Hollywood: Article 17 is about filtering after all

The meeting kicked off with a long series of statements from the many different rightholders in the AV sector (see the video recording here). The assembled sector representatives made it clear that from their perspective Article 17 is welcome (as it clarifies that online platforms need to obtain licenses for the works uploaded by their users) but that they are not interested in widely licensing AV works to UGC platforms and would instead focus on the blocking and removing of unlicensed content via the upload filtering mechanisms introduced by Article 17. 

This approach is the logical consequence of the predominant business model in the AV sector which relies on exclusive licensing to selected outlets (Cinema, TV, VOD platforms). It directly contradicts the music industries’ narrative from the first meeting that Article 17 is about licensing and not about blocking access – as in the case of music general availability is crucial. Representatives of the AV industry made it very clear that they would fight any attempts at non-voluntary licensing and that they would also fight against effective protection for user rights under exceptions and licensing (see for example the statement issued by the Motion Picture Association starting at 10:41:44 of the video recording). These initial statements make it clear that the AV industry does indeed look at Article 17 as an instrument to limit freedom of expression and reuse and will likely use the stakeholder dialogue to bend the article further in this direction.

It is worth noting that there were a few voices from the AV sector representing individual creators such as actors and screenwriters who made less one-sided interventions and stressed the need for individual creators to obtain fair remuneration for the use of their works by platforms. It remains to be seen in how far these legitimate voices manage to evade being drowned out by the rhetoric of industry. 

Will you please start licensing our content?

After the AV industry, the representatives of journalists, visual artists, photographers, authors, publishers and press publishers (who used the majority of their speaking time to complain about the fact that Google and Facebook had decided to simply ignore their rights under the French implementation of the press publishers right) had their turn. The common theme throughout these interventions were expressions of frustration that the dominant platforms so far have not shown any interest in licensing their content and expressions of hope that Article 17 would change this. If this will indeed happen seems highly dubious, and representatives from the platform operators tried very hard not to make any commitments in this regard. 

This part of the meeting underlined the fact that Article 17 leaves the fundamental power imbalances between the different stakeholders largely unchanged. In order for rightholders from these sectors to be paid for uses of their works by the platforms (which in itself is a perfectly legitimate objective) there is a clear need for strong collective licensing mechanisms that cannot be ignored by the platforms. However, such licensing solutions will need to be carefully balanced to ensure that they do not affect the vast majority of works that are voluntarily shared by creators who do not expect any monetary reward for their acts of sharing. 

During the subsequent interventions from platforms, the big platforms tried to say as little as possible while a number of newly invited representatives from smaller platforms (animexx and seznam.cz) made it clear that the technological and regulatory burden created by Article 17 will endanger their ability to continue operations. As we have argued before, there is indeed a high risk that Article 17 will drive EU based smaller platforms out of business, while it further entrances the position of the dominant US based platforms. One way to prevent this outcome would be to use the stakeholder dialogue to agree on a targeted definition of the affected platforms. 

State of play after two days

After the end of the second meeting we now have a clear picture of the state of play. On the right holder side there are at least 4 different camps that have widely diverging expectations towards the Article 17:

• The Music industry is broadly interested in using Article 17 as leverage to get licensing deals from platforms that are more favourable than the licensing deals that they currently have in place. Given the importance of music on most UGC platforms it seems likely that they will achieve this objective.
• The AV industry is looking at Article 17 mainly as an incentive for platforms to better comply with their wishes to block and take down content. The stakeholder dialogue will be crucial in developing guidelines that effectively protect user rights against the unchecked desire of AV rightholders to keep its content off the open internet.
• Rightholders in the print and visual arts sectors look at Article 17 as leverage to finally stop platforms from ignoring their pleas to obtain licenses for their works that users upload to the platforms. Their best bet to achieve this goal will be strong forms of collective licensing.
• In the context of Article 17 individual creators contributing to these industries are looking for means to establish their own remuneration claims towards platforms. For them to benefit from Article 17 collective licensing mechanisms will be essential as well.

