New European copyright rules: ‘Best efforts’ may render them inconsequential

With the rise of the Digital Age, the European Union was more than ripe for an overhaul on its Copyright Directive of 2001.  Last week, the European Parliament voted in favor of the new Directive on Copyright in the Digital Single Market (New Directive) to bring copyright regulations in alignment with the realities of the digital era.

While most are in agreement that copyright reform is long overdue, Article 13 in particular, has caused much debate — receiving praise from content right holders and outright criticism from online platforms. Somewhere in the middle, online users appear to be safeguarded from potential infringement claims (for now) but users express concerns over online censorship. In fact, Change.org currently has garnered more than 5.2 million signatures seeking to “Stop the censorship-machinery! Save the Internet!”

Although many have deemed Article 13 “controversial,” it remains to be seen whether Article 13 will have serious ramifications related to filters and censorship, as well as liability for online platforms. Rather, the subjective “best efforts” standard may simply create an inconsequential effect on right holders and online platforms alike.

Genesis for reform

The Copyright Directive of 2001 (2001 Directive) was enacted prior to the inception of major social media platforms and online streaming platforms, including Facebook (2004), YouTube (2005), Twitter (2006), and Instagram (2010). While the European Union could not possibly have anticipated the social media frenzy that catapulted our society into the digital era, the 2001 Directive was antiquated at best, and did not account for online rights or mass dissemination of copyrighted works.{mosads}

According to the European Commission, the new Directive is intended to “ensure… the right balance between the interests of all players — users, creators, authors, press — while putting in place proportionate obligations on online platforms.” 

At issue, Article 13 seemingly shifts infringement liability from the user –– who uploaded the infringing content –– to the online platform who serves as a conduit to communicate the content. Further, the Commission distinguishes between unauthorized content uploaded to a “large” platform versus a “small” platform.  And such designation impacts the platform’s obligations.

Specifically, an online platform is deemed “large” if it has existed for at least three years, generates more than €10 million annually, and has more than 5 million unique monthly users.  Where no licensing agreement is in place with right holders, a large online platform must render its “best efforts” to (1) obtain permission from the right holder; (2) prevent unauthorized content from being uploaded to the online platform; (3) expeditiously take down unauthorized content upon notice; and (4) prevent future unauthorized uploads.

By contrast, small platforms are held to a lesser standard –– to avoid liability, small platforms must only make “best efforts” to obtain authorization from a right holder and expeditiously remove unauthorized content.

‘Best efforts’ may result in inconsequential effect

{mossecondads}Not surprisingly, this liability shift has received a wave of scrutiny from tech giants, such as YouTube, who are now subject to the ambiguous and subjective “best efforts” standard for ensuring that user-generated content does not infringe any content holder’s rights. For example, a YouTube user may upload a copyrighted song without obtaining authorization from the right holder. If the right holder discovers this blatant infringement, YouTube may be subject to infringement liability if YouTube did not use its “best efforts” to expeditiously remove or prevent the user-uploaded content.

So, what exactly is considered “best efforts” to prevent infringing activity from lingering on these online platforms? To be frank, the Commission failed to use its own “best efforts” in providing any guidance. As the Commission stated, “[t]he ‘best effort’ obligation does not prescribe any specific means or technology.”

We thus understand what the obligation does not impose, but online platforms still lack any clarity from the Commission’s expectations. With such little guidance, online platforms are left wondering what they must do to protect themselves from liability.

Many online platforms, such as YouTube, already use content filters to prevent users from uploading illicit or infringing content. The question becomes whether this is enough.

In fact, YouTube has invested more than $100 million in building a content identification filter to prevent illicit or infringing content from being uploaded to its platform. However, because YouTube’s “best effort” obligation only extends to Member States of the European Union, it may need to invest additional resources in geo-filters for that market. While YouTube most likely can afford to develop this technology for a specific market, other online platforms may be less capable.

Online platforms that are international in scope (which many are) are placed in the unenviable position of having to create different software for the EU market in much the same way they had to in order to comply with the EU’s GDPR standards.

Next steps

Article 13 purportedly offers broader protections to right holders. Yet, the ambiguity surrounding “best efforts” ultimately may have an in inconsequential impact on such protections –– unless and until the Commission offers more guidance to online platforms and/or sets proper expectations for right holders, the benefit of Article 13 remains unknown.

Now that the European Parliament has adopted the New Directive, Council of the European Union must formally endorse the New Directive, which will likely occur this month. After the New Directive is published on the Official Journal of the EU, Member States of the European Union will have up to 24 months to implement the new rules into their national legislation. 

Michael Rounds is a partner and Andrea LaFrance is an associate at Brownstein Hyatt Farber Schreck LLP.  Their practice focuses on trademark, copyright and IP transactions and disputes, as well as IP litigation.