European Business Law, the fourth volume in our series, shows how the European authorities simultaneously abolish all restrictions on access to and exercise of economic activities and support the growth of domestic markets, through the harmonization the internal legislation or the enactment of genuinely unified regulations.

European Business Law

Taking account of the ways that digital technologies have changed how works and other protected subject matter are treated, produced, distributed and exploited and the emergence of new business models and new players, the European legislator has intervened to remove legal uncertainty for both rightholders and users, as regards certain uses, in particular cross-border uses, of works and other subje …

 Directive on Copyright in the Digital Single Market  

Taking account of the ways that digital technologies have changed how works and other protected subject matter are treated, produced, distributed and exploited and the emergence of new business models and new players, the European legislator has intervened to remove legal uncertainty for both rightholders and users, as regards certain uses, in particular cross-border uses, of works and other subject matter in the digital environment. Based upon and complementing the rules laid down in the directives currently in force on copyright, in particular Nos 96/9 , 2000/31 , 2001/29 , 2006/115 , 2009/24 , 2004/48 , 2012/28  and 2014/26 , Directive No  2019/790 of 17 April 2019 on copyright and related rights in the Digital Single Market, which came into force on 6 June 2019, applies to all works and other subject matter that are protected in the EU on or after 7 June 2021 (Art. 26, Directive No 2019/790). 

The text finally adopted pursues various objectives: on the one hand, to ensure wider access to content, it provides for rules to adapt certain exceptions and limitations to copyright and related rights to the digital and cross-border environment and facilitates the licensing of, inter alia, the dissemination of out-of-commerce works and other protected subject matter and the online availability of audiovisual works on video-on-demand platforms and the use of content in the public domain; on the other hand, in order to achieve a well-functioning and fair marketplace for copyright, it lays down rules on rights in publications, on the use of works or other subject matter by online service providers storing and giving access to user-uploaded content, on the transparency of authors' and performers' contracts, on authors' and performers' remuneration, as well as a mechanism for the revocation of rights that authors and performers have transferred in such contracts .

1) Mandatory exceptions and limitations to copyright 

Directive No 2019/790 introduces two new mandatory exceptions to copyright by allowing copies and extractions of lawfully accessible works and other subject matter for the purposes of text and data mining in general (Art. 4) , or for the purposes of scientific research (Art. 3) , with the exception under Article 3 being a public policy provision whereas the Article 4 exception can be overridden by rightholders. Apart from the text and data mining exceptions, the directive maintains the education and research exception provided under Directive No 2001/29 and develops it further (Art. 5). There is also a mandatory public policy exception to permit cultural heritage institutions to reproduce works and other subject matter permanently in their collections for preservation purposes (Art. 6).

2) Measures to facilitate licensing of rights

By virtue of Article 8 of the directive, Member States must enable collective management organizations, in accordance with their mandates from rightholders, to conclude non-exclusive licenses for non-commercial purposes with a cultural heritage institution for the digitizing and online dissemination within the EU of out-of-commerce works or other subject matter that are permanently in the collection. Besides the mandatory collective management of rights, and only within well-defined areas of use, where obtaining authorizations from rightholders on an individual basis is typically onerous and impractical, Member States may provide for the extension of the effects of a license agreement with collective management organization that is subject to the national rules implementing Directive No 2014/26  to apply to the rights of rightholders not having authorized that organization to represent them (Art. 12). Further, Article 13 institutes a negotiation mechanism to ensure that parties facing difficulties related to the licensing of rights when seeking to conclude an agreement for the purpose of making available audiovisual works on video-on-demand services may rely on the assistance of an impartial body or of mediators. Article 14 prohibits the claiming of an exclusive right to any reproduction of works of art that has fallen into the public domain, unless it itself constitutes an original creation.

3) Creation of a related right for publishers of press publications

Article 15 confers on publishers of press publications the right to authorize or prohibit the reproduction or the online use of their publications by online service providers, and not for private or non-commercial uses by individual users. The rights provided for, which expire after two years, do not apply to hyperlinks or in respect of the use of individual words or very short extracts of a press publication. Authors whose works are incorporated in a press publication must receive an appropriate share of the revenues that press publishers receive for the use of their press publications by service providers. Where an author has transferred or licensed a right to a publisher, such a transfer or license constitutes a sufficient legal basis for the publisher to be entitled to a share of the compensation for the use of the work made under an exception or limitation to the transferred or licensed right (Art. 16).

