Information Society, Copyright Law

From Max-EuP 2012

by Thomas Dreier

1. Digital and networking technologies

The law of copyright protects the works of creative authors in the fields of literature and the arts. In addition, in many countries, copyright also grants protection to the holders of rights related to copyright (also called neighbouring rights). Thus, in general, performing artists and contributors to the organization and production of creative works, such as producers of phonograms and films, also enjoy copyright protection. In the information society, authors play a central role. Since the invention of the printing press by Gutenberg and the fight against the illegal reproduction of books, copyright has successfully reacted to the subsequent changes in both reproduction and communication technology (broadcasting, phonogram, magnetic tape and copy machine). However, copyright does not always follow the same logic in all countries. Whereas in continental Europe copyright is understood as author’s rights, ie as rights protecting both the personality and exploitation interests of individual authors, the Anglo-American understanding of copyright is based on a utilitarian perspective which focuses on providing incentives for innovation and creation.

Digitization and networking pose major challenges for copyright law. Not only can any user produce copies of copyrighted works at almost zero marginal cost, without loss of quality, even private users can make copyrighted works available for downloading on a world-wide scale. Hence, users, who in the analogue world were mere consumers of products offered by creators and producers, may also assume the position of those offering copyrighted works in the digital and networked world. This change jeopardizes established marketing channels as it does with regard to remuneration schemes and incentives to create. In addition, the mass character of copyright relevant activities creates problems for contractual transactions and the enforcement of exclusive rights. This is particularly true where copyright relevant acts are undertaken in the private sphere or under the disguise of technically supported anonymity. Often internet service providers, ie typical intermediaries, are the only actors who can be targeted in order to successfully stop ongoing infringing activities of third parties. Moreover, in the case of decentralized file-sharing systems, the only intermediaries are the providers of the file-sharing software. Another problem for the legislature is the convergence of both the roles of the parties involved and their respective use acts. The more roles and technical solutions merge, the less room is left for both the legislature and the courts to meaningfully differentiate and to apply rules which have been formulated in view of clearly distinct roles and technologies. However, in spite of early predictions to the contrary, copyright has not ceased to exist. Rather, its importance as a tool to regulate the production, dissemination and consumption of information in the information society has greatly increased.

As an intellectual property right (intellectual property) copyright is territorial in nature. So far, there has been no creation of a truly transnational copyright, neither at the international nor at the European level. Rather, existing differences amongst national copyright laws are bridged by way of international conventions (in particular, the Revised Berne Convention (BC); the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS); and the two so-called digital treaties, ie the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT) (World Intellectual Property Organization (WIPO)). The European Union has reacted to the challenges posed by the information society by way of enacting a number of directives in order to harmonize the national copyright of its Member States.

2. Trends in legal development

As a first reaction, European and, subsequently, also international copyright law adopted computer programs (software protection (copyright and patent law)) and databases (database protection) as objects of copyright protection (computer programs: Dir 91/250 (republished as Dir 2009/24), Art 10(1) TRIPS, Art 4 WCT; Databases: Dir 96/9, Art 10(2) TRIPS, Art 5 WCT). In doing so, the fact that computer programs are technical rather than aesthetic creations was disregarded in much the same way as the fact that the general term of copyright protection, ie 70 years after the death of the last surviving author, is far too long for computer programs, since it prevents competitors from entering young and emerging markets. There had been plans for a special protection of computer programs, which should be tailored to the particular characteristics of software, but those plans were abandoned in the middle of the 1980s, mainly because US software producers preferred bringing software under the umbrella of an already established world-wide protection system such as copyright. As regards databases, however, the EC created a newly invented sui generis type of legal investment protection. In both cases, national rules of the EU Member States had shown great differences which were then harmonized to a large extent. Continuing national differences with regard to the originality of computer programs are, in practice, not particularly significant in view of the rather complex structure and length of today’s computer programs. What exactly constitutes a ‘substantial investment’, the criterion for legal protection of databases, and what constitutes ‘extraction’ has been largely clarified by the ECJ Case C-203/02 – British Horseracing Board [2004] ECR I-10415, ECJ Case C-304/07 – Directmedia Publishing [2008] ECR I-7565 and ECJ Case C-545/07 – Apis-Hristovich [2009] ECR I-1627.

