Earlier this week, together with epicenter.works, Gesellschaft für Freiheitsrechte, Wikimedia Austria, Creative Commons Austria and the Cultural Broadcasting Archive we have submitted extensive comments in response to the new implementation draft (PDF, in German) which we summarise below.

Article 17: A combination of the German implementation and the worst ideas from the Commission guidance

One of the strongest elements of the original implementation proposal was that it combined some of the approaches to safeguarding user rights and to preventing overblocking first put forward by the German Ministry of Justice in its implementation proposals with an attempt to stick as closely as possible to the text of the directive. Where the German implementation proposal (which in the meantime has become law) introduced the provisions implementing Article 17 in an entirely new act, the Austrian proposal includes them into the existing copyright act. The new proposal both maintains this approach and continues to follow the lead of the German legislator when it comes to the user rights safeguards. Unfortunately it combines this approach with introducing some of the worst elements of the Article 17 implementation guidance issued by the Commission earlier this year, the so-called “earmarking” provisions for commercially valuable works that allow right-holders to opt-out of most user rights protections. 

For the most part the Austrian proposal follows the lead of the German legislator. The minimum threshold for the use of fully automated filters contained in the proposal is the same as the one contained in the German implementation law: 15 seconds for audio and video, 160 characters for text and 250Kb for images. These thresholds are lower than what was included in the previous proposal, which is not unexpected since the Austrian legislator seems to have clearly decided to adopt the de-facto standard set by the German implementation. Seen in this light it is disappointing to see that the Austrian legislator has not fully followed the German approach here. Where the German law excerpts single images from the rule that uploads should be considered legitimate only if they do not use more than half of an original copyright work, the Austrian daft misses such a clarification. This would mean that memes and other forms of transformative content based on visual works are not protected against overblocking. It remains unclear how the requirement not to use more than half of a work can ever be meaningfully fulfilled in the case of an image.

Other elements where the Austrian draft falls behind the standard set by the German legislator are the protection of legacy content from automated retroactive removal, provisions protecting openly licensed and works in the public domain from wrongful blocking and the failure to include a collective redress right for users’ organizations to file cases against platform operators that systematically fail to meet their obligations to protect legitimate uses, which was included in the first draft of the Austrian proposal and has disappeared since. Like the German legislator, the Austrian Ministry of Justice regrettably continues to insist on including the new neighbouring right for press publishers within the scope of Article 17, even though the directive is clear that it is in fact out of scope.

A new exception for parody, pastiche and caricature that only applies to uses on large platforms

Maybe the most problematic aspect of the new Austrian proposal is how it would implement the exception for caricature, parody and pastiche. Unlike many other EU member states, the Austrian copyright act currently does not contain such an exception based on the optional exception contained in article 5.3(k) of the InfoSoc directive. Since Article 17(7) of the DSM directive makes this exception mandatory, the new draft now proposes to implement such an exception, but only for uses of works that are made available via the types of platforms covered by Article 17. This approach which would result in a situation where using a work for parody on YouTube would be legal, while the same use of the same work on a non-commercial platform or a private website would be illegal, defies belief. The DSM directive itself makes it explicit that the provision in Article 17(7) is there because these exceptions safeguard users’ fundamental rights, and it is hard to understand how the Ministry of Justice can come to the conclusion that fundamental rights deserve protection only on commercial platforms. 

This is why back in 2019 more than 60 eminent copyright scholars remarked that “a rational national lawmaker implementing the E&Ls in Article 17(7)[…] should take this opportunity to fully harmonize the respective national E&Ls beyond uses concerning [online platforms]”. In other words, limiting the scope of the new exception to uses on online platforms makes no sense and should be fixed before the draft becomes law.

Other bits and pieces

The implementation proposal contains a number of other shortcomings that need to be fixed to bring it in line with the requirements of the directive. This includes an attempt to subject the new press publishers’ right to compulsory collective management. This is problematic as it would effectively prevent press publishers from granting licenses (including open licenses) for free if this aligns with their chosen business model. 

A final problematic element of the new implementation proposal is the fact that it requires remuneration for the use of out-of-commerce works (OOCWs) under the new fallback exception that allows cultural heritage institutions to make OOCWs in their collections available when there is no representative collective management organisation that could issue a license. Making such uses subject to remuneration goes against the logic of the out-of-commerce-works provisions introduced by the directive. By definition, any remuneration paid for the use of the fall-back exception would have to go to a collective management organisation that is not representative of the authors of the OOCWs in question. Consequently, it would be unable to pay the remuneration to the right category of authors. The remuneration requirement would make the use of the fall-back exception more difficult, while failing to compensate the actual authors of those works. It is therefore an unnecessary and unjustified barrier to the use of out-of-commerce works.

Next steps

It is generally expected that the Ministry of Justice will introduce a revised draft (that will hopefully contain a number of the fixes that we have proposed in our submission) into parliament later this year.

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On the other hand, we have the German approach that proposes to implement Article 17 via a separate “copyright-service-provider law” (“Urgeberrechts Diensteanbieter Gesetz”) that substantially departs from the language in an attempt to capture the structure and effet utile of the directive.

The German implementation proposal focuses on using the room for legislative discretion left by the directive to give practical meaning to the abstract requirements to protect user rights contained in the directive. It also adds measures aimed at ensuring that individual creators directly benefit from the new rules. As a result, the German implementation proposal is much closer to the legislative compromise struck by Article 17 than any of the more literal implementation proposals that have emerged so far.

