On April 26, 2022, the Court of Justice of the European Union (the “Court”) delivered its judgment (full text of the decision accessible here) in case C-401/19 – Poland vs. European Parliament and Council, concerning the validity of Article 17 Directive (EU) 2019/790 on copyright and related rights in the Digital Single Market (full text accessible here – the “DSM Copyright Directive”).
1. Article 17 DSM Copyright Directive in a nutshell
Article 17 of the DSM Copyright Directive applies to online content-sharing service providers (“OCSSPs”), as defined in Article 2 para. 6, with further guidance in recitals 62 and 63.
Article 17 states that OCSSPs carry out acts of communication to the public when they give access to works uploaded by their users. As a result, these providers become directly liable for their users’ uploads.
They are also expressly excluded in paragraph 3 from the hosting safe harbor for copyright relevant acts under Article 14 para. 1 Directive 2000/31/EC the “E-Commerce Directive”).
The new provision introduces a complex set of rules to regulate OCSSPs, including a liability exemption mechanism in paragraph 4 of the DSM Copyright Directive, and a number of what can be referred to as mitigation measures and safeguards.
The liability exemption mechanism on Article 17 para. 4 of the DSM Copyright Directive encompasses a series of cumulative “best efforts” obligations to: (a) obtain an authorization; (b) ensure unavailability of specific protected content; and (c) put in place notice and take down and notice and stay down mechanisms.
Assuming OCSSPs are able to demonstrate best efforts to obtain an authorization, they shall then comply with the additional conditions as specified by Article 17, para 4, let. b) and c) to benefit from a liability exemption for the user-uploaded content they host. In that, OCSSPs shall first receive from rights holders “relevant and necessary information”, upon which they must either carry out “best efforts to ensure the unavailability of specific works” (para. 4, let. b)) or ensure the works already taken down do not resurface on the platform (para. 4, let. c)).
In addition to the above, Article 17 of the DSM Copyright Directive also includes the mitigation measures and safeguards against the potential negative effects of the preventive measures. First, the requirements of a proportionality assessment and the identification of relevant factors for preventive measures (para. 5). Second, a special regime for small and new OCSSPs (para. 6). Third, a set of mandatory exceptions akin to user rights or freedoms that are designed as obligations of result expressly based on fundamental rights (para. 7). Fourth, a clarification that Article 17 of the DSM Copyright Directive does not entail general monitoring – a similar prohibition to that set out in Article 15 of the E-Commerce Directive (para. 8). Fifth, a set of procedural safeguards, including an in-platform complaint and redress mechanism and rules on out of court redress mechanisms (para. 9).
Finally, Article 17 paragraph 10 of the DSM Copyright Directive tasks the European Commission with organizing stakeholder dialogues to ensure uniform application of the obligation of cooperation between OCSSPs and rights holders and to establish best practices regarding the appropriate industry standards of professional diligence.
2. Pleas in law and main arguments of the Republic of Poland
With a referral brought on May 24, 2019 (full text of the action accessible here), the Republic of Poland sought:
- the annulment of Article 17 paragraph 4 let. b) and c) of the DSM Copyright Directive, the latter in the part containing the following wording: “and made best efforts to prevent their future uploads in accordance with point (b)”; and
- in the alternative, if the Court found that the contested provisions could not be deleted from Article 17 of the DSM Copyright Directive without substantively changing the rules contained in the remaining provisions of that article, the annulment of Article 17 of the DSM Copyright Directive in its entirety.
The Republic of Poland raised a single plea alleging infringement of the right to freedom of expression and information pursuant to Article 11 of the Charter of Fundamental Rights of the European Union (“Charter”), claiming that the imposition on OCSSPs of the obligation to make best efforts: (i) to ensure the unavailability of specific works and other subject matter for which the rightsholders have provided the OCSSPs with the relevant and necessary information (i.e., let. b) of Article 17 para. 4 of the DSM Copyright Directive); and (ii) to prevent the future uploads of protected works or other subject-matter for which the rightsholders have lodged a sufficiently substantiated notice (i.e., point (c), in fine, of Article 17(4) of the DSM Copyright Directive), makes it necessary for OCSSPs to carry out prior automatic verification (filtering) of content uploaded online by users and to introduce preventive control mechanisms, to avoid liability.
According to the Republic of Poland, such mechanisms undermine the essence of the right to freedom of expression and information and do not comply with the requirement that limitations imposed on the right to freedom of expression and information be proportional and necessary, as provided by Article 52 para. 1 of the Charter.
3. Opinion by AG Saugmandsgaard Øe
On July 15, 2021, in its opinion on case C-401/19, Advocate General Henrik Saugmandsgaard Øe proposed that the Court should find that Article 17 of the DSM Copyright Directive was indeed compatible with the freedom of expression and information, and therefore dismissed the action brought by Poland (full text of the opinion of the AG accessible here).