On the side of the platforms the picture is less clear. The dominant platforms such as YouTube and Facebook have so far tried to keep their cards close to their chests and it is largely unclear how they see their interactions with rightholders once Article 17 is in place. So far their interventions give the impression that they do not see a need to substantially change their practices.

What has become clear is that smaller platforms and platforms dealing with lots of different types of rights will be struggling with the regulatory and technological burdens imposed on them by Article 17. Smaller platforms will benefit most from being excluded from the scope of Article 17 by tightening the definition of the affected platforms. Where they do fall within the definition, ubiquitous collective licensing mechanisms will be essential for enabling them to operate.

The users’ perspective

The first two meetings of the stakeholder dialogue have largely skirted around the key concern for users: how to ensure that the filtering infrastructures that will be created to comply with article 17 can effectively safeguard users rights? The Commission has indicated that this topic will be on the agenda in the third phase of the dialogue that will commence in mid December. 

While the discussions about licensing that we have seen so far are not directly affecting users, it seems clear that it will be much easier to safeguard users rights in implementation scenarios that put an emphasis on (collective) licensing than in the “filternet” scenario favoured by the big AV rightholders. 

Given this, it will be important to work towards licensing solutions that ensure broad availability of content on online platforms thereby minimising the need for upload filters. The first two meetings of the stakeholder dialogue have shown that this is an objective where the interests of users overlap with those of some parts of the right holder community. Hopefully the next rounds of the stakeholder dialogue will allow us to build on this overlap of interests.

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A quick reminder where we are with the copyright reform process in Brussels: the key vote in the JURI committee is continuously extended, and currently is planned for January 2018. The date should be seen as tentative. In the meantime, one more committee – the civil liberties committee LIBE – will make it’s vote in late November (but with a sole focus on the controversial article 13, the content filter article). As we await decisions to be made in the European Parliament, a proposal from the Council, prepared by the Estonian Presidency, has recently surfaced. Unfortunately, it spells one more step towards the licensing chasm for the educational sector.

Enter Extended Collective Licensing

The proposal includes a completely new chapter on “Measures to facilitate collective licensing” – and in it, a single article on “Collecting licensing with an extended effect”. In the Commission’s proposal, extended rights licensing is proposed as means of solving issues around making available out-of-commerce works by heritage institutions (see our previous analysis on the relationship between the new article and the commission’s proposal here) . But let us remember, that extended rights licensing schemes present in Nordic countries for educational uses are also the reason that a carve-out mechanism has been included in the article on the educational exception. As a reminder, Commission has proposed that Member States could “subject the application of the exception or limitation … to the availability of adequate licenses”. It is a clause that we have been criticising during the last year, together with 34 organizations.

The new article, proposed by the Council, serves the purpose of establishing EU-wide legal framework for extended rights licensing by collecting societies. In practical terms, it should be read as an invitation for Member States to adopt such schemes. And once these are in place it’s quite obvious what choice States will make regarding “application of the exception”.

Do not export ECL for education, export the Estonian educational model!

Commentators have been wondering, why Estonia, which fancies itself as a “digital nation”, is supporting during its Presidency copyright proposals that will hinder modern digital economy and society. For example, article 13 – the content filter article – which might break open communication based on online platforms.  The same can be said about education. Estonia, like most Nordic countries, has an impressive educational system. It also has a robust educational exception – the best one in Europe, in our opinion – Estonia scored highest on our copyright for education barometer. No one has provided an answer to this question? Does Estonia want to join the “Nordic copyright for education” club, and replace its exception with an extended rights licensing system? We sincerely hope that is not the case.

