant competitors.
An increased regulatory burden may also act as a deterrent to potential start-ups and venture capitalists, leading to a shift in investment towards jurisdictions with less constrictive rules.
For these reasons, and despite a proposed carve out for small and medium sized enterprises, the ironic effect of Article 13 may be to solidify the market dominance of Facebook and Google. In so doing, the EU could be placing control over what Europeans see and do online into the hands of a few companies in Silicon Valley.
Link Tax: Where Do We Draw the Line?
Article 11 also suffers from a lack of certainty and practical guidance. Crucially, the concept of a "link" is currently undefined, with the task being left to individual Member States. MEP Julia Reda has flagged the possible outcome that "[i]nstead of one Europe-wide law, we'd have 28, with the most extreme becoming the de-facto standard." International internet platforms could simply comply with the most restrictive in order to save on costs.
This is particularly important in light of US District Judge Katherine Forest's recent decision in Goldman v Breitbart, which found that the simple act of embedding a tweet could constitute an act of "linking" in violation of a publisher's copyright. It is unclear whether the Commission ever intended the effect of Article 11 to extend as far as licensing tweets. However, if even a single Member State was to adopt the prevailing US approach, this is a distinct possibility. A full discussion of the Goldman case can be found here.
Again, it may be that industry leaders, who can afford to negotiate complex licenses with international publishers, will continue to thrive, whilst other platforms are strangled by red tape.
Automating the Process: What About "Fair Use"?
A common criticism of Articles 11 and 13 is that, at present, there is no carve out for "fair use" exceptions. This term, which originates in US copyright law, allows for the limited use of copyrighted works for transformative purposes such as comment, criticism, or parody.
In the absence of fair use exceptions in the proposed Directive, any user generated content is potentially in breach of copyright. All extracts of audio, pictures, text and video shared online risk being automatically flagged and removed by the filters. As noted by Julia Reda, "even short and purely factual headlines like 'Angela Merkel meets Theresa May'" would require licensing".
It easy to see how such a system could be manipulated. It may, for example, allow key information to be suppressed in anticipation of financially or politically influential events. Filters can be primed to detect media which could be harmful to a company's share price, or the electability of a chosen candidate. That material can then be blocked before it has ever been made available to the public.
What is most concerning is that claims need not be legitimate in order to be effective. Platforms must block any potentially infringing material as a matter of course. By the time that the legitimacy of the claim has been investigated, or a legal challenge brought, the damage may have been irreversibly done.
What Is Next for Articles 11 & 13?
JURI's decision is not determinative. Articles 11 and 13 still need to be approved by the wider European Parliament's plenary vote. Its first attempt at passing through Parliament was kicked back on 5 July 2018 by a vote of 278 for to 318 against. MEPs will now have until September to re-examine the text and consider the issues from both sides of the debate.
Despite the criticism levied against publishers, they have succeeded in highlighting the need for greater protection of European copyright holders. The legislation also contains important carve outs for SMEs, Wikipedia, source code repositories and trading websites such as eBay.
However, in an area as complex as copyright law, it is doubtful that any system based on automatic and indiscriminate filtering could ever provide a wholly satisfactory solution. Even if the risks of abusive filtering are overstated, the current drafting is undoubtedly vague and looks set to fail in its ostensible goal of challenging the dominance of Facebook and Google.
Given that the main offenders of the UGC loophole are a small group of market leaders, the issue could have perhaps been better addressed on competition grounds. However, that is not the path that the Commission have elected to go down. It will now be for the European Parliament to choose whether to heed the warnings of the experts who built the internet.
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.