To recall, the AG considered that the contested provision respected the “essence” of freedom of expression and information. While in view of the particular importance of the Internet to that freedom, public authorities cannot oblige online intermediaries to monitor content shared or transmitted through their services in the search of any kind of illegal or undesirable information, the European legislator may, as in this case, choose to impose certain monitoring obligations, in respect of specific illegal information, on certain online intermediaries.
The AG observed, moreover, that Article 17 of the DSM Copyright Directive meets an objective of general interest recognized by the EU, since it is intended to ensure effective protection of intellectual property rights. As regards compliance with the principle of proportionality, the AG explained that the European legislator had a margin of discretion to reconcile freedom of expression with respect for the intellectual property rights of rightsholders. In this context, the legislator could choose to modify the liability regime applicable to online sharing service providers – which initially resulted from E-Commerce Directive – by imposing monitoring obligations on some of them.
4. Ruling of the Court
In a nutshell, the Court held that Article 17 DSM Copyright Directive is compatible with freedom of expression and information under Article 11 of the Charter. In so doing, it rejected the request of the Republic of Poland to annul said provision as the obligation on OCSSPs to review – prior to its dissemination to the public – the content that users wish to upload on their platforms, is accompanied by the necessary safeguards to ensure that that obligation is compatible with freedom of expression and information.
The Court clarified that when transposing Article 17 of the DSM Copyright Directive, Member States shall act based on an interpretation of such provision consistent with Article 11 of the Charter and, more generally, not conflicting with European fundamental rights or with the other general principles of EU law (e.g.: the principle of proportionality).
Lastly, the Court also noted how currently no valid alternatives appear to exist to the use of automatic recognition and filtering tools in order to comply with the obligations under Article 17(4)(b)(c) of the DSM Copyright Directive.
5. Findings of the Court
The ruling of the Court is based on the following reasoning:
- The action brought by Poland is inadmissible: Article 17 of the DSM Copyright Directive establishes a new liability regime for OCSSPs, the various provisions of which form a whole and seek to strike a balance between the rights and interests of those providers, those of users of their services and those of rightsholders. As let. b) and point c) of Article 17 para. 4 of the DSM Copyright Directive are not severable from the remainder of Article 17, the partial annulment asked by Poland would consequently alter the substance of Article 17.
- The liability regime pursuant to Article 17 of the DSM Copyright Directive introduces a limitation on the exercise of the right to freedom of expression and information: in case users upload unlawful content on the platforms of OCSSPs and the latter have no authorization from the relevant rightsholders, OCSSPs shall demonstrate that they meet all the conditions for exemption from liability, as laid down in Article 17 para. 4 let. a), b) and c) of the DSM Copyright Directive.
Such obligations require de facto OCSSPs to carry out a prior review of the content and to this end OCSSPs shall use automatic recognition and filtering tools, in the absence of other practicable solutions. Such a prior review and filtering are liable to restrict an important means of disseminating online content and thus to constitute a limitation on the right to freedom of expression and information.
- The limitation on the exercise of the right to freedom of expression and information complies with requirements set by of Article 52(1) of the Charter: the obligation on OCSSPs does not disproportionately restrict the right to freedom of expression and information of users, because such obligation is accompanied by appropriate safeguards in order to ensure respect for the right to freedom of expression and information of users, and a fair balance between that right, on the one hand, and the right to intellectual property, on the other – namely:
- a clear and precise limit on the measures that may be taken in implementing those obligations, by excluding measures which filter and block lawful content when uploading;
- users are authorized to upload and make available content generated by themselves for the specific purposes of quotation, criticism, review, caricature, parody or pastiche, moreover OCSSPs shall inform their users that they can use works and other protected subject matter under exceptions or limitations to copyright and related rights provided for in EU law;
- the liability of OCSSPs can be incurred only on condition that the rightsholders concerned provide them with the relevant and necessary information about that content at-issue;
- Article 17 of the DSM Copyright Directive clarifies that the new liability regime does not lead to any general monitoring obligation on OCSSPs: this means that the latter cannot be required to prevent the uploading and making available to the public of content which, in order to be found unlawful, would require an independent assessment of the content by them. In that regard, availability of unauthorized content can only be avoided upon notification of rightsholders;
- There are several procedural safeguards, in particular the possibility for users to submit a complaint where they consider that access to uploaded content has been wrongly disabled, as well as the possibility to access to out-of-court redress mechanisms and to efficient judicial remedies;
- The DSM Copyright Directive requires the European Commission to organize stakeholder dialogues to discuss best practices for cooperation between the providers and rightsholders, and also to issue guidance on the application of that regime.
In conclusion, the judgment at-issue provides some guidance within an indisputably legally complex area of copyright law. In that, much will be seen on how Article 17 of DSM Copyright Directive will be (transposed and) applied in practice by Member States.