We are not against extended rights licensing as such. We share the view that it is a good solution for heritage institutions dealing with out-of-commerce work – another area that is being addressed by the new Directive. Yet a model that works in the heritage sector will not necessarily be a good fit for education. Heritage institutions have only recently – with the advent of digitisation – dealt with the issue of widespread use of works from their collections. In education, there’s a long history of broad use of copyrighted works for educational purposes. Heritage institutions are debating how to make out-of-commerce works available online – there is no comparable debate in the educational sector. It is important not to treat extended rights licensing as a one-fits-all solution – and this seems to be the case in the current Council proposal.

It is not just ECL that is the problem

The proposal includes several other changes that are harmful for the education sector. New language in recital 16 – one that addresses the scope of the exception – strengthens a concept already present in the Directive, that the educational exception should in most cases apply just to excerpts. This is an idea that kills the exception – try teaching students anything based just on half of Hamlet.

Furthermore, looking beyond article 4 – the one that concerns the new educational exception, there are other issues that should worry educators and educational institutions. There is still risk of a new “link tax”, that might force educational platforms to pay money to press – and maybe even scientific publishers. And, most importantly, the content filter will hurt educators publishing content on social media platforms.

Things are not looking good. If you want to help us fight for better copyright for education, please join our coalition. Regarding the content filter, please join the Create.Refresh campaign. And you can follow our blog to get an overview of the rest of the copyright reform process.

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More than a year after the European Commission published its proposal for a Directive on Copyright in the Digital Single Market (DSM directive), the proposal continues to be discussed both in the Council and in the European Parliament. While the discussions in the European Parliament have recently slowed down to a crawl (the vote in the Legal Affairs committee is not expected before January), the discussions between the Member States in the Council are picking up steam: earlier this week, the Estonian Council presidency’s  consolidated compromise proposal was made public.

The compromise proposal contains an entire new chapter (chapter 1a – Measures to facilitate collective licensing’) that contains an a new article (art 9a – ’Collective licensing with an extended effect’). To anyone familiar with the Commission’s proposal (and the critical reception by cultural heritage institutions) this addition will appear somewhat odd as the Commission’s original proposal already relied on ’collective licensing with an extended effect’ as a mechanism that would allow cultural heritage Institutions to make out of commerce works (OOCW) from their collections available online.

So what exactly is going on here? Articles 7-9 of the Commission’s proposal are aimed at enabling the cross border use of out of commerce works. This would allow cultural heritage institutions to make such works from their collections available online so that they can be accessed from everywhere within the EU. While we think that relying on extended collective licensing alone will not be sufficient to achieve this objective for all sectors and all types of work, we are happy with the ambition to solve this problem on an EU wide basis.

A legal basis for Extended Collective Licensing

By contrast, the newly proposed article 9a focusses on (existing) national extended collective licensing arrangements and would not have any cross border effects. Instead, it introduces provisions into the EU legal framework that would remove the legal uncertainty that currently surrounds the extended collective licensing arrangements that exist in a number of (mainly nordic) EU Member States:

A functioning copyright framework that works for all parties requires the availability of proportionate, legal mechanisms for the licensing of works. Systems such as extended collective licensing or presumptions of representation are a well-established practice in several Member States and can provide such solutions, […] Given the increasing importance of the ability to offer flexible licensing solutions in the digital age, and the increasing use of such schemes in Member States, it is beneficial to further clarify in Union law the status of licensing mechanisms allowing collective management organisations to conclude licences, on a voluntary basis, irrespective of whether all rightholders have authorised the organisation to do so (Recital 28a + 29c of the Estonian Compromise proposal)

Last year’s CJEU ruling in the Doke & Soulier case has illustrated that there is a real possibility that ECL arrangements can be declared illegal. This is problematic, as there can be no doubt that extended collective licensing arrangements can play an important role in enabling access to works that are otherwise very difficult to license:

In the case of some uses, together with the large amount of works involved, the transaction cost of individual rights clearance is prohibitively high compared to the commercial value of the use, and without effective collective licensing mechanisms transactions in these areas are unlikely to take place. Extended collective licensing and similar mechanisms have made it possible to conclude agreements in areas affected by this market failure where traditional collective licensing does not provide an exhaustive solution for covering all works and other subject-matter to be used. (Recital 28b of the Estonian Compromise proposal)

The Council’s proposed article 9a would introduce provisions that provide a legal framework for national extended collective licensing arrangements. Compared to articles 7-9 of the Commission’s proposal, it is more flexible, as it is not limited to the the use of out of commerce works by cultural heritage institutions. Instead, it would enable the licensing for all types of works which would allow CHIs to obtain licenses for collections that contain both in and out of commerce works (it would also cover extended collective licensing in other fields such as education).

