The European Commission today set out its position on the future regulation and development of online platforms in Europe. This communication is the result of the Commission’s studies and public consultation into online platforms as part of the broader Digital Single Market Strategy announced this time last year.

A key theme of the policy is to encourage co-regulation between platforms and governments (i.e. binding commitments agreed without the need for further legislation). In the intellectual property environment, there are two recommendations in the proposal which will be of particular interest to platform operators and rights holders.

Payment

The Commission has indicated that its next copyright reform package, due to be adopted in September this year, will aim to ensure a “fairer allocation” of the value generated by distribution of copyright works through online platforms.

This suggests the introduction of a mechanism by which rights holders will receive a royalty of some kind when their content is made available on platforms. Such a change would represent a major shift in the relationship between platforms and content owners and is a key step in the Commission’s goal of ensuring fair remuneration for the underlying originators of creative works.

The music industry in particular has for some time argued strongly that platforms such as YouTube have been able to generate significant value (particularly through advertising) from hosting their content, without having to pay rights holders a proper price for it. This then has the knock on effect that underlying authors such as artists and producers lose out. The Commission also seems to have been influenced by responses to its public consultation from rights holders who expressed concerns that their works are increasingly being used either without authorisation or pursuant to unfair licensing terms.

It is not yet clear precisely how such a system would operate in practice and there are likely to be a number of challenges in calculating what should be paid and who should benefit. More details will follow in September but, given the stakes, every detail is likely to be heavily lobbied as the reforms are finalised.

Notice and Takedown

The Commission has also indicated that it will issue guidance on the scope of the hosting defence under Art 14 of the e-Commerce Directive. This currently provides a defence to liability for online platforms where infringing content is hosted without knowledge and providing the platform acts expeditiously to remove such content, upon being made aware of it.

At present platforms have no guidance on what is required to “act expeditiously” and accordingly different platforms operate a wide variety of procedures and standards in order to comply (generally known as “Notice and Takedown” procedures). The Commission will review the need for a formal standardised procedure during the second half of the year, taking into account other ongoing reforms such as the amendments to the Audio-Visual Media Services Directive.

Respondents to the public consultation indicated that guidance in this area was important in order for platforms to be able to employ voluntary, self-regulatory measures without running the risk of falling outside the hosting defence.

It is notable that Art 16 e-Commerce Directive envisages a code of conduct to facilitate the implementation of Art 14 (amongst other provisions) however no such code was ever agreed. On a national level, the UKIPO’s IP Enforcement 2020 strategy contemplates the possibility of a Code of Practice for intermediaries to give clarity and certainty in this area. If this goes ahead it will be interesting to see how it compares to any guidance issued by the Commission.

Content owners have long sought a shift towards a so called “notice and staydown” system whereby a single notice would be sufficient to remove an infringing work, regardless of how many time is was uploaded and by how many different. However, the Communication suggests that the Commission will not go that far as part of the current policy.

Implementation

Given the focus on co-regulation, the Commission believes that each of the above reforms can be introduced within the framework of the existing e-Commerce Directive. Whether this approach is successful will of course be dependent on securing the support of platforms to any proposed new voluntary regime. There is of course a risk that by avoiding new legislation the Commission’s reforms will in fact make for a more complicated regulatory regime with differing national interpretations, which could prove difficult to navigate for new, smaller players in the market.

 


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