Earlier this year, the EU passed a sweeping new copyright directive that includes new requirements that Internet platforms filter social media uploads for potential copyright violations. Some creator groups – especially in the music sector – have been applauding the law and proposing that it be adopted elsewhere. But a growing number of copyright experts from around the world have begun preaching caution.  

At issue is the EU’s recent shift to a system holding social media and other user upload platforms strictly liable for all copyright violations on their platforms, whether or not they received notice of such alleged violations. To avoid liability in the EU, Internet companies must adopt upload filters that use technology to detect potentially copyright-protected materials and prevent their upload. Copyright and technology experts have begun sounding alarms about how implementation of these rules in the EU might harm freedom of speech and creativity on the Internet, including at a forum held recently at Microsoft’s Innovation and Policy Center in downtown Washington D.C.

At the Microsoft forum and elsewhere, academics have begun describing the EU directive as marking a perhaps dangerous shift in the legal rules that undergird the proliferation of the user generated content revolution. Of particular concern is that other countries might copy the EU directive before it is even implemented in that region. “There is a possible future out there,” explained American University’s Sean Flynn, “that user generated content sites like YouTube become just like TV of Netflix – full of licensed curated content, and only that.”

Road to Two-Year Implementation

The EU recently approved the Copyright Directive, 2019/790, of 19 April 2019, on copyright and related rights in the Digital Single Market and amending Directives 96/9/EC and 2001/29/EC, available here.

EU member states must bring into force the laws, regulations and administrative provisions to comply with the Directive by June 7, 2021.

After June 7, 2026, the European Commission must conduct a review of the directive and produce a report. But before June 7, 2024, the Commission must assess the impact of the liability regime in Article 17 on online content-sharing service providers with an annual turnover under Eur 10 million, and take action if needed.

At the turn of the millennium, there was discussion about rules for the so-called information superhighway. The Digital Millennium Copyright Act was adopted in the United States in 1998 under which technological protection measures were offered to content providers with limitations on liability for platforms or internet service providers. Europe quickly followed suit with the E-Commerce Directive with the goal that there be some transatlantic uniformity as a policy goal, according to American University law professor Michael Carroll. “That’s changed,” he said recently at the forum held at Microsoft. “We used to all be heading the same way with secondary liability and notice and takedown,” he explained. But with the latest Directive, the “EU is going a different way.”

”From now until June 7, 2021, we’re about to see a bunch of natural experiments, as each separate member state in theory brings their law into compliance. Some may go past the deadline, but in France they are already talking about transposition, starting legislative processes,” said Matt Schruers of the Computer & Communications Industry Alliance (CCIA). “So we’re going to see implementation spread out over time, and that means there’s an opportunity to look at how that has an impact. You could have empirical data on the early implementations that could help educate the later implementation.

“We haven’t had anything like this since probably the 1996 Internet treaties, where we start changing the law,” he said. “I think this is an interesting opportunity to do research on the subject, and also research for the later countries that could affect their decision-making. You have to start collecting your baseline data now.”

Further Hurdles in the EU

The European Parliament was tightly split over the Directive, ultimately voting 348 to 274 in favor. But only 19 governments supported the Directive. Italy, Sweden, Poland, Finland, the Netherlands and Luxembourg voted against it. Poland has brought a court challenge to the Directive on the grounds that it represents censorship and violates freedom of expression, a fundamental tenet of EU law, according reports, including by Brussels NGO Communia.

Other legal challenges could follow, some say.

Concern over Licensing, Filters

US digital rights group Public Knowledge explained the concern around controversial Article 17. “Article 17 (previously article 13) establishes that commercial online platforms ‘perform an act of communication to the public’ when they give access to copyright-protected works uploaded by their users. Those sites and apps will have to make ‘best efforts’ to preemptively purchase licenses for all copyrighted content that users might potentially upload. In practice, this could mean they must attempt to license all copyrighted content in the world.”

“Upload filters create a chilling effect,” Public Knowledge continued. “Most users will not challenge upload filters when they are blocked from uploading, if the system tells them that the reason for denial is possible copyright infringement. The average person is fortunate enough to not have to know the intricacies of copyright law and their rights to use copyrighted content legally under some circumstances. For good reason, our European allies refer to the upload filter provisions of the Directive as a ‘censorship machine’.”

