EU Copyright Directive: Articles of Concern to Brand Owners

Aug 20 2021 - 14:13

The very existence of the Copyright Committee within INTA indicates that brand owners ought to be interested in the most impactful change in European Union copyright legislation in recent memory: the new Copyright and Related Rights in the Digital Single Market (DSM) Directive. As EU member states work toward its implementation into legislation by June 7, 2021, the Copyright Committee has analyzed some of the major provisions of the DSM Directive.

The DSM Directive was a review of existing copyright legislation to make it fit for the online environment.

As evidenced by the Copyright Committee, INTA has been evolving from an organization purely focused on trademarks to one that also looks at broader issues of concern to brand owners—with good reason.

Boundaries between a variety of intellectual property (IP) protection regimes are blurry. Industrial designs may intertwine with trademark and copyright protection; software may fall under copyright, but also under the patent regime. A good example is character merchandising, where a dual protection regime is a rule rather than an exception (for example, Disney characters, Marvel characters, and many others).

Overlaps of exclusive IP rights functioning under separate regimes are nothing new. Interaction between copyright and trademark protection is frequent and poses a challenge for the delicate balance of private and public interest, or the balance between unlimited and limited monopoly that IP rights confer to owners (for example, Dastar v. Twentieth Century Fox (U.S.) and Hauck v. Stokke (EU), respectively).

Whatever seriously influences copyright protection in the EU should be of interest to brand owners. For some, notably user content “heavy” companies, also known as OCSSPs (or OCSPs—online content-sharing service providers, such as Facebook, Instagram, Twitter, and YouTube), certain provisions of the new DSM Directive merit attention.

The Copyright Committee has analyzed the provisions of the DSM Directive of greatest concern and will follow up in the coming weeks with in-depth features in the INTA Bulletin on certain articles in the Directive.

Below is a brief outline of these provisions.

Text and Data Mining Exception—Articles 3 and 4

“Text and data mining” generally refers to the computer-based analysis of large bodies of data to gain information and insights into the content being mined. This has become a prominent tool for processing and analyzing data in scientific and research fields and can generate significant value to the user in various commercial fields. It will be an exception from copyright protection, which is potentially problematic.

Optional Extended Collective Licensing Exception—Article 12

Article 12 permits, but does not require, member states to institute new provisions in their law to enable collective management organizations (CMOs) to represent rights holders that have not expressly agreed to allow their works to be included in the CMO. Article 12 could interfere with the legitimate interests of rights holders that rely on the individual exercise of rights to finance, produce, and distribute audiovisual and other works. It also puts the burden on rights holders to opt out, which sets a harmful precedent. Moreover, it is unclear whether the safeguards are sufficient to protect rights holders where in practice the exercise of opt-out rights can be onerous and difficult to administer.

The Value Gap—Article 17

Article 17 was established to address concerns about liability for certain online service providers to bridge what has been dubbed the “value gap.” Value gap describes “the growing mismatch between the value that user upload services, such as YouTube, extract from music and the revenue returned to the music community—those who are creating and investing in music.”

This article clarifies that an OCSSP performs an act of communication which is an exclusive right of the rights holder. It also establishes a framework of liability for OCSSPs and a mechanism for OCSSPs to secure licenses or authorization for their activity. Finally, it provides conditions in which OCSSPs can obtain a new “safe harbor” from liability in addition to the safe harbors already established in the eCommerce Directive, the legal framework for online services in the EU.

Principle of Appropriate and Proportionate Remuneration—Article 18

Article 18 requires member states to ensure that when authors and performers license or transfer their exclusive exploitation rights to a producer, broadcaster, publisher, label, or other similar party, they are entitled “to receive appropriate and proportionate remuneration.” The DSM Directive outlines “different mechanisms” that should be considered during national implementation to account for principles of contractual freedom and a fair balance of rights and interests.

Transparency Obligation—Article 19

This provision will establish a transparency obligation for producers, publishers, labels, and other similar parties. This is similar to an audit right for authors and performers. Article 19 requires member states to ensure that authors and performers can obtain up-to-date, relevant, and comprehensive information on the exploitation of their works and performances including, where applicable, merchandising revenues, all revenues generated, and remuneration due.

Contract Adjustment Mechanism—Article 20

Article 20 establishes a framework by which authors and performers can obtain additional remuneration for works they license to producers, publishers, labels, or other similar parties when the original negotiated remuneration turns out to be low in comparison to revenues generated from exploitation of the work.

The provision’s contract adjustment mechanism requires member states to ensure that authors and performers or their representatives are entitled to claim additional, appropriate, and fair remuneration.

Right of Revocation—Article 22

Article 22 requires member states to introduce a revocation right that can be exercised when an author or performer grants exclusive rights to a producer, publisher, label, or similar party and that party fails to exploit the work. The rationale for including this in the DSM Directive is that authors and performers should be allowed to seek other avenues for exploiting their work if a significant amount of time has lapsed without exploitation.

Important Note: Variation

Since the new instrument is a directive, the 27 member states will need to transpose the new provisions into their own legislation. While the DSM Directive provides the framework the member states need to implement it, they still have discretion to implement the new “rights” within this framework. As a result, national implementation of this part of the DSM Directive is likely to vary, and this may pose different challenges and cause controversy across content sectors.

By Slobodan Petošević, Group Executive Chairman and CEO, PETOŠEVIĆ

This article first appeared in the INTA Bulletin and was reprinted with permission from the International Trademark Association (INTA).

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