A second reaction then dealt with copyright issues of digitization and networking. It is rather surprising and historically without precedent in the area of intellectual property law that the initiative in these respects started at the international level (with the two WIPO Treaties of 1996 mentioned above, followed by Dir 2001/29 on copyright in the information society in 2001, which was transposed into the national laws of all Member States as late as 2006). In its harmonization effort, the EU went beyond what was prescribed by the WIPO Treaties and also harmonized, for copyrighted works and objects of related rights’ protection alike, the reproduction right, the public communication right, the distribution right and the newly created right of making copyrighted works available to the public in publicly accessible networks (the so-called making available right). However, as regards the definition of what constitutes a public communication, there still is some room for interpretation for Member States (ECJ Case C-306/05 – SGAE [2006] ECR I-11519: video in hotel rooms as public communication under Art 3(1) Dir 2001/29; see also pending Case C-283/10 – Circul Globus Bucuresti). However, as regards the exceptions and limitations to copyright, Member States only agreed on an, albeit, closed list of 21 limitations and exceptions, only one of which is of a mandatory nature. Since most cases are decided on the basis of a copyright exception or limitation, it can be said that for practical purposes no real EU-wide harmonization in the field of copyright has been achieved so far. Legal sanctions, which were initially also largely left to Member States’ national legislation, were harmonized at a later stage by the horizontal Dir 2004/48 on the enforcement of intellectual property rights. It should be noted that recently, the number of cases referred to the ECJ for preliminary ruling has substantially increased (see on the issue of computer programs ECJ Case C-393/09 – Bezpečnostní softwarová asociace and pending case C-406/10 – SAS Institute (software protection); on the scope of copying ECJ Case C-5/08 – Infopaq [2009] ECR I-6569, and pending Case C-302/10 – Infopaq II; on adequate remuneration ECJ Case C-467/08 – Padawan [2010] ECR I‑0000, Case C-462/09 – Stichting de Thuiskopie [2011] ECR I‑0000, and pending Case C-387/09 – Egeda; and for the issue to what extent the EU-territory can be split by way of technical program decoders, see pending Cases C-403/08 and C-429/08 – Football Association Premier League et al).

In some cases Member States have made use of the remaining room for national legislation, eg France adopted a special rule prescribing technical compatibility of technical protection measures. Germany, to cite yet another example, created a special rule intended to enable owners of analogue archives to exploit these archives digitally thus taking care of much of the orphan works issue, ie the issue of how to deal with works where no author or subsequent rightholder can be found in spite of a diligent search performed by the person who wants to use the work in question. Also, similar to some, but not all Member States, Germany has extended its existing special levy regime for compensating authors for the economic value of recording and photocopying to include digital reproductions as well. Moreover, Arts 12 ff of the E-Commerce Directive (Dir 2000/31) leave room for interpretation by Member States as regards the scope of liability of internet service providers. Whereas some Member States apply their general principles of secondary infringement, France has adopted special legislation which assigns internet service providers a special role in stopping ongoing infringing activities of their respective subscribers. See also ECJ Joined Cases C-236/08 to C-238/08 – Google France and Google (liability of Google for adwords by its customers), and pending Cases C-324/09 – L’Oréal and others v eBay (purchase of keywords identical to trademarks) and C-70/10 – Scarlet Extended (scope of injunction under the Enforcement Directive (Dir 2009/48)). However, it should be noted that, so far, no general agreement has been reached with regard to these issues, which is in part also due to the fact that in spite of two decisions handed down by the ECJ (ECJ Case C-275/06 – Promusicae [2008] ECR I-271 and ECJ Case C-557/07 – LSG [2009] ECR I-1227; see also pending case C-461/10 – Bonnier Audio et al), it is still unclear to what extent existing EU data protection legislation allows for the storage and forwarding of traffic data necessary for tracking down who has been assigned dynamic Internet Protocol (IP) addresses.