Public Knowledge urged the Copyright Office to delay the Section 512 Study, a public study and report to evaluate the impact and effectiveness of the safe harbor provisions contained in section 512 of the Digital Millennium Copyright Act (DMCA), “until we know more about the implementation and litigation of the Directive.”

European law firm FieldFisher blogged that “after all the controversy,” it would be “interesting” to see how member states implement Article 17 (nicknamed the ‘upload filters’ or ‘value gap’ provision).

“There has been criticism that the new Directive has no substance and that some of the provisions are wordy and nebulous,” it said, “especially paragraph 4 of Article 17, which sets out various potentially rather onerous obligations on online platforms in relation to third party content that is uploaded by users onto their platforms.”

It is noted that under Art. 7.10, there is a requirement for the European Commission to cooperate with member states to organize “stakeholder dialogues to discuss best practices” on how the provision will operate in practice.

“These dialogues will no doubt centre around whether online platforms will need to introduce expensive filtering technology to screen for infringing content in order to avoid liability under the Directive or whether there is another, less onerous option (unlikely),” the law firm said. “It is true that some online platforms e.g. YouTube, already has its own filtering technology in place to deal with infringing content. However, in order to fulfil the obligations under paragraph 4, some are concerned that it may be necessary to install more advanced technology with more sophisticated algorithms.”

Prof. Carroll at American University called the effort to place importance on the value gap a push to get policymakers to change the license price by changing the liability regime.

“The market would be the market without copyright, and what would that price be?” he said. “Who’s to say what the value gap is? You’re just making explicit decisions about winners and losers at the licensing table in public policy. You’re actually just asking policymakers to set licensing prices. And that value gap doesn’t capture any of the value for the user.” Users can be considered authors as well, he said.

“So we want policymakers to change the license price by changing the liability regime,” Carroll said. “Well, you’ve created the market. Strip away what this really is: you just want the government to set the price of licensing. You don’t like the price you’re getting with the safe harbor.” He put a question to industry as whether the academic community could do more research on this issue.

Ideas for a Balanced Way Forward

Martin Senftleben, a law professor at Vrije University Amsterdam, has raised some ideas about the obligations in the Copyright Directive and opportunities he sees to possibly bring more flexibility into the national implementations.

Senftleben recently discussed his new paper, “Bermuda Triangle: Licensing, Filtering and Privileging User-Generated Content Under the New Directive on Copyright in the Digital Single Market.”

“The new EU Directive on Copyright in the Digital Single Market creates a peculiar triangle of obligations to license, filter and privilege user-generated content (UGC),” the abstract to the paper states. “As it abolishes the traditional safe harbour for hosting in the case of copyrighted content, it may lead to the disappearance of the open, participative internet which EU citizens currently enjoy. To avoid the loss of open, democratic avenues for online content creation, national lawmakers will have to find the right amalgam of licensing and filtering obligations on the one hand, and new use privileges that offer room for user-generated content without prior authorization on the other.”

Senftleben calls the two options in the new directive aimed at “alleviating the burden” of strict liability for user-generated content – licensing and filtering – “problematic”. That’s because it leaves the clearing of rights for UGC to the “highly fragmented collective licensing framework” across EU member states, and because the filtering “raises the spectre of content censorship following the maxims of cost and efficiency considerations of the content and platform industry.”

Instead, Senftleben suggests the development of a “broader use privilege” for UGC. This would have the advantage of “avoiding an encroachment upon fundamental rights and safeguarding breathing space for open, participative online communication,” he argues. And if it is combined with “an obligation to pay equitable remuneration for content remixes and mash-ups that do not fulfil quotation or parody standards, it also has the advantage of generating a revenue stream that benefits not only the creative industry but also individual creators.”

Background

Senftleben called the new Copyright Directive the “second milestone” in EU digital copyright policy after the 2001 Information Society Directive.

The background of the latest directive began with a European Commission open consultation in 2013-2014, followed by a May 2015 Communication on rules for a Digital Single Market Strategy. The single market covers the EU zone plus Norway, Iceland and Liechtenstein. Then in December 2015, a Communication on a “modern, more European” copyright law was issued that he said firmly embedded the Digital Single Market Strategy in the copyright framework. In March 2016, there was a consultation on publishers in the copyright value chain that led to a neighboring right related to press publishers. In May 2016, there was a communication on online platforms, opportunities and challenges. And then in September 2016 came the legislative proposal for a directive on copyright in the Digital Single Market.

