Documents considered by the Committee on 2 November 2016 Contents

5Copyright in the Digital Single Market

Summary and Committee’s conclusions

Committee’s assessment

Legally and politically important

Committee’s decision

(a) Cleared from scrutiny

(b) Not cleared from scrutiny; further information requested; drawn to the attention of the Business, Energy and Industrial Strategy Committee and the Culture, Media and Sport Committee

(c) Not cleared from scrutiny; further information requested; drawn to the attention of the Business, Energy and Industrial Strategy Committee and the Culture, Media and Sport Committee

Document details

(a) Evaluation of Council Directive 93/83/EC on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission; (b) Proposal for a Regulation laying down rules on the exercise of copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes;

(c) Proposal for a Directive on copyright in the Digital Single Market

Legal base

(a) —; (b) and (c) Article 114 TFEU; ordinary legislative procedure; QMV

Department

Business, Energy and Industrial Strategy

Document Numbers

(a) (38082), 12281/16, SWD(16) 308 and (38083), 12283/16, SWD(16) 309 ; (b) (38077), 12258/16 + ADD 1–4 COM(16) 594; (c) (38076), 12254/16 + ADDs 1–4 COM(16) 593

5.1These documents form part of the Commission’s latest copyright package introduced by the overarching Communication considered at Chapter 9 of this Report.

5.2Document (a) is the Commission’s evaluation of Directive 93/83 which:

5.3The evaluation, which is based on a study of data, questionnaires to Member States and an on-line public consultation, concludes that the Directive has facilitated copyright clearance of free to view satellite broadcasts and simultaneous cable retransmission in different Member States.29

5.4Document (b) is a proposal for a Regulation which would apply the country of origin principle to ancillary online services (such as simulcasting,30 catch up TV/radio, and material related to a broadcast such as a preview). It would also impose the mandatory collective management of rights on closed-circuit internet-protocol based, mobile and similar networks.

5.5The proposed Regulation does not cover video on demand31 (which is addressed in the proposed Directive), nor pure webcasters, including broadcasters offering an online only channel such as BBC3. It would not prevent territorial licencing (licencing the same content at different prices in different territories). Mandatory collective management would not apply to open internet retransmission services which, because they are not linked to any particular infrastructure, have only a limited ability to ensure a controlled environment.

5.6Document (c) is a proposal for a Directive which would contain:

5.7The copyright exceptions are largely found already in UK law, The Government has expressed some initial caution over a new press publications right, further regulation of online intermediaries, and additional remuneration provisions which interfere with freedom of contract. However it does not object to the policy objectives underlying these elements of the proposal.

5.8We are grateful for the very full Explanatory Memoranda which each include a helpful analysis of the Commission’s Impact Assessment.

5.9The Government does not raise any particular concerns with the proposed Regulation. It does, however, raise some concerns with the proposed Directive, notably in relation to the proposed introduction of a right for press publishers, additional obligations that would be imposed upon online intermediaries, and the mechanism for adjusting contracts to correct disproportionately low remuneration for creators or performers.

5.10The Government indicates that it has, and continues to, consult extensively with stakeholders. We therefore ask the Minister for an outline of stakeholder responses highlighting matters which have given rise to objections, particularly with the proposed Directive which is likely to prove more controversial.

5.11In relation to Brexit we ask the Minister to indicate:

5.12We clear document (a) and hold documents (b) and (c) under scrutiny and draw them to the attention of the Business, Energy and Industrial Strategy Committee and Culture, Media and Sport Committee as part of a major package of copyright legislation.

Full details of the documents

(a) Evaluation of Council Directive 93/83/EC on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission: (38082), 12281/16, SWD(16) 308 and (38083), 12283/16, SWD(16) 309 ; (b) Proposal for a Regulation laying down rules on the exercise of copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes: (38077), 12258/16 + ADD 1-4, COM(16) 594; (c) Proposal for a Directive on copyright in the Digital Single Market: (38076), 12254/16 + ADD 1-4, COM(16) 593.