It is an open issue whether such competition amongst national regulatory schemes is to be preferred over a harmonizing and unifying legal activity in the area of copyright by the European legislature.

Another uncertainty exists regarding the application of competition law (Arts 101, 102 TEU/81, 82 EC) to the exercise of exclusive copyrights in dynamically developing information markets (see CFI Case T-201/04 – Microsoft [2007] ECR II-3601).

3. European copyright harmonization: strategies

Although much might speak in favour of creating a Union Copyright modelled after the Community Trademark and the Community Design, no such plans have been voiced by the EU Commission so far. The reason may be that the debate concerning the scope of permissible limitations and exceptions to the exclusive copyright during the adoption of Dir 2001/29 on copyright in the information society has demonstrated that Member States are not willing to compromise in this respect. Rather, copyright harmonization within the EU has by and large been undertaken by way of harmonizing directives. Apart from diverging national copyright laws and traditions, this limited approach may also be explained by the fact that in view of the principle of subsidiarity, the EU is only empowered to act in order to remove obstacles to the single market.

In its harmonization efforts concerning the information society, the EU legislature has explicitly adopted the approach of providing for a ‘high level of protection’ (Dir 2001/29, recital 4), thus meeting the protection interest of copyright industries vis-à-vis the loss of control over protected works caused by digital and networking technologies. Consequently, Dir 2001/29 provides for comprehensive exclusive protection of copyrighted works and objects of related rights, which subjects most of the acts undertaken by users in the digital and networked environment to the requirement of rightholders’ authorization. In particular, the EU legislature has narrowed down the scope of digital private copying and has limited the permissible scope for most other optional exceptions and limitations. While it is still unclear to what extent the freedom of information (as guaranteed by Art 10 ECHR and corresponding provisions in national constitutional law) has influence upon exceptions and limitations to the exclusive rights, it is beyond doubt that Member States are bound by the international three-step test as adopted by the EU (Art 13 TRIPS; Art 5(5) Dir 2001/29). According to this test, Member States may enact limitations and exceptions only if they (1) concern certain special cases, (2) which do not conflict with a normal exploitation of the work or other subject matter, and (3) do not unreasonably prejudice the legitimate interests of the rightholder. Although this test initially was intended to work as a safeguard against overly broad exceptions and limitations in national copyright laws, its narrow interpretation severely limits the room for the availability of information value-added services. It should be noted, however, that some authors have proposed a more balanced interpretation of the three-step-test (see MPI Declaration, <www. ip.mpg.de/ww/de/pub/aktuelles/declaration_on_the_three_step_.cfm>).

In addition, in accordance with the WIPO internet treaties EU law provides for extensive protection against the illegal circumvention of effective technological protection measures (digital access and copy control mechanisms), which includes legal protection against the production, sale and distribution of illegal anti-circumventing mechanisms. Also, rights management information is protected against unauthorized modification. This enables business models which are based on product diversification by technical means (differentiation of access and use rights at different price levels and pricing models ranging from subscription models and package deals and on up to pay-per-use schemes). It should be noted, however, that some issues raised in this respect are still waiting to be solved. Opponents regard legal anti-circumvention protection as an undue benefit to powerful market participants which ultimately leads to private legislation, since the scope of what uses are possible with regard to copyright material is no longer circumscribed by law, but rather depends on what the technical system permits the user to do. This is particularly true where technical protection measures override statutory exceptions and limitations to copyright. Moreover, it is claimed that artificial access blocks and use limitations result in an inefficient deadweight loss. Proponents, in contrast, point out that product diversification and price discrimination lead to an increase in both consumer welfare and the producer’s overall gain.

