Intellectual property rights in the digital era

Intellectual property rights in the digital era

Provisional version Doc. … 14 March 2016 Intellectual property rights in the digital era 1 Report Committee on Culture, Science, Education and Media...

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Provisional version Doc. … 14 March 2016

Intellectual property rights in the digital era 1

Report Committee on Culture, Science, Education and Media Rapporteur: Mr Axel E. FISCHER, Germany, Group of the European People’s Party

Summary Despite their erosion in the digital era, intellectual property rights are human rights protected under Article 1 of the first Protocol to the European Convention on Human Rights. Intellectual property is an important European cultural value and economic asset and an erosion of intellectual property rights would have a negative impact on all people in Europe. In accordance with Article 10 of the Convention on Cybercrime, member States must adopt legislative and other measures to establish the infringement of intellectual property rights as criminal offences under domestic law. Special attention should be given to operators of Internet-based social networks and platforms with user-generated content, which benefit financially from illegal content posted on their sites. Intellectual property rights must also be respected when member States negotiate, accede to, and implement international legal obligations in this field. Authors of creative works must have the right to use the potential of the Internet. Too often, the main benefit from the dissemination of works on the Internet accrues to a few big Internet companies, while authors, performers, and other right-holders suffer dramatic losses of income.

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Reference to committee: Doc. 13448, Reference 4042 of 11 April 2014 F – 67075 Strasbourg Cedex | [email protected] | Tel: +

33 3 88 41 2000 | Fax: +33 3 88 41 2797

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Draft resolution

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1. The Parliamentary Assembly welcomes that, thanks to the Internet, authors of creative works and holders of intellectual property rights are enabled to offer their works globally and users can access creative works globally, instantly and through inexpensive fixed or mobile access devices. The Assembly notes however with concern a decrease in the production and diversity of creative works as a result of geographic imbalances and shifts in their production, leading to the emergence of a few excessively dominant market players and a concentration of creative industries in a few parts of the world. 2. The Assembly is also concerned by a de facto erosion of intellectual property rights in the digital era, which has been facilitated by legislative reforms weakening intellectual property rights. Intellectual property is an important European cultural value and economic asset and an erosion of intellectual property rights would have a significant negative impact on all people in Europe. 3. The Assembly recalls that intellectual property is protected under Article 1 of the first Protocol to the European Convention on Human Rights (ETS No. 9); the effective exercise of this human right may require positive measures of protection by member States against interference by others. 4. The Assembly reaffirms that digital services do not take place in an imaginary borderless cloud, but are real services with real producers, distributors and customers, all of which are based in countries and their legal systems. Therefore, it is necessary and legitimate for States to apply to such services their laws, including laws on intellectual property, consumer protection and taxation. The geographical location of digital services and content as well as their possible geo-blocking are hence an appropriate way to prevent the circumvention or violation of national laws, because intellectual property rights have their territorial application also online. 5. The Assembly values the growth in human communication resulting from the use of Internet-based social networks and platforms with user-generated content; it recalls that users are the rights-holders of their creative works uploaded on such networks and platforms as well as of their personal data, unless they expressly waive such rights. Users are likewise primarily responsible for respecting intellectual property rights of others, especially if they play an active role in content dissemination. Recalling the case-law of the European Court of Human Rights, the Assembly emphasises that Internet service providers are also liable for intellectual property right violations, if they commercially or otherwise benefit knowingly from such violations by their users. 6. The Assembly acknowledges that open licensing of creative works can be an option for the respective copyright-holders in order to voluntarily share their work with others. As this option is easier for financially well-established individuals, institutions or companies, its potentially limiting impact on the pluralism of creative works should nevertheless be taken into account. The Assembly also considers that, by offering technological solutions against the de facto erosion of intellectual property rights, the private sector can play an important role in avoiding stricter legislation and stricter case-law by competent courts. 7. Having regard to the current legislative initiatives within the European Union by its Commission and Parliament and referring to the protection of intellectual property rights under Article 17 (2) of the Charter of Fundamental Rights of the European Union which binds all organs of the EU, the Assembly stresses that: 7.1. national transpositions and applications of EU legislation must comply with the European Convention on Human Rights and in particular Article 1 of its first Protocol; 7.2. the European Patent Office as well as Directive 2004/48/EC on the enforcement of intellectual property rights should be strengthened in the framework of Article 118 of the Treaty on the Functioning of the European Union, which calls for measures for the creation of EU-wide intellectual property rights and for the setting up of centralised EU-wide authorisation, coordination and supervision arrangements; 7.3. the European Convention on the Legal Protection of Services based on, or consisting of, Conditional Access (CETS No. 178), which entered into force within the European Union on 1 January 2016, should be used for strengthening the protection of intellectual property rights; 7.4. efforts for the creation of a digital single market within the European Union should not privilege online services over offline print media, film and cinema as well as terrestrial audio-visual services, but 2

Draft resolution adopted by the committee on 14 March 2016

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Doc. … avoid a distortion of competition by taking due account of the possible dominance of gatekeepers to online services and the latters’ impact on the pluralism of creative work and cultural expressions; 7.5. Europe-wide licensing arrangements should be supported in order to facilitate the cross-border portability of online content and services. 8.