Background

5.13The distribution and access of copyright protected material, including through digital channels is increasing. The Commission indicates that 49% of EU internet users accessed music, audiovisual content and games online on 2014; broadcasters and retransmission service providers are increasingly investing in the development of digital and online services for the distribution of radio and television programmes; a high number of news programmes incorporate copyright protected material requiring swift clearance of rights with a multitude of rights holders. At the same time the evolution of digital technologies has changed the way works and other protected subject-matter are created, produced, distributed and exploited.

Explanatory Memorandum of 3 October 2016: The Proposed Regulation

5.14The Minister for Intellectual Property (Baroness Neville-Rolfe) sets out the policy implications of the proposed Regulation:

“The UK has been supportive of the aims of the Digital Single Market, and encouraging the provision of new digital services while protecting the rights of copyright owners. This Regulation is an attempt to deliver these objectives.

“On-demand services are increasing—in the second half of 2015, 59% of adults in the UK accessed at least one on-demand service compared to 51% in the second half of 2013. There are also clear age-related trends in propensity to use on-demand services—72% of those aged between 15 and 24 accessed an on-demand service in 2015, compared to 48% of 55–64 year olds.

“Furthermore, there is evidence that younger groups are more likely to want to watch content from other countries. 8% of internet users in the EU (approximately 33 million people) have tried to access content intended for consumers in other Member States. The main reason for doing so was that the content was unavailable in their own country. Although this proportion is relatively low, the demographic most interested was the 15–24 age range category: 17% had tried to access content intended for other Member States.

“The proposed country of origin rule provided by the Regulation could mean that UK consumers benefit from being able to receive television and radio content from other Member States. Likewise, British citizens residing in other Member States may be offered direct access to television broadcast from the UK, over the internet, via legal subscription services that are currently unavailable to this group. If this in turn leads to greater lawful cross-border provision of content there could also be a reduction in copyright infringement. There would be cost savings for UK broadcasters when transmitting into other EU states and for UK online retransmission services when retransmitting programmes from other EU states.

“However, it is not clear how much the country of origin principle would be used, and how much demand there is to provide television services to other countries. Commercial broadcasters in the UK primarily design their business models around the sale of advertising to audiences in the UK and possibly Ireland, and may have little interest in serving other markets. Some broadcasters and makers of films and television programmes are also concerned that an extension of the country of origin principle may reduce their ability to license their rights on a territorial basis, which is a common practice in the audiovisual sector. The proposals do not address territorial licensing and do not interfere with freedom to contract. However, the predominance of territorial licensing in the audiovisual sector may still reduce the attractiveness of these proposals to them.

“Regarding online retransmissions of broadcast programmes, we know that income from cable retransmission under the existing SatCab Directive is of significance to UK rights holders. For example, the Authors’ Licensing & Collecting Society received income of £4.5m in 2014–2015 from cable retransmission for UK rights holders, around 15% of their total income. The Regulation may deliver similar benefits to rightholders in relation to online retransmissions. However, it is not clear which types of online retransmissions are in scope of the proposals (particularly given that the retransmission must be simultaneous with the initial broadcast and by a party other than the original broadcaster), and therefore who will be affected by them.”

The Proposed Directive

5.15In his Explanatory Memorandum dated 3 October 2016, the Minister outlines the content of the proposed Directive as follows:

(i) Adapting copyright exceptions to digital and cross-border environments

“Exceptions to copyright allow users of copyright materials to carry out certain acts without permission from rightholders. They are already partially harmonised through an exhaustive list of optional exceptions provided in the Information Society Directive (2001/29/EC). However, Member States implement copyright exceptions differently, and they do not always have cross-border effect. Consequently the Commission proposes harmonising the following exceptions:

“Text and Data Mining (TDM)

Text and data mining (TDM) technology is used by researchers to extract large amounts of data from documents and other materials and identify patterns and trends within them. To extract the data, TDM technology must make many copies of relevant materials, which runs the risk of copyright infringement.

“The draft Directive contains a mandatory TDM exception providing that copyright is not infringed when research organisations text and data mine copyright works to which they have lawful access. Use of the exception is restricted to universities, research institutes or other public interest research organisations, excluding commercial research institutions. This proposal aims to reduce barriers to TDM by these organisations, thus supporting research and innovation.