4) Use of protected content by online content-sharing service providers

Together with Article 15, Article 17 is the most controversial provision of the directive. It stipulates that any online content-sharing service provider performing an act of communication to the public or making available to the public when it gives the public access to copyright-protected works or other protected subject matter uploaded by its users must obtain an authorization from the rightholders for instance by concluding a licensing agreement (Art 17(1). Failing such obtention of authorization Article 17(4) lays down the principle that online content-sharing service providers are liable for unauthorized acts of communication to the public, including making available to the public, of copyright-protected works and other subject matter, unless the service providers demonstrate that they have made best efforts: a) to obtain an authorization and b) to ensure the unavailability of specific works and other subject matter for which the rightholders have provided the service providers with the relevant and necessary information, and c) have acted expeditiously, upon receiving a sufficiently substantiated notice from the rightholders, to disable access to, or to remove from their websites, the notified works or other subject matter, and made best efforts to prevent their future uploads . According to the Court of Justice, measures adopted by service providers must comply with the right to freedom of expression and information of internet users and must, in particular, be  strictly targeted in order to enable effective protection of copyright but without thereby affecting users who are lawfully using those providers’ services: users should be allowed to upload and make available content generated  by users for the specific purposes of quotation, criticism, review,  caricature, parody or pastiche . However, the directive introduces a “variable geometry” liability since, by differentiating according to the audience, the economic dimension and the technical means available to the content sharing service provider, it provides that content sharing platforms of less than three years, whose annual turnover is less than EUR 10 million, are not subject to the implementation of disabling systems rendering unavailable the unauthorized content provided for in Article 17 (4) (b), although they must comply with paragraph 4 (a) and act promptly when they receive a sufficiently substantiated notice to disable access or to remove unauthorized works from their websites. Not-for-profit online encyclopedias, not-for-profit scientific or educational repositories, open source software development and sharing platforms, electronic communication services within the meaning of Directive No 2018/1972, online marketplaces, business-to-business cloud services and cloud services, which allow users to upload content for their own use are excluded from the definition of online content-sharing service provider within the meaning of the directive (Art. 2(6). Lastly, Article 17(7) authorizes users to upload certain content for the purpose of caricature, parody or pastiche.

5) Fair remuneration in exploitation contracts of authors and performers

Article 18 lays down the principle of appropriate and proportionate remuneration of authors and performers licensing or transferring their exclusive rights through agreements for the exploitation of their works, leaving Member States a certain freedom in the implementation of that principle provided that account is taken of contractual freedom and a fair balance of rights and interests. However, Article 20 provides for a contract adjustment mechanism" (similar to a hardship clause) according to which, when the remuneration originally agreed turns out to be “disproportionately low” compared to all the subsequent relevant revenues derived from the exploitation of the works or performances, authors and performers or their representatives are entitled to claim additional, “appropriate and fair” remuneration.

6) Transparency in contracts for the exploitation of rights

Under Article 19, authors and performers must receive on a regular basis - at least once a year - relevant and comprehensive information on the exploitation of their works and performances from the parties to whom they have licensed or transferred their rights. If the administrative burden resulting from the obligation becomes disproportionate in the light of the revenues generated by the exploitation of the work or performance, the obligation is limited to the types and level of information that can reasonably be expected in such cases. The directive provides that disputes concerning the transparency obligation and the contract adjustment mechanism may be submitted to a voluntary, alternative dispute resolution procedure (Art. 21).

In application of Article 22, where an author or a performer has licensed or transferred his or her rights in a work or other protected subject matter on an exclusive basis, the author or performer may revoke in whole or in part the license or the transfer of rights where there is a lack of exploitation of that work or other protected subject matter. The revocation may only be exercised after a reasonable time following the conclusion of the license or the transfer of the rights. Member States may provide for certain limits e.g. excluding works or other subject matter from the application of the revocation mechanism if they usually contain contributions of a plurality of authors or performers. Lastly, the directive also ensures that any contractual provision that prevents compliance with Articles 19, 20 and 21 is unenforceable in relation to authors and performers.

Directive No 96/9 of 11 March 1996 on the legal protection of databases (OJ L 77/20 of 27 March 1996).

Directive No 2000-31 of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce) (OJ L 178/1 of 17 July 2000).

Article 3(1) "Member States shall provide for an exception to the rights provided for in Article 5(a) and Article 7(1) of Directive 96/9/EC, Article 2 of Directive 2001/29/EC, and Article 15(1) of this Directive for reproductions and extractions made by research organizations and cultural heritage institutions in order to carry out, for the purposes of scientific research, text and data mining of works or other subject matter to which they have lawful access".

Directive No 2014/26 of 26 February 2014 on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market, OJ L 84/72 of 20 March 2014.