Over the past few months, the German implementation proposal has come under intense pressure from exclusive rightsholders and some platforms who argue that the proposed approach does not adequately reflect the provisions of Article 17. Besides, rightsholders have also claimed that it violates national and international copyright law in multiple ways. A central argument of the opponents of the German implementation proposal is the claim that it strays too far from the text of the directive.

Given this background, it is interesting to see the first Austrian implementation proposal (that was circulated to stakeholders for feedback earlier this week) take a middle road between the two existing approaches. The Austrian implementation proposal does integrate the provisions from Article 17 directly into the text of the existing Austrian copyright act, thus deviating from the structure of Article 17, but mostly stays very close to the text of the directive. At the same time, it takes up key elements first introduced in the German approach: The non-waivable direct remuneration right for authors and performers, the protection of minor uses from automated filters, the ability for users to flag uploads as legitimate, and the ability for users’ organizations to act against platforms that engage in structural over-blocking. The result is a proposal that (similar to the German one) focuses on strengthening the position of creators and users, instead of leaving it up to platforms and large corporate rightsholders to set their own rules.

The Austrian proposal in more detail.

So let’s look at the Austrian proposal in more detail: Similar to the German proposal it introduces a direct remuneration right for authors and performers that will ensure that independent of existing contractual arrangements with publishers and other intermediaries, creators will be remunerated for the use of their works on platforms. As in the German proposal, this direct remuneration right can only be exercised via collective management organizations, which means that it will primarily benefit creators in sectors with existing collective management structures. In the German discussion this direct remuneration right has been strongly criticized by both platforms, who would prefer not to pay for obvious reasons) and by intermediary rightsholders, who prefer to control how much (or rather little) of their licensing revenue should go to the actual creators. Given that the need to make sure that creators benefit from the use of their works on platforms was the main argument for getting Article 17 in the first place, the fact that rightsholders are now trying to undermine the proposed direct remuneration right is more than a little bit hypocritical. 

On the other side of the balance, there are three main interventions that strengthen user rights. Where the German Ministry of Justice proposed a new “minor uses” exception that would ensure that minor uses of existing works cannot be automatically be blocked, the Austrian proposal takes a slightly different approach. It borrows the definition of “minor uses” from the German proposal (less than 20 seconds of audio or video, less than 1000 characters of text, images smaller than 250KB), but instead of making them subject to an exception, the Austrian proposal specifies in § 89a (1) that automatically blocking these “minor uses” without human review is not proportionate (and therefore platforms are not allowed to do this). This is an interesting use of the proportionality requirement from Article 17(5) of the directive that is based on the correct insight that measures (such as automated blocking) employed by platforms must be proportionate concerning all the objectives contained in Article 17 including the requirement not to block legitimate uses in 17(7) and 17(9). In the explanatory memorandum, the Ministry notes that “It is precisely the use of such small excerpts that will often be covered by an exception or limitation and thus be permitted”. While this may be a less controversial approach, authors and performers would be better off in the German proposal: By legalizing minor uses under an exception, the German proposal would create the possibility that they receive compensation for those uses.

Excluding minor use from automated filtering is one of two measures to ensure that the Austrian proposal complies with Article 17(7). In addition to this, the proposal also requires platforms to provide users with the ability to flag uploads as covered by an exception. § 89b (7) specifies that platforms must display uploads flagged by their uses as long as the legal nature of the use is obvious to the platform. While welcome in principle, this flagging mechanism is more limited when compared to the mechanism in the German proposal: It only applies to uses under the exceptions noted in Article 17(7) of the directive (with the notable omission of use for the purpose of citation) while it should apply to uses under all relevant exceptions. Besides, the flagging mechanism can’t be invoked if a work is used under open licenses or is not protected by copyright at all.

The third measure to protect user rights is the right for users’ organizations to file cases against platform operators that systematically fail to meet their obligations to protect legitimate uses. § 89b (7) allows user organizations to bring cases against platforms that systematically over-block user uploads in order to stop them from doing so. As noted in the explanatory memorandum the ministry sees this as an important additional safeguard to protect users against violations of their fundamental right to freedom of expression. The ability to bring collective action against platforms is further strengthened by an explicit requirement in § 89b (7) for platforms to provide users and user organizations with information on the functioning of any measures they employ to comply with Article 17. Taken together these two measures constitute an important check against over-blocking that is missing from all other implementation proposals. While the German proposal does contain the ability for users’ organizations to take platforms to court over overblocking, it lacks the necessary information rights over the functioning of blocking measures and the remedies to bring about systematic changes in the way that platforms police copyright-protected content.

A template for implementation?

In general, the Austrian example appears to fuse together some of the explicit attempts of the German Ministry of Justice to implement the directive in a way that minimizes the over-blocking of legal content, provides strong safeguards for user rights and ensures that authors and creators are directly remunerated, on the one hand, with the desire to stick as closely as possible to the text of the directive, on the other hand. The result may be the most realistic implementation proposal yet.

While the elements that we have outlined above will almost certainly come under attack from large corporate rightsholders (and possibly from the platforms as well), it is important to recall that, according to the Commission’s guidance proposal, it is simply not enough to do a literal implementation of the directive that does not specify concrete safeguards against automated blocking of legitimate content. Having closely watched the discussion on the European level and in Germany, the Austrian Ministry of Justice may just have shown us (and more importantly the other Member States still waiting to propose their implementations) a credible way for reconciling the conflicting requirements of Article 17 of the DSM directive.

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