“Teaching

“The draft Directive contains a mandatory teaching exception, which permits digital uses of copyright works for teaching purposes. It is restricted to non-commercial, illustrative uses of copyright works, which occur either on the premises of an educational establishment or through a secure electronic network accessible only by students and teaching staff. This proposal aims to support cross-border teaching activity, such as the provision of a course by a university in one Member State to a student in another.

“Preservation

The draft Directive contains a mandatory exception for preservation purposes, which permits cultural heritage institutions, such as libraries, archives and museums, to make preservation copies of works held permanently in their collections. It allows copying of any work or other subject matter into any other medium or format, including the making of digital copies.

“(ii) Improving licensing practices and ensuring wider access to content

“Out-of-commerce works

“To improve the availability of out of commerce works, the Commission proposes Member States legislate to facilitate collective licensing agreements between collective management organisations and cultural heritage institutions. The proposals apply to all types of out of commerce works and give cross-border effect to licences concluded via these mechanisms.

“Video-on-demand

The draft Directive requires Member States to put in place a negotiation mechanism to facilitate the provision of EU audiovisual works on video on demand (VoD) platforms. This is intended to help resolve licensing disputes which hinder the availability of audiovisual works. It is intended to work alongside a stakeholder dialogue between participants in the audiovisual sector (e.g. creators, producers, distributors, broadcasters, VoD platforms). The stakeholder dialogue is a non-legislative measure and so is not covered in the Directive.

“(iii) Achieving a well-functioning marketplace for copyright

“Press publications

“The draft Directive provides a new right, similar to copyright, covering press publications. This is intended to help ensure that press publishers are remunerated for online uses of their publications. Alongside this new right is the possibility for Member States to provide that publishers may claim compensation for uses of their publications under an exception.

“Online intermediaries

“The Commission proposes measures intended to deal with issues which may arise between right holders and online intermediaries which host large amounts of user-uploaded content. The draft Directive obliges such intermediaries to seek, in good faith, to conclude agreements with right holders for the use of their content. It also provides that online services must put in place appropriate and proportionate measures, in cooperation with right holders, to avoid unauthorised content being hosted on their services.

“Fair remuneration

“The final set of measures proposed in the Directive are intended to ensure that creators and performers are fairly remunerated in their contracts. To achieve this, the draft Directive introduces transparency obligations for licensing agreements, designed to increase legal certainty about how creators and performers are remunerated.

“The draft Directive also gives creators and performers a right to request additional remuneration in cases where the remuneration originally agreed in a contract becomes disproportionately low compared to the revenues and benefits ultimately derived from the exploitation of the work, via a contract adjustment mechanism. Creators and performers would be able to enforce this right via a court or similar body where an agreement on remuneration could not be reached.

“These measures are supported by an alternative dispute resolution mechanism designed to help enforce the reporting obligations and the contract adjustment mechanism.”

5.16The policy implications of the proposed Directive are analysed as follows:

“(i) Adapting copyright exceptions to digital and cross-border environments

“In June 2014, the UK was the first Member State to introduce an exception for text and data mining for non-commercial research, in order to support research and innovation. An EU-wide exception for text and data mining is likely to have similar benefits for research and innovation within the EU, in particular for collaborative research between institutions based in different Member States. It would sit alongside the UK’s exception, which would continue to be available.

“The proposed exception takes a similar approach to the UK’s exception, in that it only permits data mining of materials to which a researcher already has lawful access—for example, via a subscription or over the internet—and precludes the sharing of copies. This helps to ensure rightholders’ rights are protected, though rightholders may raise concerns about the lack of remuneration and the inability to override the exception by contract.

“The proposed exception focuses on the institution carrying out the text and data mining—the research organisation—rather than the type of research, which may be either commercial or non-commercial in nature. This differs from the UK’s exception which is open to any type of user, but only for non-commercial research. Enabling text and data mining for both commercial and non-commercial research is likely to be welcomed by researchers, but they may have concerns about the restriction to certain organisations.