In cases where technical protection measures prove to be ineffective or cannot be implemented due to market conditions (such as is the case regarding digital music), right holders have to increase their efforts to effectively enforce their copyrights, unless they adopt business models which are not based on copyright (such as advertising revenue and/or value-added services). It is still an open question to what extent the enforcement of copyright benefits from the harmonization of the general rules for the enforcement of intellectual property rights. This is all the more true since the liability of internet service providers has only been partially harmonized by E-Commerce Dir 2000/31.

Finally, it should be mentioned that the legal rules governing copyright contracts and licensing have not been harmonized within the EC so far. Whereas some countries allow for a complete transfer of ‘the copyright’, others restrict the free transfer of the personality rights component of authors’ rights. In spite of this lack of harmonization within the EU, the copyright industries have developed their own licensing standards. Moreover, beyond traditional proprietary licensing, the open source, open content, creative commons and remix cultures have developed their own licensing schemes which, although based on the exclusive nature of copyright, provide for an environment more or less free of rights. The aim of these movements is to create a body of creative material which can be freely used by third parties without having to ask for permission and, at times, even without payment.

4. Acquis communautaire

Three out of the seven copyright directives which form the acquis communautaire in this area of law explicitly deal with questions of copyright in the information society (Dir 91/250, republished as Dir 2009/24: computer programs; Dir 96/9: databases; Dir 2001/29: information society). In addition, the horizontal enforcement directive (Dir 2004/48) has harmonized the civil law remedies of injunctive relief, corrective measures, damages, rules of evidence, measures for preserving evidence and claims for information. However, it should be noted that the exact scope of the claim for information against internet service providers is still in need of clarification in the digital and networked environment (see ECJ cases Promusicae and LPG, cited above).

Recent harmonizing measures include the Commission’s Recommendation issued in 2005 on collective cross-border management of copyright and related rights for legitimate online music services. The aim of this recommendation was to make licensing easier for services delivering music online across borders of the EU. In order to achieve this, the EU Commission tried to break up the well-established system of so-called sister-agreements amongst national collecting societies and to make sure that the European online music rights could be obtained from one single source. However, it still remains to be seen whether such a paradigm shift will indeed create more competition amongst collecting societies within Europe or whether, quite to the contrary of its intended purpose, it will lead to even more concentration amongst collecting societies. Since the new system must, as a consequence, abolish the possibility of acquiring all rights necessary for national exploitation from one single source, it will almost certainly lead to higher transaction costs which ultimately have to be borne by the consumer. Member States have criticized this move by the EU Commission, because the instrument of a recommendation largely excludes them from the decision-making process.

Subsequently, the EU Commission came forward with a proposal to prolong the term of protection for both performing artists and producers of phonograms from 50 to 95 years. Whereas this proposal has certain merits with regard to individual performing artists, with regard to phonogram producers it may only be explained by the massive lobbying efforts of the music industry which is looking to compensate the diminishing return on the sale of music in the form of CDs. In view of severe criticism from user groups and the scientific copyright community, the European Parliament in its first reading has voted for an extension to only 70 years. The harmonization of copyright levies for private copying within the EC still remains an open project with little chance of compromise. In this respect, distortions of competition will unfortunately continue to exist within the Community with regard to both analogue and digital recording media and equipment.

Finally, after a standstill in the Commission’s copyright activities, a consultation process to explore the possibilities of adjusting the copyright rules with regard to the requirements of the knowledge-based economy, raising issues of exceptions and limitations for libraries and archives, for disabled persons, for the use of copyrighted works in education and research, user-generated contents and orphan works led to the adoption, in May 2011, of an IP-strategy and a proposal for a directive on certain permitted uses of orphan works.

