This article has been also published on the EACCNY website on June 29, 2021.
On June 4, 2021, the European Commission issued a communication about Article 17 of Directive 2019/790 on Copyright in the Digital Single Market (the “DSM Directive”), providing non-binding guidelines to ensure its consistent transposition across Member States. Notably, these guidelines focus on cooperation between online content-sharing service providers (“OCSSPs”) and rightsholders, with a particular focus on balancing fundamental rights and the use of copyright exceptions and limitations.
For purposes of legal certainty, the Commission established that Member States should apply Article 17 only to OCSSPs as defined by Art. 2, par. 6 of the DSM Directive, thus excluding inter alia: (i) not-for-profit online encyclopedias, (ii) not-for-profit educational and scientific repositories, (iii) open-source software-developing and sharing platforms, (iv) providers of electronic communications services, as defined in Directive (EU) 2018/1972, (v) online marketplaces, (vi) business-to-business cloud services, and (vii) cloud services that allow users to upload content for their own use.
- THE EUROPEAN COMMISSION GUIDELINES: SOME NOTABLE POINTS
- Article 17: A lex specialis
The Commission defined Article 17 of the DSM Directive as a lex specialis with respect to Article 3 of Directive 2001/29/EC (the “InfoSoc Directive”) and Article 14 of Directive 2000/31/EC (the “E-commerce Directive”). Indeed, said provision does not introduce a “new” right into EU copyright law; instead, it introduces specifications to regulate the lawfulness of acts of “communication to the public” (as set out in the InfoSoc Directive) in a digital environment, and particularly on content-sharing services. Therefore, the Commission determined that Member States should specifically implement Article 17 of the DSM Directive, which is not an optional provision, rather than relying on their previous national implementation of Article 3 of the InfoSoc Directive.
- The development of the licensing market
Under Article 17 of the DSM Directive, OCSSPs need to obtain authorization for any act of communication or making items available to the public that consists of granting public access to copyright-protected works or other protected subject matter uploaded by their users. Given that the DSM Directive does not specifically define the term “authorization,” the Commission stated that Member States can adopt different authorization models to “foster the development of the licensing market.”
By way of example, in certain cases, rightsholders may authorize the use of their content in exchange for data or promotional activities or for free, i.e., under a Creative Commons License or by uploading or sharing their own content on the services of OCSSPs.
Moreover, Member States are encouraged to maintain or establish voluntary mechanisms to facilitate agreements between rightsholders and OCSSPs, such as mediation mechanisms to support parties during difficult negotiations. Further, the Commission invited Member States to rely on individual and voluntary collective licensing solutions, including collective licenses with an extended effect for specific sectors where it is particularly difficult to identify rightsholders or the transaction costs of individual rights clearance are prohibitively high. However, if Member States allow the use of collective licenses with an extended effect in the context of Article 17 of the DSM Directive—an optional solution accompanied by a number of precautionary corollaries—then they must also transpose Article 12 of the DSM Directive, which sets out specific safeguards in this regard.
Nonetheless, in the name of contractual freedom, rightsholders should retain the right to refuse authorization of any act of communication or making available to the public of their works.
- The best effort requirements
Under Article 17, par. 4 of the DSM Directive, in the event that OCSSPs do not have authorization for acts of communication or making items available to the public, they may be held liable, unless they prove the following:
(a) they made their “best efforts” to obtain an authorization: to this extent, according to the Commission, providers should, at a minimum, engage proactively with rightsholders that can be easily identified and located. As a result, in order to facilitate the identification of rightsholders, Member States may encourage the development of registers of rightsholders that OCSSPs may consult in accordance with data protection rules. The Commission further clarified that when a provider contacts rightsholders that then either refuse to engage in negotiations for the granting of authorization or dismiss any reasonable offer made in good faith by the provider, the latter should be considered compliant with the best effort requirement set forth under Article 17, par. 4, let. a) of the DSM Directive. Finally, the Commission determined that the notion of “best efforts” should also cover the efforts made by OCSSPs and rightsholders to negotiate in good faith and enter into fair licensing agreements. Indeed, OCSSPs should not be forced to accept agreements that are not fair on terms;
(b) in accordance with high industry standards of professional diligence, they have made their best efforts to ensure that specific works and subject matter for which the rightsholders provided them the necessary and relevant information are not made available: the Commission established that relevant industry practices on the market should be taken into account in order to determine whether OCSSPs complied with high industry standards of professional diligence. However, under what is known as the technological neutrality principle, once rightsholders provide the “necessary and relevant information” about their works, providers are then still free to choose the technology or solution that best suits their needs. In this regard, the Commission also clarified that “necessary and relevant information” consists of any useful information that may allow OCSSPs to satisfy the best effort requirement by making certain content unavailable (e.g., when fingerprinting is used, rightsholders may be asked to provide a fingerprint of the specific work/subject-matter or a file that will be fingerprinted by the provider itself, together with information on the ownership of the rights);
(c) they have acted expeditiously to disable access or to remove content from their websites upon receipt of a sufficiently substantiated notice from the rightsholders (notice and take down) and made their best efforts to prevent future uploads of notified works (notice and stay down): for implementation of the notice and take down requirement, the Commission invited Member States to follow the Recommendation on Measures to Effectively Tackle Illegal Content Online. Under this Recommendation, notices should be sufficiently precise and supported by grounds adequate to enable providers to make informed decisions with respect to the content subject to notification. Moreover, such a notice should contain an explanation of the reasons why a piece of content is deemed illegal and a clear indication of its location.