Therefore, the Assembly recommends that member States: 8.1. promote public awareness, especially among Internet users, of the human right to the protection of intellectual property and the importance of this right for the cultural diversity and the economic wellbeing of our societies; 8.2. promote the electronic identification of intellectual property rights on the Internet by supporting widely accessible technical facilities for this purpose and raising awareness among authors of creative works; 8.3. adopt such legislative and other measures as may be necessary to establish as criminal offences under domestic law the infringement of intellectual property rights; 8.4. adopt dissuasive measures towards operators of Internet-based social networks and platforms with user-generated content, which benefit financially from illegal content posted on their sites; 8.5. promote online complaint procedures of law enforcement authorities as well as user hotlines by Internet service providers against violations of intellectual property rights on their services; 8.6. develop online dispute resolution procedures for online violations of intellectual property rights in accordance with the Assembly’s Resolution 2081 (2015) on “access to justice and the Internet: potential and challenges”; 8.7. reinforce in an open and transparent manner their multilateral work on international cooperation in the field of intellectual property rights; 8.8. ensure that Article 1 of the first Protocol to the European Convention on Human Rights be respected in law and practice when negotiating and implementing international treaties affecting intellectual property rights, including free trade agreements such as the Transatlantic Trade and Investment Partnership (TTIP); 8.9. ensure that the protection of trade secrets, for example under Article 39 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), does not unduly limit the public’s rights to access information under Article 10 of the European Convention on Human Rights.

9. The Assembly calls on authors of creative works, rights-holders, collective rights agencies and licensing agencies as well as on Internet service providers, including social networks and platforms with user-generated content, to use technical facilities for the identification of intellectual property rights online, such as digital rights management technologies for providing necessary information to users and preventing their unauthorised actions. Social networks and platforms with user-generated content should empower their users in this respect by providing such identification automatically by default. The Assembly also calls on them to adhere to the self-regulatory “UGC Principles” established in 2007 against illegal user-generated content.

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Draft recommendation

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1. Referring to its Resolution …. (2016), the Parliamentary Assembly emphasises the importance of the right to the protection of intellectual property in accordance with Article 1 of the first Protocol to the European Convention on Human Rights (ETS No. 9) and Article 10 of the Convention on Cybercrime (ETS No. 185), which must be respected when member States negotiate, accede to, and implement international legal obligations affecting intellectual property rights. 2.

The Assembly therefore recommends that the Committee of Ministers: 2.1. invite the Cybercrime Convention Committee (T-CY) to draw up guiding principles on legal and practical measures against the infringement of copyright and related rights in accordance with Article 10 of that convention; 2.2. invite the Parties to the European Convention on the Legal Protection of Services based on, or consisting of, Conditional Access (CETS No. 178) to study the effectiveness of domestic law and practice in accordance with Article 4 of that convention as regards the protection of intellectual property rights; 2.3. follow-up through practical action its Recommendation (2001) 7 to member States on measures to protect copyright and neighbouring rights and combat piracy, especially in the digital environment; in this context, practical cooperation should be sought with the European Observatory on Infringements of Intellectual Property Rights and Europol; 2.4.

reinforce cooperation with the European Union in this field;

2.5. transmit to competent domestic ministries and agencies this Recommendation and the Assembly’s Resolution …. (2016) on intellectual property rights in the digital era.

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Draft recommendation adopted by the committee on 14 March 2016

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Explanatory memorandum by Mr Axel E. Fischer, rapporteur