As far as trans-border infringement actions over the internet are concerned, mention should be made of the special jurisdiction provided for under Art 5(3) Council Reg 44/2001 (jurisdiction (PIL)), according to which an infringer may be sued in the courts of the place where the harmful event occurred or may occur. According to a judgment handed down by the ECJ concerning the infringement of personality rights, which in all likelihood also applies to the infringement of copyright, jurisdiction is established in all states in which the exclusive copyright has been infringed. However, according to the ECJ, damages with regard to the whole territory of infringement can only be claimed at the jurisdiction of the defendant’s domicile, whereas any national court which bases its jurisdiction on Art 5(3) Reg 44/2001 is limited to awarding damages covering the harm done by the infringing act within this particular national territory (ECJ Case C-68/93 – Shevill [1995] ECR I-415).

As regards the law applicable to trans-border infringements (non-contractual obligations (PIL)), the Rome II Regulation (Reg 864/2007) provides in its Art 8(1) that the law applicable to a non-contractual obligation arising from an infringement of an intellectual property right shall be the law of the country for which protection is claimed. Although this prescribes the country of protection principle, it remains unclear to what extent this rule (‘obligation arising out of infringement’) only covers issues of infringement in the narrow sense or, likewise, all other issues that have to be decided in infringement proceedings. In order to prevent that in an internet scenario the laws of all states apply from which the copyrighted work in question can be technically downloaded, several proposals have been made in the legal literature to limit the potentially applicable laws to those of the states which were the intended target of the internet communication. As far as trans-border contracts are concerned, Rome I (Reg 593/2008) provides that —notwithstanding any contractual choice of the parties according to Art 3—the contract shall be governed according to Art 4(2) by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence (unless the contract is a contract for the provision of services which, according to Art 4(1)(b), shall be governed by the law of the country where the service provider has his habitual residence). However, Rome I is silent on the issue of what constitutes the ‘characteristic performance’. It seems likely that one will come to different conclusions depending on whether the contract grants an exclusive or a non-exclusive licence. In the case of a contract consisting of a bundle of rights and obligations capable of being categorized as falling within more than one of the specified types of contract, the characteristic performance of the contract should be determined with regard to its centre of gravity (recital 19). Ultimately, the ECJ will have to decide all these issues.

Regarding applicable law and choice of law in general intellectual property (PIL).

Literature

Charles Clark, ‘The Answer to the Machine is in the Machine’ in P Bernt Hugenholtz (ed), The Future of Copyright in a Digital Environment (1996) 139; Mihály Ficsor, Copyright for the Digital Era—The WIPO Internet Treaties (1997); Michel M Walter, Updating and Consolidation of the Acquis—The Future of European Copyright (2002) <http://ec.europa.eu/internal_market/copyright/docs/conference/2002-06-santiago-speech-walter_en.pdf>; Lawrence Lessig, Free Culture (2004); Stefan Bechtold, ‘Dir 2001/29/EG’ in Thomas Dreier and P Bernt Hugenholtz (eds), Concise European Copyright Law (2006) 343; Lucie Guibault and others, Study on the Implementation and Effect in Member States’ Laws of Directive 2001/29/EC on the Harmonisation of Certain Aspects of Copyright and Related Rights in the Information Society (2007), report to the European Commission, DG Internal Market <www.ivir.nl/publications/guibault/Infosoc_report_2007.pdf>; Tilman Lüder, ‘The Next Ten Years in EU Copyright—Making Markets Work’ (2007) 18 Fordham Intell Prop Media & Ent LJ 3 <http://law.fordham.edu/publications/article.ihtml?pubID=200&id=2576>; Guido Westkamp, Country Reports on the Implementation of Directive 2001/29/EC in the Member States (2007) <www.ivir.nl/publications/guibault/InfoSoc_Study_2007.pdf>; Catherine Seville, EU Intellectual Property Law and Policy (2009) 7 ff; Michel M Walter and Silke von Lewinski (eds), European Copyright Law (2010); Bernd P Hugenholtz and others, European Copyright Code—The WITTEM-Project <www.copyright code.eu>.

Retrieved from Information Society, Copyright Law – Max-EuP 2012 on 25 May 2022.

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