For the notice and stay down requirement, the Commission established that rightsholders shall provide OCSSPs with the “necessary and relevant information” about their works, as set forth by Article 17, par. 4, let. b) of the DSM Directive.
Of note, as the Commission also remarked, is that assessment regarding the best effort requirement shall be subject to the principle of proportionality, provided under Article 17, par. 5 of the DSM Directive. Notably, in determining whether OCSSPs have met their obligations, the following elements shall be considered: (i) the type, size and audience of the service; (ii) the type of content uploaded by the users of the service; and (iii) the availability of suitable and effective means and the related costs. As a result, in practice, in order to comply with best effort requirements, OCSSPs shall not be expected to apply the most costly or sophisticated solution, but rather the most proportionate one.
- Safeguarding legitimate use
Article 17, par. 7 of the DSM Directive provides that the cooperation of rightsholders and OCSSPs to comply with the best effort requirements shall not hinder legitimate use of non-infringing content. As the Commission clarified, the reference to legitimate use shall cover use that may fall under the mandatory copyright exceptions provided by Article 17, par. 7 of the DSM Directive or those falling under the optional exceptions and limitations provided in the InfoSoc Directive, as long as Member States implemented them in their national laws. Also, other legitimate uses for the purposes of Article 17, par. 7 of the DSM Directive may consist of authorized use or the use of content that is not covered by copyright or related rights.
Moreover, the Commission determined that it would not be enough for the transposition of Article 17, par. 7 to restore legitimate content ex post, i.e., once it has been removed or disabled. As a result, legitimate use should be deemed sufficiently protected only if the evaluation of the content is carried out at least to a certain extent ex ante, that is at the time of the upload, without this leading to any general monitoring obligation on behalf of OCSSPs, as that type of obligation is specifically excluded by Article 17, par. 8 of the DSM Directive. In particular:
(i) manifestly infringing uploads shall be subject to automated blocking, i.e., they shall be prevented from going online. According to the Commission, an upload is manifestly infringing when it matches a specific file provided by the rightsholders. In this regard, the Commission established that in providing instructions to online content-sharing service providers, rightsholders shall take legitimate use into account, since the information they transmit to providers is so impactful that the content for which they do not give any blocking instructions shall not be deemed manifestly infringing. Finally, the Commission listed some illustrative criteria to determine whether an upload is manifestly infringing or not, namely (i) the length/size of the identified content used in the upload; (ii) the proportion of the matching/identified content in relation to the upload; and (iii) the level of modification of the content.
(ii) non-manifestly infringing uploads shall go online and may be subject to ex post human review when rightsholders object to them by sending a notice.
(iii) when proportionate, possible, and practicable, uploads that may cause significant economic harm to rightsholders shall be subject to ex ante human review by OCSSPs. The Commission clarified that this approach mainly applies to particularly time sensitive content, such as pre-released music or films.
- A new complaint and redress mechanism
When manifestly infringing uploads are identified and blocked, users shall be notified without undue delay and shall have the opportunity to contest the blocking via the complaint and redress mechanism provided by Article 17, par. 9 of the DSM Directive. In this case, as indicated by the Commission, during the human review performed under the redress mechanism, the content shall stay down.
In the inverse scenario, the Commission determined that in the event OCSSPs deem the upload as not manifestly infringing content, rightsholders shall be informed without undue delay. If they object, OCSSPs shall carry out a human review, during which the content shall stay online.
In the end, the Commission established that while no specific deadlines are provided for these activities in Article 17, par. 9 of the DSM Directive, user complaints should be addressed expeditiously in order not to affect the fundamental right to freedom of expression. For the same reason, users should be granted access to easy-to-use and free of charge complaint mechanisms.
- FINAL REMARKS
The guidelines issued by the Commission in its communication serve as a compass for Member States charting their courses to implement Article 17 of the DSM Directive, a pivotal and complex provision. However, as the Commission also noted, the guidelines may need to be reviewed once the Court of Justice of the European Union issues its judgment in case C-409/19, which could have a series of implications for the implementation of Article 17.
 Under Art. 2, par. 6 of the DSM Directive, an online content-sharing service provider is defined as “a provider of information society service of which the main or one of the main purposes is to store and give public access to a large amount of copyright-protected works or other subject matter uploaded by their users, which they organize and promote for profit-making purposes.”
 See Commission Communication of 1 March 2018 available at: https://ec.europa.eu/digital-single-market/en/news/commission-recommendation-measures-effectively-tackle-illegal-content-online.
 Poland v. Council and Parliament.