On the modern, more European copyright law communication, Senftleben said the Commission pointed to an “interdependence” of diverse creative content and innovative online services, calling them both important for the internet economy.

But the Commission also raised the possibility of a “value gap” – whether the value from new forms of online content distribution are fairly shared under existing copyright law. This developed into a “very powerful argument,” he said. It became clear that the value gap referred to a particular type of “You Tube-type” platform. The idea was that something had to be done about platforms populated by user-generated content. Then it became a question of how these platforms, including for example Netflix, can allow all this content without licenses. The answer was the safe harbor provision allowing those platforms to “rely on a liability shield,” which since the start of the millennium had not been called into question in Europe.

“In a nutshell, the argument was there are players getting rich, in particular US players, they get rich just by not paying for precious content that very often comes from EU creators,” he said. The same point was made in the Online Platforms: Opportunities and Challenges document of May 2016, and other sources such as a study in France on literary content.

Nobody wanted to reopen the EU E-Commerce Directive because it offers a safe harbor for a wide range of content, not just copyrighted, he said, so an alternative solution was sought to change EU legislation. The French study suggested leaving the safe harbor in place but finding ways to “neutralize” it in relation to copyrighted content by creating a “carve-out.” And this is how it was addressed in the eventual Copyright Directive passed this year.

Meetings have already begun in Brussels and in national capitals on how to implement this in a harmonized fashion, Senftleben said.

The European Commission’s information page about its new efforts to modernize EU copyright rules, with links to all related documents, is here.

London-based IFPI, the international music industry association, hailed the directive’s passage and turned its attention to ensuring national implementation that is “fully consistent with [the directive’s] aim and key principles of European and international law.”

IFPI highlighted that: “This world-first legislation confirms that User-Upload Content platforms perform an act of communication to the public and must either seek authorisation from rightsholders or ensure no unauthorised content is available on their platforms. The Directive also includes a ‘stay down’ provision requiring platforms to keep unlicensed content down – another global first.

The directive has been called a “paradigm shift,” but there is some division in the copyright industry as the film industry has viewed it as not going far enough on enforcement, according to reports.

Article 17 – Licensing, Liability, and Communicating to the Public

Looking at the controversial Article 17 of the directive, Senftleben noted a provision that states that national laws must consider service providers as having performed an act of communication to the public if it provides access to copyright-protected material. He said previously this was the case only if the service provider had full knowledge of the consequences of its action. This was removed in final negotiations, he said, and departs from legal precedent where related court decisions, such as one about hyper-links, had always maintained the knowledge requirement. The EU legislation “takes the very remarkable next step” of abandoning the knowledge criterion, said Senftleben.

It is notable that the new directive has several exemptions from liability, including for online marketplaces, scientific repositories, and media. It was clear it was targeted at online content providers, with YouTube the most often mentioned as an example, and Facebook being mentioned also in the later stages of the legislative debate, he said.

With the knowledge requirement gone, it means strict liability, so whatever is uploaded to the platform, the platform is directly liable, Senftleben explained. If a user uploads infringing content, the platform is liable for infringement. Platforms will have to find a way to deal with this “enormous liability risk” as they are now exposed, he said. However, the legislation offers two options in this case: 1) enter into licensing agreements, 2) filtering.

Senftleben noted that the EU is not like the United States, with one or two languages and an integrated market. The EU market is more diverse. But he also pointed to Art. 17.2 of the directive, which states that licensing authorization will be extended to acts carried out by users of the platform. He said this creates a “strange” situation where the content being uploaded changes constantly and immediately after the license agreement is completed. “You are basically asking for a license for a moving target,” he said.

This creates a challenge for both sides, he said, with an “enormous” rights clearance task for the platforms and a question of whether the content industry is willing to grant umbrella licenses for all kinds of productions. The music industry seems to not have too much difficulty with this, he said, because they are already used to umbrella licenses for radio broadcasts. The film industry is a different story, he said. They have an “exploitation cascade,” from cinema to paid tv to regular tv and video-on-demand services, Netflix and so on. He guessed they would like to keep these exploitation steps as they are and then offer a license for use on a UGC platform after they have completed all the other things. The problem is that this is not what users want, he argued, as UGC platforms have become a forum for debate and with regard to film they want do not want to wait to post mashups and parodies and mixes with clips from the movies. Senftleben said collecting societies may struggle with umbrella licensing agreements as they have members but with extended licenses you get non-members as well. But the ‘elephant in the room’, he said, is that you would need cross-border licenses for the whole EU territory, adding wryly, “Good luck with this one.” He also noted that within each country there are many different collecting societies for various aspects of copyrighted content, and there is an unresolved issue of possibly creating an EU-wide collecting society.