At the same time, extended collective licenses based on this proposed article would also be much more limited as they would only apply domestically. This would mean that CHIs would need to geoblock access from other EU Member States to works that they make available online based on such licenses, which would work against the very idea of a Digital Single Market.

For cultural heritage institutions in Member States that have ECL systems in place or that are willing to introduce such systems, this is good news. Licenses based on the new systems will be much more flexible and allow them to digitize collections without having to spend resources to establish if works are out of commerce or not, and there will be a strong incentive for them to obtain licenses based on the newly proposed article 9a instead of making OOC works available relying on licenses based on articles 7-9.

Geoblocking or a Digital Single Market?

Unfortunately, this is where the problems with the new article start. By introducing the ability for more flexible domestic ECL systems, the Member States severely undermine the viability of the existing provisions aimed at allowing EU wide access to out of commerce works.

From our perspective, this would be a huge loss that goes directly against the objective of the directive to create a Digital Single Market including cross border access to the digitized cultural heritage collections of institutions all across the EU. The new proposal will likely lead to a situation where a lot of digital collections will only be available from within the Member State where the institution owning the collection resides.

The real losers of this would be be cultural heritage institutions in Member States that lack a robust collective management sector that is the prerequisite for extended collective licensing. Establishing a robust legal framework for ECL on the EU level should not happen at the detriment of those institutions. To prevent this, the Member States should make sure that the provisions for access to Out Of Commerce works contained in the Commission’s proposal are strengthened.

Cultural heritage institutions have taken the position that this requires both a simplification of the procedures foreseen in the Commission’s proposal (which has been addressed in the Estonian compromise proposal), and the addition of an exception as a fallback mechanism for situations in which ECL does not work. Such a fall back exception (not included in the Council’s compromise proposal) would ensure that cultural heritage institutions have the ability to make all of their out of commerce works available even in situations where ECL does not provide a viable solution, because there are no collecting societies willing or able to issue such licenses.

The best of both worlds

The European legislator needs to provide a solution that allows cultural heritage institutions in the EU to make the out of commerce works contained in their collections available online. Wherever possible, on the basis of extended collective licenses; and where necessary, on the basis of a fallback exception.

Giving Member States additional space for extended collective licenses that are not limited to OOC works is a welcome addition, but in the light of the overall ambition to create a Digital Single Market, this should not be limited to domestic uses only. Fortunately, the Estonian compromise proposal keeps this perspective open: the last paragraph of the new article 9a includes a suggestion for the Commission to explore the ability to giving national ECL scheme a cross border effect:

the Commission shall, by 31 December 2020, submit to the European Parliament and to the Council a report on the use of such mechanisms […] The Commission’s report shall be accompanied, if appropriate, by a legislative proposal, including as regards the cross-border effect of such national schemes.

This passage opens the pathway to a best case scenario in which cultural heritage institutions can draw on flexible extended collective licensing arrangements with cross border effect that are backed up by a fallback exception that allows CHIs to make available out of commerce works in situations where they cannot be included in such ECL arrangements.

The new Estonian presidency proposal contains two of the three building blocks for making this a reality. It is now up to the Member States to add the final building block: the addition of a fall back exception.

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The judgement does not come entirely unexpected as it is largely in line with the Advocate General opinion from earlier this year. As we have already noted in our analysis of the AG opinion, the case has the potential to undermine Extended Collective Licensing (ECL), which is currently held as the solution for the issue of out-of-commerce works.

