The recently adopted and much-debated Directive (EU) 2019/790 on Copyright in the Digital Single Market (the “DSM Directive”) ought to be implemented by the Member States by June 7, 2021. Bringing into force the national laws, regulations and administrative provisions necessary to comply with the DSM Directive will not be an easy task, seeing that some of its provisions are quite vague and wordy. One of many questions is to what extent the DSM Directive seeks to impose mandatory obligations on market players, i.e. compulsory requirements that cannot be adjusted or mitigated by agreements between rightholders, users of copyrighted content, service providers and/or other actors.
This article discusses whether or not the DSM Directive should be understood as limiting the contractual freedom of so-called “online content-sharing service providers” to avoid prevention of non-infringing uses of content, such as legitimate uses under exceptions or limitations to copyright.
One of the most controversial provisions of the DSM Directive, i.e. Article 17, applies to online content-sharing service providers (“OCSSPs”). An OCSSP is defined as a service provider of which the main or one of the main purposes is to store and give the public access to a large amount of copyright-protected works or other protected content uploaded by its users, which it organizes and promotes for profit-making purposes. Article 17 thus applies not only to large content providers such as YouTube, Dailymotion and Vimeo, but to any type of user-upload service provider that fits the broad definition.
Article 17(1) explains that OCSSPs are performing an act of public communication or an act of making available to the public when they provide public access to uploaded copyrighted content. Therefore, according to Article 17(1), OCSSPs shall obtain relevant authorizations from the rightholders. In other words, OCSSPs are made primarily liable for their users’ uploads.
In addition, according to Article 17(3), OCSSPs shall no longer benefit from the limitation of liability established in Article 14(1) of the Electronic Commerce Directive 2000/31/EC (the “safe harbour”). Instead, Article 17(4) of the DSM Directive imposes a duty of care on OCSSPs to prevent copyright infringements from taking place on their platforms. In the absence of authorization, an OCSSP giving the public access to copyright-protected works (or other protected content) uploaded by its users will thus be liable for copyright infringement unless the OCSSP demonstrates that it has: (i) used its best efforts to obtain an authorization; (ii) used its best efforts to ensure the unavailability of content for which the rightholders have provided the OCSSP with the relevant and necessary information; and, in any event (iii) acted expeditiously, upon receiving an adequate notice from the rightholders, to disable access to, or remove from their websites, the notified content and used its best efforts to prevent their future uploads.
While the “best efforts” requirements of Article 17(4) do not explicitly demand that automatic content recognition technologies (e.g. “upload filters”) be implemented by the OCSSPs, considering the vast amounts of content that are being uploaded, it is conceivable that only automatic filters can execute the required verifications. However, in the current state of the art, no machines, not even artificial intelligence, can adjudge whether uploaded content is actually protected by copyright. In particular, hitherto there are no automatic systems that can decide whether, e.g. a text, movie or image is covered by an exception or limitation to copyright, such as a caricature, parody or quotation right. Hence, an obvious concern is that the technical measures thus implemented by the OCSSPs might not be able to sufficiently distinguish lawful from unlawful content and that these measures will therefore also block legal content (“over blocking”). Indeed, as repeatedly stressed by, e.g. the CJEU, technical filtering and/or blocking measures must be strictly targeted in the sense that they must serve to bring an end to an infringement of copyright or related rights without affecting the accessibility of lawful information (cf. the CJEU’s judgments in Cases C-70/10 (Scarlet Extended), paragraph 52, C-360/10 (SABAM), paragraph 50 and C-314/12 (UPC Telekabel), paragraph 56).
Article 17(7)(1) of the DSM Directive seeks to avoid over blocking by stating that “[t]he cooperation between online content-sharing service providers and rightholders shall not result in the prevention of the availability of works or other subject matter uploaded by users, which do not infringe copyright and related rights, including where such works or other subject matter are covered by an exception or limitation”. Similarly, Article 17(9)(3) states that the DSM Directive “shall in no way affect legitimate uses, such as uses under exceptions or limitations provided for in Union law”. Furthermore, Article 17(9)(4) states that OCSSPs “shall inform their users in their terms and conditions that they can use works and other subject matter under exceptions or limitations to copyright and related rights provided for in Union law.” In addition, Article 17(9)(1) and (2) requires: (i) that OCSSPs put in place effective and expeditious complaint and redress mechanisms that are available to users; (ii) that out-of-court redress mechanisms are available for the settlement of disputes; and (iii) that users have access to a court or another relevant judicial authority to assert the use of an exception or limitation to copyright and related rights.
The problem, however, is that limitations and exceptions to copyright seek to maintain an appropriate balance between the interests of users and rightholders. More specifically, limitations and exceptions to copyright allow beneficiaries to use protected material without authorization from rightholders. Limitations and exceptions to copyright do not create mandatory communication obligations for users or third parties, such as OCSSPs. Therefore, although it is very likely that a proportion of users’ uploads of third party content is covered by exceptions and/or limitations to copyright, i.e. that certain content may be shared by users without the authorization of rightholders, the OCSSPs would still not be obliged, on such grounds, to make such content available to the public.