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Introduction

1. Intellectual property is a non-tangible property which typically belongs to the owner or rights-holder of creative or artistic works such as music, literature, pictures or images. It includes also industrial design, computer software and certain trade secrets. Intellectual property rights are mainly copyrights, patents, trademarks and industrial design rights. 2. In today’s knowledge-based society, intellectual property rights are most valuable business assets. On 6 May 2015, the EU Commission issued its Communication on “A Digital Single Market Strategy for Europe” and an accompanying Staff Working Document which deals with “access to and use of copyright-protected content”. It estimates that copyright-intensive industries generate 7 million jobs and contribute approximately € 509 billion to the gross domestic product of the EU. 3. However, there are noticeable factors which challenge intellectual property rights today. First, they are threatened by the global expansion of trade in counterfeit products and the technological simplicity of sharing some types of copyright protected material through the Internet. The Internet has become the preeminent medium for selling counterfeit products globally. Since the launch of its international co-operation project in this field in 2012, Europol has identified by the end of 2014 a total of 1829 domain names which were used 4 for selling counterfeit products online. 4. For consumers, unlike in the analogue world, it has become very easy (and is continuously getting easier through greater bandwidth and accessibility of works on mobile devices) not only to access works and to make digital copies thereof, but also to re-diffuse them on the internet. This is often likely to occur without the authorisation of the right-owner. To the extent that this occurs illegally, end users may not only deprive right-holders from their revenues from exploitation, but in fact may also step into the author’s or other rightowner’s shoes as “distributors” of his work on the internet by posting it on their websites, in social media, blogs etc. or when participating in file sharing services. Internet service providers, such as online platforms, might support consumers (even if not necessarily in a directly visible way), given their regular financial benefits from the operation of such platforms or other services without acquiring licenses. 5. Secondly, many business models dwell on the online exploitation of copyright-protected works of other rights-holders. In addition, user-generated content, which is in principle copyright-protected, becomes of growing business value for some online industries. The International Chamber of Commerce in Paris stated in its Intellectual Property Roadmap 2014 that “the emergence of new Internet applications and platforms, the increasing ubiquity of mobile devices and Internet, ever-increasing bandwidth and changing consumer behaviour are making intellectual property owners reconsider their strategies and models for distributing, commercialising and controlling their intellectual assets in the electronic environment.” The European Audiovisual Observatory of the Council of Europe showed through its MAVISE Database that accessing digital copyright protected content is one of the most popular online activities, with 35% of Internet users engaging in playing or downloading games, images, films or music. 6. Thirdly, intellectual property rights are protected for a certain duration and geographic territory; thus, as long as harmonised international standards on intellectual property do not exist, the Internet would in principle enable users in one country to access content which would be lawfully inaccessible in other countries due to different copyright protection. Even if legal standards on intellectual property rights online and their territorial application were clarified at international level, the enforcement of such standards would still be a major challenge in a globalised market, where illegal copies of such content can be accessed and purchased online. 7. As outlined by Professor Silke von Lewinski in her background report, whom I particularly thank for her work and on which I will draw extensively, it is difficult for rights-holders to control uses on the Internet and thus to implement their rights so as to be able to benefit from them effectively. Although they may protect their content by technical protection measures, such as by encryption or copy-protection measures, and although the law legally protects them against circumvention and related acts, the use of such measures is unpopular with consumers, so that in particular the music industry does no longer apply them towards endusers. Internet service providers benefit from generous safe harbour provisions in the EU’s e-commerce Directive of 2001, according to which they are exempted from liability for the use of infringing content via their services under certain conditions, especially if they remain passive.

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https://www.europol.europa.eu/content/292-internet-domain-names-seized-selling-counterfeit-products

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8. Not least, intellectual property may be restricted due to general public interests, such as educational or scientific purposes. In addition, the right to freedom of information has led to the limitation of exclusive audiovisual transmission rights of major events which are of public interest, such as the right to short television reporting about major sports events. 9. Through discussions and opinion making in social media by end-users, pressure has been built up in favour of “free access” to creative content; authors who wanted to defend their rights were intimidated by offensive reactions (as for example by massive “shit-storms” addressed to the musician and author Sven Regner). Overall, public debate has shown a certain tendency towards putting authors and other rightsholders into a defensive position, and favouring quite far-reaching rules in favour of free access by users and through certain intermediaries (and their business models, while those of right holders are not valued to the same extent), to the detriment of authors’ and other right holders’ rights. 10. As stated in the Motion for a resolution underlying this report (Doc. 13448), we shall review the existing legal standards of intellectual property rights (section 2 below) and discuss and propose strategies for parliaments in all European States on how to ensure effective protection of these rights at national, European and global levels (sections 3 to 6 below). 2.

The protection of intellectual property rights by international treaties

11. At global level, intellectual property rights are protected primarily by the revised Berne Convention for the Protection of Literary and Artistic Works, which has been signed and ratified by virtually all countries in the world, and the conventions of the World Intellectual Property Organisation (WIPO). In addition, the World Trade Organisation (WTO) has set standards though its Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). 12. Article 15.1.c of the International Covenant on Economic, Social and Cultural Rights of the United Nations recognises the fundamental right of everyone “to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.” 5 Therefore, the Report of 24 December 2014 on copyright policy and the right to science and culture by the Special Rapporteur of the United Nations in the field of cultural rights cannot convince in pretending that intellectual property rights would not be human rights. Cultural diversity and individual creative freedom would be at stake, if States redirected financial support from proprietary publishing models to open publishing models, as called for by the Special Rapporteur. 13. Article 1 of the first Protocol to the European Convention on Human Rights (ETS N° 9) protects property. The European Court of Human Rights has stressed that intellectual property benefits from the 6 protection afforded by Article 1. Moreover, the Court reiterated the principle that genuine, effective exercise of the rights protected by that provision does not depend merely on the State’s duty not to interfere, but may require positive measures of protection by States, which can include making copyright violations a criminal 7 offence. 14. Article 10 of the Convention on Cybercrime (ETS N° 185) specifically addresses this issue by penalising the violation of copyright and related rights “by means of a computer system”, i.e. by making electronic copies accessible online or by selling online hard copies or counterfeit products. Article 10 contains the obligation to establish as criminal offences the infringement of copyright and related rights, where such acts are committed wilfully, on a commercial scale and by means of a computer system. 15. Article 17 of the EU Charter of Fundamental Rights protects the right to property and includes expressly intellectual property. The major copyright legislation of the EU can be found in Directive 2001/29/EC, which implements the Copyright Treaty and the Performances and Phonograms Treaty of the World Intellectual Property Organisation, as well as Directive 2004/48/EC on the enforcement of intellectual property rights. In addition, intellectual property questions are addressed by Directive 2009/24/EC on the legal protection of computer programmes, the Orphan Works Directive 2012/28/EU and the Collective Rights Management Directive 2014/26/EU