At this point it is unclear how the Doke & Soulier judgement relates to the EU Commission’s proposal for dealing with out-of-commerce works in the collections of cultural heritage institutions—currently a part of the proposal for a Copyright in the Digital Single Market directive. Regardless, the judgement  casts a shadow of doubt over ECL arrangements such as the one at the center of the Commission’s proposal. This is mainly due to the fact that through this decision the court has established stringent criteria that national measures would need to fulfil. The fact that according to the court “every author must actually be informed of the future use of his work by a third party and the means at his disposal to prohibit it if he so wishes” (para 38) seems to contradict the very purpose of Extended Collective Licensing arrangements, which is to circumvent the need to clear rights on a per-work (or per-rightsholder) basis.

Can ECL still provide a solution for out-of-commerce works?

Looking at the reasoning of the court, it becomes evident that the judgement is not so much concerned with the operation of of ECL as a legal mechanism, but rather with the question of whether EU member states can limit the ability of authors to exercise their exclusive rights in ways other than those foreseen by the EU legislator. The court answers this with a resounding “no” and then goes on to examine whether the French system respects the ability of authors to object to the use of their out-of-print works. The court comes to the conclusion that it does not, because authors are neither individually informed about future uses of their works, and because their ability to opt out of such uses is limited. In summary, the court does not declare ECL in general incompatible with the InfoSoc directive, but has ruled, that the French ECL implementation does not sufficiently respect the authors’ exclusive rights.

In the light of the ongoing efforts to modernize the EU copyright framework, this means that any legislative solution to the issue of out-of-commerce works needs to be based on a clearly defined exception to the exclusive rights of authors and other creators. The most obvious way to achieve this would be for the EU legislator to introduce a mandatory exception that allows cultural heritage institutions to make out-of-commerce works in their collections available online, which is exactly what cultural heritage institutions have been arguing for in the run up to the Commission’s proposals.

Unfortunately the Commission has not paid much attention to this recommendation,  and instead has presented a flawed proposal to require member states to introduce Extended Collective Licensing in their national laws. Given that the Commission’s proposal would explicitly introduce ECL into EU copyright law, but at the same time fails to create an explicit exception to the exclusive rights of authors and other creators, it remains an open question whether the Commission’s proposal would satisfy the requirements that CJEU has outlined in the Doke & Soulier decision. In this situation the EU legislator would probably be well advised to strengthen the Commission’s proposal by adding a mandatory exception benefitting cultural heritage institutions.

Commercial exploitation is not the answer

There also is another side of the Doke & Soulier case that has received relatively little attention, even though it provides an important clue for designing the EU approach to the out-of-commerce works problem: The French mechanism for making out-of-print works available relies on commercial publishers who can obtain licenses to re-publish digital editions of out-of-print works. In essence it tries to put the out-of-print works back into commercial circulation.

The reason why Doke & Soulier brought their legal challenge is the fact that the French system confiscates the exclusive rights to their works from authors (and previous publishers) and then lets a collecting society license them to other publishers. Even when one ignores the legal details of the case, it is hard to justify why the fact that a book is out-of-print should give reason to expropriate authors of their rights in favor of commercial exploitation by publishers.

It is difficult to understand why the French government is relying on this questionable mechanism to bring old books back into circulation when there is a much more obvious (and less problematic) solution: allow cultural heritage institutions to make out-of-commerce works in their collections available online as part of their existing public task.

Such a solution also limits the exclusive right of authors to control the use of their works, but it does so in a much less invasive way, and relies on public institutions that have a long history of providing access to works that have fallen out of commercial circulation. While this approach is central to the Commission’s proposal, it is needlessly weakened by the fact that recital 27 of the proposed directive would allow cultural heritage institutions to generate “reasonable revenues” from making out-of-commerce works available online.