“The risk is that we lose quite a bit of autonomy and freedom of expression,” said Senftleben, noting that was is at stake is what has been seen as the “revolutionization” of content creation with users creating content of their own.

“The users have been emancipated,” he said. But a lot of the “open, participative” approach on the internet may be lost if the system resembles TV channels to the extent they can only offer and permit content that falls within the licensing package, he warned.

“The directive – on a very fundamental level – reverses our abstract hierarchies of values,” said Nikolas Guggenberger, Postdoctoral Associate & Resident Fellow, Information Society Project, Yale Law School, and an Assistant Professor at WWU Münster School of Law, Germany. “Whereas there used to be a significant fault tolerance in favor of free expression, this directive seems to be designed around the idea of a zero fault tolerance protecting IP to the detriment of free expression.”

Article 17 – Filtering

The term ‘filtering’ is not explicitly used in the new directive, but it is there under Art. 17.4.b, which requires platforms to make “best efforts” to ensure the “unavailability” of copyrighted works that are not under license. This will require automation, Senftleben said, as it would be impractical even for scores of law students to be employed to do this.

But furthermore it could run up against fundamental rights of freedom of expression and privacy, a point raised by Poland in its legal challenge to the directive on the grounds of censorship. There is precedent for this argument in the EU Court of Justice decision of November 201, C70-10, the Scarlet/Sabam case which found general filtering obligations impermissible. The argument against this has been that the obligation in the new directive applies only to specific works after the creative industry tells you what to protect. He said one could imagine the industry sending long lists that in the end could resemble a general obligation. That is something to be resolved by the courts, he said.

Yet another point Senftleben raised is the strong reliance on industry in the decision-making, which could be questionable, as it is not clear who represents the public interest when it comes to filtering. Industry will by necessity seek the most cost-efficient method of filtering. As well, there is a risk of market concentration as the biggest players already have sophisticated filtering systems and will then set the compliance standard for other players, making the filter obligation an entrance barrier for newcomers, especially small ones, he said. If a company does not have the resources to defend itself against challenges, then excessive filtering will become the norm.

There is a small and micro-business privilege (Art. 17.6) in which companies offering services for less than 3 years and with an annual turnover of less than Eur 10 million only have to show a best effort to obtain authorization for content. And if they have less than 5 million monthly unique visitors they also have to show best efforts to prevent further uploads of notified works. Senftleben suggested smaller platforms might consider pooling together to work on this. And as soon as a company goes above the minimums, it must fully comply.

A Proposed Further Option: Privileging and Pastiche

Meanwhile, Senftleben came up with another possible option, referring to Art. 17.7 and 17.9, which hold that cooperation between online content service providers and rightsholders “shall not result in the prevention of the availability of works and other subject matter uploaded by users which do not infringe copyright and related rights,” including if they are under an exception or limitation.

It is a requirement, but “nobody knows how to do this,” he said, as filtering mechanisms are not sophisticated enough. Here Senftleben proposes his broad use privilege, which would be based on the list of permissible limitations for caricature, parody or pastiche. He noted there is no agreement in Europe (or elsewhere) on what pastiche means, which means numerous things could fit under that category. His understanding of pastiche includes lists such as collections of “funny animal” videos, which usually come with background music. That music is strictly speaking infringing, he said, since it is not a quotation, nor a parody, unless it is a pastiche, where the user combines their own creative contribution. He pointed to a 3 September 2014 decision by the EU Court of Justice (C-201-13, Deckmyn/Vandersteen) that harmonized the definition of parody, and suggested a court could do the same for the term pastiche. The court might decide it is broad enough to cover mash-ups and remixes.

The three-step test in international law says exceptions and limitations should not interfere with normal exploitation of a work, and in EU law this takes a restrictive function. There is an element that would include revenues being paid in his notion of a broader use privilege. The idea builds on existing EU rules on private copying levies being paid for cross-border purchases to collecting societies. Senftleben proposed that users would enjoy the freedom to remix, and the platforms would pay levies, a lump sum such as a percentage of advertising revenue, and the collecting societies pass on the revenues to individual creators. This avoids a problem of industry not passing on the revenues to the original creators, he said.