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http://www.ohchr.org/EN/HRBodies/HRC/RegularSessions/Session28/Documents/A_HRC_28_57_ENG.doc See, for example, Anheuser-Busch Inc. v. Portugal (Application No. 73049/01), § 72 7 Fredrik Neij and Peter Sunde Kolmisoppi v. Sweden (Application No. 40397/12), in which the Court upheld the punishment under Swedish penal law of the applicants for having provided and commercially exploited an internet platform (called “Pirate Bay”) for the illegal sharing of copyright protected material. 6

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Doc. … 16. On 9 December 2015, the European Commission presented its proposal for a regulation on ensuring the cross-border portability of online content services in the internal market as well as its communication “towards a modern, more European copyright framework”. As far as intellectual property rights constitute cultural expressions in accordance with the UNESCO Convention on the Protection and Promotion of the Diversity of Cultural Expressions, which has been signed by the EU, Article 167 of the Treaty on the Functioning of the European Union confirms subsidiarity in this field.

3.1.

Exceptions to and limitations of intellectual property rights

17. Different user groups, often backed by internet service providers which have a commercial interest in unrestricted circulation of works on the internet, have expressed their interest in new mandatory and broadly worded exceptions and limitations of authors’ rights. However, exceptions and limitations of a right must be justified by sound policy reasons, such as education, research, news reporting. In contrast, for example, mere entertainment, the mere technical possibility to access or use works in a given way, or the pursuit of new business models by internet service providers as such may not generally be considered as sufficient reasons to restrict the rights of authors, who need to be able to benefit from their creations also in the internet. 18. Furthermore, even where it is decided to remove an obstacle to trade caused by different authors’ rights legislation, one should take into account the fact that exceptions or limitations are not the only possible means to do so, but that a frequently appropriate measure may instead be different kinds of licensing, including individual or (voluntary or mandatory) collective licensing, which might be encouraged. 19. In general, national rules on exceptions and limitations of authors’ rights vary to a great extent, among others due to their close link to culture and cultural policy, and are based on different concepts. In particular, under the Anglo-Saxon copyright system, the laws regularly contain very detailed provisions on exceptions and limitations, supplemented by a number of somewhat broader clauses called “fair dealing” to apply to certain well-defined situations (unlike the much broader concept of “fair use” in US law). There is no tradition of statutory remuneration rights as a compensation for the loss of exclusivity through exceptions and limitations. In contrast, national laws under the Continental European authors’ rights system only know quite specific exceptions and limitations rather than fair dealing or other flexible clauses, and yet differ among themselves in several aspects, such as in the scope and detail of the regulation of exceptions and limitations and in the extent to which statutory remuneration rights are provided in connection with exceptions and limitations. 20. It has been claimed that rendering facultative exceptions or limitations mandatory would enhance legal certainty. However, the mandatory or facultative character does not affect the legal certainty; in both cases, a particular provision exists, be it a different one in each EU Member State or the same one in all of them. Still, it is true that the mandatory character could facilitate exploitation across borders by creating a similar legal situation in the Member States (although different interpretations may remain for some time), while the facultative character in this case results in the need to ascertain different national laws rather than one law; at the same time, businesses always needed and will further need to take into account the laws of countries to which they want to export, including on issues other than intellectual property, and will have to do so also for exploitation beyond the EU. 21. In the framework of the WIPO, certain countries have called for a binding treaty on certain exceptions and limitations. While a treaty on access to special format copies was adopted in favour of visually impaired persons (Marrakesh Treaty of 2013), which relates to a very narrow and economically little important area, a treaty on exceptions in particular in the fields of education and public libraries meets major, justified objections including at governmental level, not least due to its larger, negative economic impact on these culturally important fields, but equally due to the close connection of these fields with general cultural policy, which is and should remain a matter of sovereign, national decision-making, which guarantees a certain level of cultural diversity. 22. Another claim backed in particular by internet service providers has been the introduction of broad, flexible clauses for exceptions and limitations, following the US-American ‘fair use’-concept or another kind of flexible exceptions or limitations. It is argued that this would facilitate a faster adaptation of copyright to challenges of new technologies, since judges could react faster than legislatures by interpreting such broad clauses. However, the disadvantages of this approach for all stakeholders are likely to prevail. In particular, flexible, broadly worded clauses will result in reduced legal certainty; also consumers will not easily know what is permitted or not. As a consequence, problems will also arise regarding the application of criminal law, which requires clear provisions regarding infringements. In addition, problems will arise for the 7