It is unclear why the Commission has included this recital in its proposal. The idea that it is possible to generate significant revenues from providing online access to old collections has turned out to be wishful thinking. The only effect of allowing institutions to charge for access to works that they make available thanks to an exception is to undermine support among rightsholders. Providing access to cultural heritage is part of their public interest mission. Introducing revenue flows into the process only muddies the waters.

A real solution for out-of-commerce works is needed

Taking into account these two lessons from the Doke & Soulier ruling, it is clear that the Commission’s proposal for a “solution” to the out-of-commerce problem needs to be improved. It needs to be more solidly grounded in the public interest mission of cultural heritage institutions (removing recital 27 is a good first step) and it needs to be anchored by an exception to the exclusive rights  of authors that allows institutions to make these works available, either based on extended collective licensing or, where such arrangements cannot be expected to work, on the basis of that exception alone.

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This opinion comes at a crucial time when the EU Commission is finalising its copyright reform proposal, which is scheduled to be published in September. As part of this proposal the Commission has promised to propose measures that will “make it easier to digitise out-of-commerce works and make them available”. While the Commission has so far been silent on the mechanism that it would propose to achieve this goal, it is generally understood that there are two different approaches on the table:

• an expansion of the existing exceptions to copyright benefitting cultural heritage institutions (as demanded by cultural heritage institutions themselves), or;
• measures that would facilitate ECL schemes and their cross-border application.

The Death of Extended Collective Licensing?

While AG Wathelet’s opinion only concerns the specific question referred to the CJEU by the French court, it has much wider-ranging consequences. Should the CJEU rule in agreement with the opinion (note that a decision is not expected until after the September publication of the Commission’s proposal), then Extended Collective Licensing is effectively dead as a solution for the copyright problems created by mass digitisation. In this sense, this opinion supports the position expressed by cultural heritage institutions that the only real solution for their issues is an update of the relevant exceptions in the InfoSoc directive.

While the immediate effect of such a ruling might be negative in the short run (it might limit access to French out-of-print books that are currently available), it could have a positive long-term impact. In the wake of the AG opinion the very real possibility of such a ruling could sway the Commission (and Member States that are reluctant to update exceptions, such as France) toward deciding on an approach based on an update of the relevant exceptions. This possibility alone makes it worth taking a closer look at AG Wathelet’s opinion.

His main argument is plain and simple: the legislation in question is not included in ‘the detailed and exhaustive list of exceptions and limitations in Article 5 of [the copyright directive]‘ [para 28]. Given that

the digital exploitation of copyright books constitutes ‘reproduction’ and ‘communication to the public’ of a work, which require individual and separate authorisation by the author, unless those acts are covered by an exception or a limitation provided for in Article 5. [para 26]

This means that the authors or subsequent rights holders have the exclusive right to authorise such reproductions and communications to the public. According to Wathelet the French law, which transfers the right to authorise these acts to a Collective Management Organisation, clearly violates this this fundamental principle of the EU copyright framework:

Authorizing Collecting Societies to issue licenses on behalf of rightsholders who are not ‘not fully exploiting [their] work[s], for example in the event that [they are] not being commercially distributed to the public’ [para 43] is the core mechanism of Extended Collective Licensing.

Wathelet makes it clear that in his opinion that Articles 2 & 3 of the InfoSoc directive preclude any law that authorises collecting societies to issue licenses on behalf of non-members. According to his analysis, a collecting society that grants licenses for the reproduction and communication to the public of works of authors that it does not represent infringes on those authors’ rights just as much as a memory institution that makes such works available without obtaining permission. Wathelet then proceeds to enlist the Orphan Works (OW) directive in his argument. According to AG:

… [the Orphan Works directive] was adopted because ‘in the case of orphan works, it is not possible to obtain such prior consent to the carrying-out of acts of reproduction or of making available to the public’. […] [The OW directive] provides that Member States are to provide for an exception or limitation to the right of reproduction and the right of making available to the public provided for respectively in Articles 2 and 3 of Directive 2001/29 to ensure that [cultural heritage institutions] are permitted […] to make them available to the public.