“The UK already provides an exception for preservation of cultural heritage. This was updated in June 2014 to apply to all types of formats and media. The proposed EU-wide exception is of similar scope, permitting institutions such as libraries, museums, archives to make copies of works that are in their permanent collections, in any format or medium, in order to preserve them. We support this exception in principle, but will need to consider the extent to which it is consistent with, and adds value to, the exception already provided in UK law.

“The UK also already provides several exceptions for teaching, including a ‘fair dealing’ exception for non-commercial, illustrative teaching use, and exceptions permitting non-commercial educational use of broadcasts and other works, when these are not available under licence for educational use. These were updated in June 2014 to apply to all media and teaching technology, including use over secure networks.

“The proposed EU-wide exception would provide similar benefits to, and contains similar safeguards as, the UK exception. In particular, to safeguard the rights of copyright owners, both apply to secure electronic networks accessible only by students and teaching staff. The EU exception also allows Member States to restrict such exceptions to cases where educational use is not permitted under licence, as is the case in the UK.

“The EU exception would provide additional benefits above the UK exception by enabling online access to educational materials across borders—for example, enabling a student at a UK university to access their course materials remotely from Italy. We support this exception in principle, but will need to consider the extent to which it is consistent with, and adds value to, the exceptions already provided in UK law.

“(ii) Improving licensing practices and ensuring wider access to content

“The proposals to facilitate the licensing of out-of-commerce works, have significant similarities to the UK’s existing Extended Collective Licensing framework, which came into force in October 2014. Both systems allow collective management organisations (CMOs) to ‘extend’ the scope of collective licences to cover the work of non-members, on the proviso that the CMO meets a number of safeguards designed to protect the interests of right holders.

“This proposal has the potential to resolve ongoing issues for cultural heritage institutions that have struggled to develop cost-effective licensing solutions to enable them to digitise large collections of out-of-commerce works. In particular, the cross-border element of the proposals, if effectively implemented, would be welcomed by many UK heritage institutions. These bodies have expressed frustration that licences offered under the existing UK scheme would only allow for use of the works within the UK (owing to the territoriality of copyright law).

“It is important that any such schemes include robust safeguards to ensure that right holders can reassert their rights, and receive remuneration for any use of their work, similar to the safeguards provided by the existing UK framework. The Government will consider whether it would be possible to implement the EU proposal via this existing framework.

“The Government supports the aim of ensuring that consumers have access to more content, and that businesses do not face unnecessary obstacles in making such content available. The negotiation mechanism, which seeks to promote the licensing of audiovisual works, appear to be consistent with this aim. The UK is generally supportive of mediation and alternative dispute resolution processes, and recently supported similar measures during the passage of the Collective Rights Management (CRM) Directive. We will, however, need to consider the level of demand for such a system and any potential administrative costs to Government.

“(iii) Achieving a well-functioning marketplace for copyright

“The draft Directive proposes an EU-wide right for press publishers, giving them the ability to control how their works are made available and reproduced online. The term of protection is set at twenty years and copyright exceptions and limitations apply. In proposing a new EU-wide right for publishers, the Commission is attempting to improve the bargaining position of press publishers when entering into negotiations with online service providers.

“The Government values the investment publishers make in their content and the important role they play in society. Indeed, the UK copyright system already provides specific rights for publishers, which enable them to seek remuneration for the use of their publications, and other Member States are free to introduce such rights.

“However, the Commission has not clearly justified why it believes action on publishers’ rights is required at EU level, why such rights should last for 20 years, and how such rights will interact with existing rights in countries such as the UK.

“The scope of the proposed right is unclear. Groups representing technology firms argue that this right is similar to the ‘ancillary copyright’ which was introduced in Germany and Spain, and would have similar detrimental impacts on the market. Following the introduction of ancillary copyright in Germany, press publishers chose to waive their rights to remuneration rather than lose visibility on Google News. In Spain, where ancillary copyright was unwaivable, Google News pulled out of the market. These examples highlight the risk that ancillary copyright for press publishers will not achieve the intended benefits for press publishers, while distorting the online market and having a particular impact on small online firms which are less able to absorb the associated costs.

“On the other hand, publishers and technology firms both appear to be content with the current rights provided to publishers in the UK. We will seek to clarify the scope and impact of the proposed EU-level rights, and whether or not they are compatible with, and provide additional benefits over, the rights already granted to publishers in the UK.