Doc. … application of any statutory remuneration rights related to such exceptions and limitations, such as for private copying, since debtors of such remuneration will try to argue that a particular use is not covered by the exception or limitation and thus the related remuneration right does not exist. Flexible exceptions or limitations will mean years of legal proceedings needed to find clarification of their meaning, resulting in high transaction costs, and this each time only for very specific situations in individual cases brought before the courts. Therefore, clear and final reactions to technical or other changes are likely to take even much longer through the courts than through legislative amendments. 23. In fact, the legal system on the European continent (and even to a large extent in the UK and Ireland), which is based on precisely drafted legal language in the field of authors’ rights (while it can still be technically neutral) has shown that it has so far successfully adapted to new technical developments. Furthermore, too broad and flexible clauses may negatively affect the division of powers between the democratically elected legislature on the one hand and the judicial power on the other hand. Finally, flexible clauses are likely to best benefit powerful users, such as major internet companies who may afford the best lawyers, and may disadvantage small users within legal proceedings. They might also in a given case result in decisions against users. They do therefore not appear as an option to be pursued. 3.2.

Text and data mining

24. Text and data mining is usually done for business and scientific and other research purposes and involves scanning (and thus reproductions) of large amounts of texts with a view to automatic analysis thereof; the results of such processes may then be used further for the development of new products or services and often create enormous economic value. Relevant industries such as the pharmaceutical industry have sought licences for such uses. Then, certain internet industries interested in mass digitisation and mass use of digitised texts, later joined by libraries, have claimed the need for a new exception or limitation for this purpose or at least for clear rules on the possibilities of making these reproductions and on how to document the validity of results obtained through automatic analysis. The recent Reda report of the European Parliament on the implementation of the Information Society Directive proposed to consider the enabling of text and data mining for research purposes. However, if such enabling were to be assured via an exception or limitation, it could have far-reaching negative consequences for the exploitation of contents in related markets by right owners. At the same time, in the field of commercial research, text and data mining 8 and further uses of the results already occur on the basis of licenses; no need for an exception appears. As for non-commercial research, an appropriate solution could be the application of a similar service, combined with a commitment by right holders to grant licences that are appropriate for non-commercial research, in the framework of self-regulation. 3.3.

“Geo-blocking” and cross-border access

25. In broader terms, “geo-blocking”, as understood by the EU Commission in its Digital Single Market communication of May 2015, refers to the practice of denying cross-border access to works as a result of territorial exploitation of copyright in certain fields, in particular of the audiovisual industry. As a consequence, consumers may not access content that is available on a given website for free (such as a TV programme via internet) or offered on the basis of a subscription (such as Netflix) in one Member State from another Member State. This practice, according to the film industry, enables and is essential for sufficient financing of European film production. Before considering any interference with the territorial exploitation of works on the internet in order to reach simultaneous availability of works throughout the EU or even beyond, one should therefore take into account the likely negative impact on the European cultural (and in particular film) production and act so as to refrain from causing damage to European culture, even if not each work would be available at the same time beyond national borders. 26. In general, one should also take into account the fact that territorial exploitation often corresponds to the demands of consumers. To a broad extent, there is no “single market”, whether digital or analog, in European reality, since most local films or music from a given country are not in a measurable demand from other countries; a licensee in these cases would not even want to have (and pay for) an EU-wide license if he cannot get clients who would subscribe for such local films or music from another country – due for example to the language barrier for foreign films (and disproportionate costs for subtitles or dubbing) and lyrics associated with music, and due to different cultural traditions. Rather, the mainstream (mostly US) films or music would survive best any compulsory rules that would prevent territorial licensing (and the internet platforms and other service providers who have driven the debate on geo-blocking would benefit therefrom). This effect would seem contrary to the aim of safeguarding and promoting cultural diversity in Europe, to which the EU and its Member States and other European countries have subscribed in the UNESCO 8

See, for example, the model developed by the Copyright Clearance Center in the USA, https://www.copyright.com/

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Doc. … Convention on Cultural Diversity. 27. For these reasons, also the – separate – current reflections of the EU Commission on a possible extension of rules of the EU Satellite and Cable Directive to on-demand offers by broadcasters are subject to major doubts: their extension to the internet was already rejected in the context of the e-commerce Directive 2001 and should also now be avoided. 3.4.