He goes on to point out that:

… it would be paradoxical if, pursuant to [the OW directive], the requirements imposed on the reproduction and communication to the public of an orphan work were far more stringent than those applicable to the same acts of exploitation in respect of ‘out-of-print’ books under national legislation such as that at issue in the main proceedings. In contrast to [the OW directive], which requires a diligent search for the rightholders to be conducted in good faith prior to the exploitation of a work, the national legislation at issue does not require an individual approach to be made to the author.

Given that the Orphan Works directive has so far failed to achieve its purpose of enabling the mass-scale digitisation of orphan works (primarily due to the overly onerous diligent search requirements pointed to by Wathelet), it is somewhat ironic that he uses it as an argument against a scheme that has been much more successful in achieving the same objective. This irony notwithstanding, Wathelet’s main argument remains valid:

In the existing structure of the EU copyright system, exceptions and limitations are the mechanisms for creating a balance between the exclusive rights of authors and other socially beneficial uses of their works (such as mass digitisation of out-of-commerce works maintained in the collections of Europe’s Libraries, Archives and Museums). Enabling such uses therefore requires updating the current list of exceptions and limitations and cannot be achieved by dubious legal constructions that assign difficult to obtain rights to collecting societies.

Update exceptions and limitations now!

The current EU copyright framework foresees exceptions to copyright for the purposes of building reconstruction – 5.3(m) – and the demonstration and repair of equipment – 5.3(l). If the EU can contemplate exceptions for these purposes, it is completely absurd that in an age where the importance of access to knowledge and culture is widely understood, the EU copyright framework still lacks a mechanism that allows publicly funded libraries and archives to make out-of-commerce works in their collections available online.

The European Commission is currently on the brink of proposing legislation which for the first time in fifteen years could result in an update of the exceptions and limitations in the EU. Over the last few weeks there have been increasing signals that the proposal will only contain minimal updates to the status quo. In this situation the Commission would be well advised not to ignore the arguments against Extended Collective Licensing brought forward by AG Wathelet in his opinion and propose a substantial update of the relevant exceptions and limitations to enable the mass digitisation of out-of-commerce works. The alternative would be another lost decade for online access to Europe’s rich cultural heritage.

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The Government, following the Hargreaves Review, made a number of proposals to make copyright licensing more efficient and remove unnecessary barriers to the legitimate use of works while preserving the interests of right holders. These include schemes to allow use of ‘orphan’ works whose copyright holder cannot be found or is unknown, voluntary extended collective licensing, and introducing minimum standards of conduct for collecting societies, underpinned by a backstop power to impose a statutory code of conduct on a collecting society where required.

These measures bring some currently unlawful or unlicensed activities within the scope of legal activity, allowing licensing to occur and thus benefiting right holders and licensees alike. They have potential to cut costs and improve compliance with copyright law, and to improve confidence in the UK copyright system.(p.7)

In the light of the discussion about the ‘Orphan works’ directive the first two of these should be of interest beyond the borders of the Island Kingdom.

Hostage works

The section on ‘improvements to copyright licensing’ is a bit misleadingly titled since these improvements are aimed exclusively at finding a solution for the hostage works problem. The policy statement outlines the problem in such a clear cut fashion that it is worth quoting at length:

The Government’s position, following the Hargreaves Review, is that it benefits no-one to have a wealth of copyright works be entirely unusable under any circumstances because the owner of one or more rights in the work cannot be contacted. This is not simply a cultural issue; it is also a very real economic issue that potentially valuable intangible assets are not being used, and an issue of respect for copyright if they are being used unlawfully. The Government therefore proposed an orphan works scheme that allows for both commercial and cultural uses of orphan works, subject to satisfactory safeguards for the interests of both owners of ‘orphan rights’ and rights holders who could potentially suffer from unfair competition from an orphan works scheme. (p.7)

This analysis of the problem is spot on and it is nice to see that the UK government explicitly recognizes the economic aspects of the hostage works problem. The solution outlined by the policy paper is not entirely surprising either. The UK government follows the diligent search approach that also underpins the EU directive. While the policy statement is not sufficiently detailed to fully evaluate these plans, a number of positive aspects stand out when comparing the proposed approach to the compromise text of the EU directive.