Accordingly, under current EU copyright law, a user’s right to make third party content available to the public, under a limitation or exception to copyright, cannot be successfully invoked against an OCSSP who does not wish to make such content available to the public. This raises the important question of whether Articles 17(7) and 17(9) intend to introduce new and mandatory communication obligations for the OCSSPs. Currently, the OCSSPs’ obligations (or lack thereof) to make uploaded content available to the public is a matter to be determined by the agreements between the users and the OCSSPs. Typically, these agreements are drafted by the OCSSPs and must be accepted by all users who wish to use the OCSSPs’ services. Thus far, these agreements often stipulate that the OCSSPs do not warrant or promise that any uploaded content becomes available through their services and that the OCSSPs may remove any content that, in the OSCCPs’ sole opinion, may violate the agreements or may harm the OCSSPs or any third party. Conversely, the agreements do not normally stipulate that the OCSSPs are obliged to communicate or make available any uploaded content that does not infringe copyright or related rights. In light of the new obligations and potential liability imposed on the OCSSPs under Article 17(4) of the DSM Directive, it is rather conceivable that the user agreements will be adjusted to give the OCSSPs additional rights to remove any content from their platforms for a variety of reasons.
Consequently, Articles 17(7) and 17(9) of the DSM Directive do not provide an efficient remedy against over blocking unless Articles 17(7) and 17(9) are to be interpreted as “contract-proof”. As long as Articles 17(7) and 17(9) do not interfere profoundly with the principle of freedom of contract, in any dispute over the disabling of access to, or the removal of, content uploaded by users, many OCSSPs may simply refer to their contractual rights and the users’ waivers under the user agreements.
The central question is thus whether Articles 17(7) and 17(9) of the DSM Directive seek to impose a mandatory obligation on the OCSSPs to make uploaded, non-infringing, content available to the public. The author argues that such interpretation of Articles 17(7) and 17(9) would be ill-advised.
Firstly, uploaded content encompasses many kinds of information, some of which attracts copyright protection, some of which attracts other types of intellectual property protection, some of which is governed by other kinds of legal regulation, and some of which enjoys no legal protection at all. Accordingly, assuming that Member States would impose “must carry” obligations on OCSSPs for any content that is covered by a limitation or exception to copyright, such obligations would most likely conflict with other laws and regulations in a number of situations. In addition, such obligations would give rise to a risk of conflict with the OCSSPs’ essential codes of conduct, which usually form an important part of the user agreements.
Secondly, the freedom to conduct a business, enjoyed by OCSSPs under Article 16 of the Charter of Fundamental Rights of the European Union (the “Charter”), covers the right for the OCSSPs to be able to freely use, within certain limits, the economic, technical and financial resources available to them. The freedom to conduct a business includes, inter alia, the freedom of contract (cf. the CJEU’s judgments in Cases C‑426/11 (Mark Alemo-Herron and Others), paragraph 32, and C‑283/11 (Sky Österreich), paragraph 42). Accordingly, as is apparent from Article 52 of the Charter, mandatory “must carry” obligations may only be imposed if they are necessary to meet clearly defined general interest objectives or to protect the rights and freedoms of others. Furthermore, any limitation of a fundamental right (e.g. the freedom to conduct a business) must always be proportionate and must always respect the essence of the right in question. The “essential core” doctrine is independent from the principle of proportionality, as confirmed by the CJEU (cf. the CJEU’s judgments in Case C-293/12 (Digital Rights Ireland), paragraphs 39-40 and 45-69, respectively).
The general interests underlying EU law on national (voluntary) imposition of “must carry” obligations for certain electronic communications networks providers (cf. Article 31 of the Universal Services Directive 2002/22/EC) are, arguably, not strong enough to outweigh the major disadvantages for most OCSSPs, should similar obligations be imposed on the OCSSPs. In Sweden, for instance, mandatory “must carry” obligations have been imposed on certain providers of commercial communication networks used to transmit television broadcasts by cable, in order to secure the public’s interest in access to versatile and comprehensive information. These “must carry” obligations ensure that residents in the connected households can receive television broadcasts for which the license is subject to: (i) impartiality and objectivity requirements; and (ii) a condition concerning a diversified range of television programs that must include news coverage. In addition, these “must carry” obligations only apply to networks that are used by a significant number of households as their main means of receiving television broadcasts. Similar laws apply in Finland, Denmark and Norway. In comparison, most OCSSPs are arguably not used by most households as their principal means to receive important information, such as news. Moreover, the content uploaded by users to OCSSP platforms is generally not subject to any regulatory requirements in respect of impartiality or objectivity. In addition, while typical “must carry” obligations tend to mitigate the negative effects of the natural monopolies held by the respective cable network owners, OCSSPs are not in possession of such monopolies. Nobody owns the internet, although, admittedly, some OCSSPs are significantly larger than others. Digital content may be shared by users through many services and platforms on the internet.