Portability of content

28. To be distinguished from general cross-border access described above is the case in which users who subscribe to an online service in their home state would like to access the service while temporarily present in another Member State, for instance while on holiday or away on business. Users who have a subscription for example for online access to films or music with a provider in their country have complained that often, they cannot (but want to) access these works once they are in a foreign country; that content thus is not “portable”. Right holders or service providers may have restricted such access on the basis of exclusive licenses per country for economic reasons; in particular in the film industry, financing largely depends on territorial exploitation. It should be possible to reconcile both interests in this very specific case, either on the basis of a memorandum between the stakeholder groups on voluntary agreements that would enable, despite otherwise exclusive licenses, such uses for their private purposes by the subscribed consumers, or by a legislative action; still, it is doubtful whether a new exception to exclusive rights could be justified in this case by a public interest reason. In any case, one will have to take account of existing exclusive license agreements. 3.5.

Research and education

29. Although most countries already provide for exceptions and limitations for the purposes of research and teaching, and Article 5(3)a of the Information Society Directive allows member States to do so within a given frame, it is partly claimed that respective exceptions and limitations should be made mandatory and uniform in the EU, in order to facilitate cross-border teaching and research. However, Article 165 of the Treaty on the Functioning of the European Union limits its legislative powers in the field of education. 30. To the extent a real need (or even possibility) exists to use foreign rather than domestic material for school or university teaching, it would seem appropriate to consider whether a system of licensing would not be practicable and preferable. In fact, in certain countries such as the USA, licensing is being practiced without noticeable problems for university course materials. Also, it must be taken into account that for school books and in part material used at universities, these educational uses constitute the core possibility of exploitation, i.e. the core market, which must not be negatively affected. Accordingly, a balanced exception or limitation for example regarding small parts of works (that are not specifically made for school or other teaching use) to be used for non-commercial online teaching that would not affect the market for such works may be useful where it does not yet exist, unless a licensing mechanism may be established for this purpose. 3.6.

Public libraries

31. Public libraries, archives and similar institutions have called for mandatory and broad exceptions and limitations of authors’ rights in particular to make full use of digital technology without the need to acquire licenses, for example, to digitise their collections or to make available online digitised works to users not only in their own community or country, but across borders, both in the EU and – in the context of WIPO worldwide. They have been cooperating with major internet companies, which have a strong commercial interest in digitising books from libraries, not least in order to get even more content to search for on the internet. In fact, well-known US companies have sponsored book digitisation in many countries. 32. Not only since public libraries are funded by public money, but also because of their role for the culture of a given country, each country has an interest in regulating aspects related to public libraries in the framework of its national cultural policy and to keep this freedom in order to adapt the law in the best manner to its national cultural policy. One may also observe that the infrastructure for public libraries as well as their local importance differs enormously among countries both within the EU and beyond; a uniform, mandatory regulation may thus not be appropriate. 33. Even if there were a considerable demand for cross-border online availability of works, it is necessary to assess the impact of any possible exception or limitation on authors’ rights. In particular, if online availability, whether worldwide or not, of digitised works through public libraries (and thus free of charge for users) were permitted by law through an exception or limitation, it is likely that authors would no longer have 9

Doc. … any real chances to normally market their works and thereby to benefit from their rights. In fact, one cannot economically compare lending in the analogue world (for which in most EU Member States a remuneration right rather than an exclusive right exists) and making available books and the like by online transmission. The uses in the analogue world are much less intense than online uses; users need to visit the library instead of having access from their home, and the borrowed book is not as vulnerable to further uses as is a digital copy. In the analogue world, a library would acquire new copies after some years of use, while this would not be needed in case of a digital copy. Given these differences, it would be very risky to apply the same regime (a simple remuneration right) as it mostly applies to analogue public lending also to “e-lending”; this is particularly true since in a case of an economic crisis, public money (from which such remuneration is paid) is usually restricted and right owners in this case would suffer from revenue cuts, while libraries could legally continue to make available online their collections, with a likely strong impact on the sales market. 34. At the same time, licenses for public libraries for the online environment already exist; right owners may thereby grant access while trying to secure, on the basis of fine-tuned contractual conditions, that uses will not negatively affect the normal exploitation. If not all publishers have granted such licenses for online uses yet, or not all libraries may afford paying for such licenses, one should consider that also in the analogue world, not every public library can afford to acquire all existing works for the purpose of lending. 35. Overall, any addition or widening of an exception or limitation regarding digital uses by public libraries and similar institutions would require very careful consideration of its possible impact on the relevant market; the normal exploitation must not be affected by any exception or limitation. 3.7.