From the text of the UK policy statement it appears that the government intends to apply a less restrictive definition of diligence when it comes to searches that need to be carried out by prospective rights holders. It intends to balance this with the obligation to pay license fees for uses of orphan works and to hold these fees in escrow for a certain period of time on behalf of possible reappearing rights holders (the “Awaiting Claim” approach):

• Diligent search before something can be used as an orphan work is key to the scheme. The Government believes that it is important to strike the right balance between a relaxed standard of diligence and for an “awaiting claim” approach, as against ensuring that absent rights owners’ needs are protected. The Government is mindful of the need to ensure the process is sufficiently straightforward to be useful to potential users. The authorising body will verify the diligence of the searches.
• Commercial and non-commercial uses of orphan works in the UK will both be permitted, both to maximise the economic potential of proposals and because making a firm distinction between the two is difficult in practice.
• This permission should come at an appropriate price – a market rate, to the extent that one can be established (though the difficulties that may attend establishing that, for example in respect of works not created for publication that are in museums’ collections, are noted).
• This price should be payable in advance (or at agreed times if there is a royalty element) and set aside for any rights holders who may still appear even after a diligent search has not found them.(p.8)

As long as the standards for a diligent search have not been determined and as long as the licensing fees have not been established (which can be notoriously difficult as pointed out by Hugenholtz and Korteweg in this study) it is difficult to say what the effect of this will be on mass digitization projects and use of hostage works by memory institutions in general. In any case this approach should create much more certainty and predictability than the approach chosen by the EU. In addition this approach also enables commercial uses of hostage works—a clear advantage over the EU approach.

How this approach relates to another important criticism raised by COMMUNIA—the fact that there is only a very limited list of potential beneficiaries who will be allowed to use hostage works under the EU directive—is not entirely clear from the UK policy statement. At first reading it appears that use by parties other than existing memory institutions might be possible, but we will need to wait for further details later in the legislative process. Needless to say we would urge the UK government to explicitly endorse use by a broader set of beneficiaries.

All in all these are substantial improvements over the proposed EU directive. The UK government recognizes this by making it explicit that the scope of uses enabled by their proposal is wider than the one of the EU directive (although the part about the exception is a bit confusing since the EU directive requires implementation in the form of an exception):

The scheme will not take the form of an exception to copyright, but will be based on authorisation by an independent body, i.e. not the same body which wishes to exploit the orphan works.

The UK scheme will be compatible with the emerging European system, as set out in the draft Directive, but broader in applicability (in particular allowing commercial use in the UK) to maximise potential benefits to the UK. (p.9)

It’s unfortunate that these extra possibilities and the less stringent approach will most likely not be implemented at the EU level, but at least the UK proposal points to an approach wherein more progressive member states will provide additional room for users of orphan works within their own territorial boundaries. This of course will lead to further splintering of EU copyright legislation which will make it more difficult for the EU to finally create a single digital market (one could argue that this means that with the orphan works directive the Commission has not only failed to address the issue it wanted to address, but that it has also shot itself in the foot doing so).

Extended Collective Licensing

Extended Collective licensing (ECL) is often seen as a different approach to the hostage works problem and the larger copyright issues presented by mass digitization projects. The European Commission has largely sidelined this approach with the orphan works directive (although Article 1.2c of the proposed directive ensures that the two approaches can coexist). Many memory institutions view ECL as a very promising approach and therefore it is good to see that the UK government is proposing to introduce legislation that will allow ECL arrangements on a voluntary level. Having this approach available alongside the diligent search model provides memory institutions and rights holders additional options to manage large scale digitization projects and to operate in the digital environment.

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