It would also be a tremendous challenge for the OCSSPs to identify and determine, on a case-by-case basis, all content that must be made unavailable or removed according to Article 17(4) of the DSM Directive (cf. above), while at the same time being obliged to identify, on a case-by-case basis, all content that must be made available to the public as (potentially) required by Articles 17(7) and 17(9). The OCSSPs would most likely not be able to perform, with legal certainty, the complex and mandatory legal assessments that would be required on a continuous basis. As a consequence thereof and assuming that a “must carry” obligation would be combined with (national) rules on sanctions for non-compliance, the OCSSPs would constantly risk being held liable under Article 17 in the absence of rightholder authorization, as the OCSSPs would be required either to remove the content or to communicate the content. Likewise, in light of the OCSSPs’ obligation to ensure the unavailability or removal of infringing content under Article 17(4), an imposition of a reverse, mandatory, obligation to carry all uploaded, non-infringing, content would almost completely deprive the OCSSPs of their right to decide what content they should communicate or make available to the public from time to time. Such an interpretation of Articles 17(7) and 17(9) would not only be disproportionate but would also seriously reduce the OCSSPs’ contractual freedom to the point that Article 17 would, arguably, adversely affect the very essence of the OCSSPs’ freedom to conduct a business.
While similar challenges will most likely arise regardless of the interpretation of Articles 17(7) and 17(9), as it will ultimately be up to the national courts (or other third-party dispute resolvers), and not the OCSSPs to decide whether certain use of certain content is infringing, the negative impact on the OCSSPs would at least be more manageable if the OCSSPs would be allowed to contractually limit any “must carry” obligations.
Thirdly, the freedom to conduct a business (Article 16 of the Charter) also encompasses free competition. Before the Charter became legally binding, the CJEU also considered the freedom to conduct a business to be closely linked to, or even part of, the freedom to establish a business under Article 49 TFEU. Moreover, the services provided by OCSSPs are subject to the freedom of services provisions in Article 56 TFEU. Accordingly, any obligations imposed on OCSSPs should respect the principle of non-discrimination and should ensure that competition in the internal market is not distorted. In addition, national restrictions imposed by a Member State must not prohibit or otherwise impede the activities of an OCSSP established in another Member State where the OCSSP lawfully provides the same or similar services.
In light of these rules and principles, Article 17 of the DSM Directive should not be interpreted as allowing the Member States to voluntarily impose “must carry” provisions on OCSSPs. Substantial EU harmonization is desired. Dissimilar national “must carry” requirements would most likely impede access to the markets in certain Member States for OCSSPs from other Member States. Furthermore, the imposition of mandatory “must carry” obligations only on OCSSPs, and not on any other types of online content providers, would most likely constitute an unjustified interference in the freedom of competition. As explained in Recital 62 in the preamble to the DSM Directive, the definition of OCSSPs “should target only online services that play an important role on the online content market by competing with other online content services, such as online audio and video streaming services, for the same audiences”. The other service provides referred to in this context are those that typically negotiate and conclude license agreements with rightholders in order to operate their services. By introducing “best effort” license acquisition requirements for OCSSPs, Article 17(4) aims to lessen the competitive disadvantages perceived by other online content providers who typically acquire licenses. While such requirements are arguably fair and non-discriminatory, placing onerous “must carry” obligations only on OCSSPs would seemingly distort competition.
Fourth, given that a “must carry” obligation for OCSSPs would severely restrict the freedom to conduct a business, any law imposing such an obligation ought to be accessible, foreseeable and formulated with sufficient precision. Seeing that Articles 17(7) and 17(9) do not even mention a “must carry” obligation for OCSSPs, the freedom of contract principle ought to take precedence over any interpretation that is not expressly supported by the wording of Articles 17(7) and 17(9).
In summary, the author asserts that Articles 17(7)(1) and 17(9)(3) of the DSM Directive should not be understood as introducing mandatory “must carry” obligations for OCSSPs. It is argued that both OCSSPs and neutral third-party dispute resolvers should be able to deny, on contractual grounds (when applicable), content restoration requests under Article 17(9)(1) and (2). An OCSSP should have a right, within the limits of its liability for its own acts (including, without limitation, the liability under Article 17(4) of the DSM Directive), to carry whatever content the OCSSP deems fit to mitigate its legal risks and to best serve its users and its audience. The OCSSPs’ user agreements should not be hampered by external interference in the absence of a clear legal foundation.
An interpretation of Article 17 of the DSM Directive, which allows a fair balance to be struck between the users’ freedom of expression (Article 11 of the Charter), as manifested through exceptions and limitations to copyright, on the one hand, and the OCSSPs’ freedom to conduct a business (Article 16 of the Charter), on the other, accordingly suggests that Article 17, when implemented by the Member States, may lead to over blocking, contrary to its wording. This paradox, however, seems to be the lowest available price to pay for the new obligations imposed on OCSSPs under Article 17(4) of the DSM Directive.