“User-generated” content (UGC)

36. Users often combine own material, such as a home video, with protected works they access from the Internet, such as music, or they may use an own text to which they add pictures from a website, and make such content available on the Internet themselves. They often do not acquire the rights for such uses and thus, in principle, infringe these rights. Some have called for an exception to the exclusive rights of authors to allow such practices. However, this approach does not seem justified. The fact that such practices have become wide-spread and serve the entertainment of the Internet community does not appear to be a sufficient public policy reason to restrict the rights of authors. In addition, even if users will often not pursue commercial ends, the platforms on which they post them are regularly commercial ones, all the more since they place advertising in context with content. While platforms in part are ready to acquire licenses, many of them argue that they would enjoy a safe harbour under the e-commerce Directive and are not ready to pay appropriate license fees. A clarification of their often rather active role, which would not allow this argument anymore, would seem appropriate. 37. It should also be mentioned that there are already possibilities for users to use protected works legally without a major effort. For example, many authors have granted licenses to everyone, such as Creative Commons licenses. Authors may also grant licenses through websites to any individual user in a simple procedure, such as on the Lady Bridgeman Art Library. 3.8.

Equitable participation in remuneration for authors and performers

38. Often, authors and performing artists cannot well participate in revenues from the exploitation of their works, since they are regularly not in a sufficiently strong bargaining position vis-à-vis their contractual partners. In order to improve this situation at least for Internet uses, one should consider applying the model of Article 4 EC Rental Rights Directive 1992 (today: Article 5 of the Directive as consolidated in 2006). It has shown to be effective in the context of the rental right. Basically, it guarantees that the author and performer keeps, when licensing his exclusive right, a kind of statutory ‘residual right’ of equitable remuneration, which he cannot waive and which should best be subject to mandatory management by a collective management organisation (CMO). The CMO, which has a stronger bargaining power than any given individual author, would collect the money from the exploitation business and transfer the money back to authors and performers. 3.9.

Enforcement of authors’ rights and liability of Internet service providers

39. The just mentioned participation rule for authors and performers may however only show the wanted effect if the overall revenues from exploitation are more than modest. In the Internet, to date revenues are often still modest, due to insufficient enforcement possibilities and revenue streams that go to Internet platforms and other intermediaries rather than to right holders. Rights enforcement is a challenge, since it is easy for anyone to copy protected works in digital form and to upload them on their websites or any kind of platforms to make them available to the public. Although procedures exist to have illegal content removed 10

Doc. … from such sites, such content is easily placed on new sites, where infringements continue. Considerable costs are spent to continuously search for new illegal content and to follow these procedures – costs that right holders could better invest in new creative content to enrich cultural diversity. The permanent existence of a considerable amount of illegal content on the Internet that is often offered free of charge renders it quite difficult for right owners to compete with their legal (paying) offers on the Internet. 40. Furthermore, Internet service providers under the e-commerce Directive enjoy quite comfortable safe harbours from liability for infringements on their platforms through consumers, and regularly reap considerable economic benefits from the circulation of protected content on their platforms, in particular through advertising. Right holders are thus deprived of income from the exploitation of their content for the benefit of intermediaries. 41. This imbalanced situation needs to be remedied by improving enforcement measures and clarifying the broad safe harbour rules of the e-commerce Directive. In particular, site blocking measures which are covered by Article 8(3) Information Society Directive are only available and applied effectively in some EU Member States (such as the UK) and function well there, but should be so everywhere; in certain countries, restrictions of the right to information on infringers may also be a stumbling block to enforcement of rights in the Internet. In addition, the safe harbours under the e-commerce Directive have often been applied to certain Internet service providers that initially had not been envisaged by these rules and for which these exemptions from liability do not seem appropriate. In particular, platforms on which users place content should be made subject to wide responsibilities, since they usually do not just play a passive, but an active role in content dissemination. Also, the approach of companies that earn money from sites with illegal content, such as through advertising or offering credit card services (in case payment is asked, e.g. for faster downloads or streams of films), called “follow-the-money” approach, is to be strongly recommended in order to avoid that platform operators continue to free-ride on right holders’ content without their authorisation on a commercial scale. 42. Such protection is also justified against the background of human rights. According to the European Court of Human Rights, the protection of authors’ rights in the Internet may justify an interference with the right of freedom of expression under Article 10 ECHR in particular through enforcement measures, 9 especially where it is not a political debate that is at stake, but commercial exploitation of cultural content. 4.