For an application, see Case C-401/19 Republic of Poland, European Parliament and Council, Judgment of 26 April 2022, LawLex202200002327JBJ, which restates that online content-sharing service providers are not only required to act expeditiously to bring to an end on their platforms specific copyright infringements after they have occurred and after receiving a sufficiently substantiated notice from rightholders, but must also, after receipt of such a notice or where those rightholders have provided them with the relevant and necessary information prior to the  occurrence of a copyright infringement, "make their best efforts in accordance with high industry standards of professional diligence" to prevent such infringements from occurring or reoccurring and carry out a prior review of the content that users wish to upload to their platforms.

Case C-401/19 Republic of Poland, European Parliament and Council, Judgment of 26 April 2022, LawLex202200002327JBJ, laying down the premiss that the specific liability regime, established in Article 17(4) of  Directive No 2019/790 in respect of online content-sharing service  providers, entails a limitation on the exercise of the right to freedom  of expression and information of users of those content-sharing service, guaranteed in Article 11 of the Charter. 

Directive No 2001/29 of 22 May 2001 on the harmonization of certain aspects of copyright and related rights in the information society (OJ L 167/10 of 22 June 2001).

Directive No 2006/115 of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (OJ L 376/28 of 27 December 2006).

Directive No 2009/24 of 23 April 2009 on the legal protection of computer programs (OJ L 111/16 of 5 May 2009).

Directive No 2004/48 of 29 April 2004 on the enforcement of intellectual property rights (OJ 157/45 of 30 April 2004).

Directive No 2012/28 of 25 October 2012 on certain permitted uses of orphan works (OJ L 299/5 of 27 October 2012). 

Directive No 2014/26 of 26 February 2014 on collective management of copyright and related rights and multi-territorial licensing of rights in musical works for online use in the internal market (OJ L 84/72 of 20 March 2014).

Article 4(1) Directive No 2019/270: "Member States shall provide for an exception or limitation to the rights provided for in Article 5(a) and Article 7(1) of Directive 96/9/EC, Article 2 of Directive 2001/29/EC, Article 4(1)(a) and (b) of Directive 2009/24/EC and Article 15(1) of this Directive for reproductions and extractions of lawfully accessible works and other subject matter for the purposes of text and data mining".

Directive No 2001/29 of 22 May 2001 , referred to as the “Information Society” Directive is one of the main pieces of legislation which harmonize copyright and related rights by reason of the cross-over of its field of application. According to Article 1, it relates to “the legal protection of copyright and related rights in the framework of the internal market, with particular emphasis on the information society”. It tends to adapt and supplement the European rules applicable to copyright and related rights in order to take account of technological development which has multiplied and diversified the vectors for creation, production and exploitation (recitals 5 and 7). Thus, it is based on the principles and rules already laid down by the previous sectoral directives which, besides, remain in force , while transposing the main international obligations arising out of the two WIPO “internet treaties”. 

Although it establishes exclusivity in the information society of the author's reproduction, communication and distribution rights, the directive, which has set itself as target the building of a “harmonized legal framework on copyright and related rights” (recital 4), does not take into consideration a number of issues, such as the moral right and collective management of copyrights , or the rights on works created under an employment contract. Furthermore, many exceptions opened to Member States significantly mitigate the scope thereof. The 28 Member States of the European Union have transposed it in their domestic law - sometimes late.

Directive No 2001/29/EC of 22 May 2001, on the harmonization of certain aspects of copyright and related rights in the information society, OJ L 167-10 of 22 June 2001, 10-19.

See the recent codifications of those provisions: Directive No 2009/24/EC of 23 April 2009 OJ L 111 of 5 May 2009, 16-22, which repeals and replaces without changing the law Directive No 91/250/EEC of 14 May 1991 on the legal protection of computer programs, OJ L 122 of 17 May 1991, 42; Directive No 2006/115/EC of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (codified version), OJ L 376 of 27 December 2006, 28-35, which repeals and replaces Directive No 92/100/EEC of 19 November 1992 on rental right and lending right and on certain rights related to copyright in the field of intellectual property, OJ L 346 of 27 November 1992, 61; Directive No 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission, OJ L 248 of 6 October 1993, 15 (Directive No 2001/29/EC, Article 1(2)(c)) and Directive No 96/9/EC of 11 March 1996 on the legal protection of databases, OJ L 77 of 27 March 1996, 20 (Directive No 2001/29/EC, Article 1(2)(e)).

See, however, Commission Recommendation No 2005/737 of 18 May 2005 on collective cross-border management of copyright and related rights for legitimate online music, OJ L 276, 21 October 2005, 54-57, which invites the Member States to take the necessary measures to promote the collective management of online rights.

European Business Law

258. Directive on Copyright in the Digital Single Market (1)

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