“Article 12 of the draft Directive aims to ensure that Member States with copyright levy systems are able to distribute levy revenues to publishers. The UK does not have a levy system, so this part of the proposal does not directly impact the UK, though may have impacts on UK authors and publishers operating in the EU.

“The draft Directive proposes measures which aim to ensure that online intermediaries which host large amounts of user-uploaded content behave responsibly towards right holders. There has been considerable debate in Europe and the UK as to the extent to which online intermediaries, such as YouTube and Soundcloud, are responsible for the legality of content uploaded by their users, and the extent to which rights holders are remunerated for the use of their works.

“The draft Directive introduces an obligation on such services to adopt appropriate and proportionate measures to ensure copyright works are protected, including the implementation of effective filtering technologies. It calls for Member State facilitated cooperation between online intermediaries and rights holders to define best practice and appropriate technological measures. It also introduces transparency requirements, obliging online services to provide information to rights holders on the type of technologies used, the way they are operated, and the success rate for recognition and removal of rights holder’s content. It also requires service providers to provide dispute and resolution mechanisms for users in cases where infringement is disputed.

“It appears that these obligations will apply regardless of whether a service is covered by the exemptions from liability found in the E-Commerce Directive 2000/31, although the relationship between the two instruments is not yet clear.

“The Government’s view is that platforms, like all businesses, must act in a socially responsible manner and cooperate in the removal of copyright infringing material. While we agree that copyright content should be respected by online intermediaries, it is important that any obligation placed on digital businesses enhances the effectiveness of existing technological solutions and does not have a stifling effect innovation and competition.

“Major established businesses may argue that they already employ effective filtering technologies. Conversely, these obligations may represent additional burdens for small or emerging businesses. These proposals should be approached carefully to ensure the right balance between providing proportionate protection and encouraging digital innovation and growth.

“With regard to the measures concerning fair remuneration in contracts of creators and performers, the Government recognises the concerns that have been raised by creators and performers. The Government wants to see creators and performers remunerated fairly for the work they produce while making sure investment in new content and innovative services is encouraged. The Government’s view is that this outcome is desirable for all and would maximise benefits across the value chain.

“We welcome the Commission’s overall focus on transparency and measures that could help creators and performers understand whether they are being properly remunerated for the use of their works and performances, in turn improving their ability to negotiate.

“However, we will need to consider further the impacts of these measures and to seek clarification in certain areas. For example, it is not clear, whether the sector-specific requirements set out in Article 14(1) are to be determined directly by the Member States, or can be agreed at an industry level. We will explore these matters with the Commission.

“The draft Directive also provides for a mandatory contract adjustment mechanism for cases where a creator or performer considers that the remuneration originally agreed under a licence is disproportionately low compared to the revenues and benefits derived from the exploitation of the work or performance. Where parties do not agree on the adjustment of remuneration, the creator or performer would be entitled to bring a claim before a court or other competent authority.

“This mechanism could improve the effectiveness of the transparency obligation since it would provide creators and performers with the legal means to request adjustment of the remuneration on the basis of information received in reporting statements. However, potential restrictions on freedom to contract need to be approached cautiously, and we would want to ensure there are clear benefits before introducing them.

“The draft Directive also provides that disputes concerning transparency arrangements and the contract adjustment mechanism may be submitted to a voluntary, alternative dispute resolution procedure. The Government supports alternative dispute resolution as a cost-effective and timely means of resolving disputes. It is unclear whether the measure as drafted would give Member States flexibility to allow the use of other dispute resolution mechanisms, such as those established via industry level agreements. We will explore this matter further with the Commission.”

Previous Committee Reports

None.


28 Collective management involves the licencing of rights by organisations on behalf of the rights owners.

29 Some rights holders raised negative impact of the county of origin principle on territory by territory distribution strategies and of mandatory collective management of underlying rights on obtaining fair market terms.

30 Linear simultaneous transmission of a broadcast over more than one medium by the broadcaster.

31 E.g. Netflix and Amazon Prime.

32 The extraction of data from documents and other material, the technology for which involves making copies of the material to be mined.




4 November 2016