Author’s rights of journalists and news media

43. Freedom of expression and information through the media is an essential requirement of a democratic society, requiring transparency, pluralism and independence of the media. The advent of digital online media has strongly changed the news media markets and the employment situation of journalists. While newspapers see their revenues dwindling, hence causing a difficult economic situation for several of them, the number of professional journalists is declining. At the same time, multinational Internet companies have soaring shareholder values and produce immense amounts of cash revenues, while producing virtually no original news content. European politicians cannot be indifferent towards such a deterioration of the news media situation in a sector which is of vital importance for a democracy. 44. The European Newspaper Publishers’ Association (ENPA) prepared in May 2015 ten policy 10 recommendations concerning copyright in the EU digital single market. Text and data mining, by users through search engines as well as by specialised Internet service providers, is growing rapidly. Therefore, ENPA regretted that search engines as well as text and data mining companies participated commercially in the exploitation of news contents while refusing to pay for the use of the copyrights. ENPA saw also legal uncertainties if the US-American concept of “fair use” were to be introduced into European copyright laws in order to restrict copyright and neighbouring rights. As this concept was unknown in Europe, it would require lengthy and costly litigation in order to clarify it through case-law of highest courts in member States. 45. Instead, licensing agreements should be concluded. Licensing agreements provide better, faster and more adaptable solutions than the introduction of new exceptions. Such agreements are successfully used in the USA, for example. However, many news media are is a weaker position when negotiating such agreements with large multinational Internet companies.

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See the “Pirate Bay” case Neij and Sunde Kolmisoppi v. Sweden (Application No. 40397/12, 19 February 2013); Ashby Donald v. France (Application No. 36769/08, 10 January 2013). Of course, blocking of all sites of a company including those that were not infringing would not be justified, see Ahmet Yildirim v. Turkey (Application No. 3110/10, 18 December 2012). 10 http://www.enpa.be/uploads/enpa_copyright_epub_2015.pdf

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Doc. … 5.

The digital economy

46. All sectors of the economy have benefitted from the advent of digital technologies and the Internet. The media landscape has been changed dramatically through a technological convergence of print and broadcast media with the Internet and mobile telephony. Individual freedom of expression and information has been advanced exponentially. These changes cannot be reversed. 47. Nevertheless, one has to recognise that digital companies are flourishing enormously today, far beyond the “dot com bubble” more than a decade ago. A true globalisation of the digital economy would still appear to be a policy objective, due to the apparent geographic concentration of the big market players. From a market economic perspective, general support for the digital industry does not seem necessary. Therefore, the economic impact of legislative changes of intellectual property rights should be taken into account, because such changes would create indiscriminate benefits for Internet companies to the detriment of right-holders and traditional media. 6.

Self-regulatory industry initiatives

48. As stated by the Assembly report on “the protection of freedom of expression and information on the Internet and online media” (Doc. 12874 Add), Internet piracy of copyright protected works became a widely publicised issue through the huge file sharing among users on the You Tube network. You Tube was purchased by Google in 2006 for 1.76 billion US-Dollars and developed subsequently a software programme called Content ID that scans and compares videos to material provided by copyright owners, for instance in order to place specific advertisement on the screens of its users who have posted those videos. This software allows You Tube to gain revenue from advertisement and identify copyright violations when videos are posted by users. You Tube also introduced the “You Tube Copyright School” for copyright violators, who were asked to watch on its website a four-and-a-half minutes video and answer questions concerning copyright as an educational exercise. 49. The Court of Justice of the EU in Luxembourg decided on 16 February 2012, that the owner of an online social network cannot be obliged to install a general filtering system covering all its users in order to 11 prevent copyright infringements by users. Nevertheless, Internet companies which benefit commercially from copyright violations of their users can be held liable under penal law, as the European Court of Human 12 Rights has found in the case concerning “Pirate Bay”. Therefore, technological initiatives for the protection of copyright do not seem to be an undue burden for Internet companies which otherwise benefit from the actions of their users. 50. Internet service providers hosting user-generated content established in 2007 the self-regulatory 13 “UGC Principles” against illegal user-generated content. More Internet companies should adhere to these principles. Social networks and platforms with user-generated content should empower their users in this respect by providing digital identification tools automatically by default. 7.

Conclusions

51. Following from the committee hearing in Paris on 3 December 2015, I concur with Professor von Lewinski that the Internet has brought about enormous opportunities for global dissemination of works to users. However, the main benefit from the dissemination of works on the Internet still accrues to the powerful Internet companies and indirectly their users, while authors, performers, and other right-holders suffer dramatic losses of income. Therefore, any legislative action with respect to exceptions and limitations should be conducted on the basis of a thorough analysis of the relevant situation and take into account all consequences thereof. While tailor-made and carefully drafted (rather than vague, flexible) exceptions and limitations may be appropriate in given situations, there is no overall need to redraft the existing ones, to render them mandatory, or to introduce new ones. Authors of creative works should have a fair chance to benefit from the potential that the Internet should offer them. This would be the aim of the proposals I included in the draft resolution and draft recommendation.

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Court of Justice of the EU, SABAM v. Netlog (C-360/10), http://curia.europa.eu/jcms/upload/docs/application/pdf/201202/cp120011en.pdf 12 ECtHR, Fredrik Neij and Peter Sunde Kolmisoppi v. Sweden (Application No. 40397/12) 13 www.ugcprinciples.com

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