If accepted, he said he could foresee a new collecting society for the whole EU for these pastiche productions. His idea would also shift the focus from the protected works identified by the creative industry to creative elements added by users. It would require a filtering system that identifies percentages of the content taken from different sources, leaving alone the percent that cannot be matched with any protected content, which would be considered to have come from the user themselves. Then it could even be established that if a work has below a certain level of protected content, it would be considered a pastiche and so would pass without further filtering. He admitted that technology companies have told him so far this is not how filtering systems are designed.

This proposed idea does not establish remuneration where it has not existed in the past, he said. By comparison, he looked to radio stations where locally produced content can be treated differently from other content.

A Look at Copyright Reform in Several Non-EU Countries

This section looks at the status of copyright reform in several countries, and considers how or whether the EU Copyright Directive might come into play.

Canada

Carys Craig, a professor and director at York University Osgood Hall Law School, told the Microsoft event that Canada is in the midst of a 5-year parliamentary review of a series of amendments from 2012, which added anti-circumvention measures, and a “made-in-Canada” notice-and-notice system (rather than notice-and-takedown) in which internet service providers are obliged to notify users when a notice of infringing activity has been posted. The 2012 amendment also included a non-commercial user-generated content exception, designed to deal with non-commercial new works by users that might contain copyrighted work and carve those out without either side having to worry about liability.

The 5-year review could be seen as an invitation for lobbyists to mobilize to address some of the protections that did not go as far as in the US, as well as possibly roll back some of the new exceptions. It is not as focused on the UGC exceptions. In 2012, parody, satire, and education were added to the exceptions related to fair dealing that lead to a fairness assessment, and that’s where the major pressure point has been.

She highlighted some differences in what Canada has right now from what is being done in Europe. There is a limit on the kinds of activities that implicate copyright holders’ rights. Canada has a clear limitation on authorization so that merely providing the means by which infringements might occur is not authorizing infringement. Merely providing the means by which communications occur is not communicating material. Merely providing links is neither communicating nor reproducing. So a lot of work is done in circumscribing those initial rights, and that comes from a body of Supreme Court jurisprudence. And the responsibility of service providers is limited by the notice-and-notice regime, and as well, there is a body of user rights which have been described as such by the Supreme Court, so fair dealing, UGC are not just exceptions, they are understood as rights. That puts Canada in a nice position to withstand some of these pressures, she said. On the other hand, this is precisely why we have a heightened political discourse around these things in the context of the copyright review.

Canada has two committees working on the review – the Industry Committee, which is producing the main parliamentary review, and the Heritage Committee, which was asked to look into models of remuneration for artists. The Heritage report has already come back and was recently released, and one Canadian academic call it “an appallingly one-sided document” that took “the recommendations, the proposals, the most far-reaching dreams of the copyright industry lobbyists and basically rubber-stamped them as recommendations” to the Canadian Parliament.

These included, for example, multiple, uncritical mentions of the value gap that creators are suffering, and the decline and suffering of the artistic middle-class which no longer exists, and the negative impact of technology on creative industries, and noting that internet service providers greatly benefit from the music they access and give their clients. Among their recommendations is to review the safe harbor provision to ensure ISPs are accountable for their role in the distribution of content, the increase of protection against piracy, and to review, clarify or review exceptions in the Act to ensure they respect the three-step test.

Meanwhile, the Industry Committee reporting is awaited, and there are hopes that it will be more balanced, she said. “I think we are really at a pivot moment in Canada” where they can learn from what the Supreme Court has said about balance, user rights and limiting liability, “or this political rhetoric is really going to gather steam and sway the people who are holding the pens.”

Canada has some cases working their way through the courts that will test user rights and fair dealing in the educational context, and parody, as well as one on downloading movies. Some of these may end up in the Supreme Court, which itself has seen a change in its makeup that might be less favorable for user rights.

Hong Kong

Peter Yu, a law professor and director at Texas A&M University, said, “Nothing is happening” on copyright in Hong Kong at the moment because of how difficult it was to get a bill in 2014. At that time, there were two highly controversial proposals, one about fair use, as legislators were trying to add a provision so it was not just the fair dealing provision but would be closer to fair use in the US. A second proposal was by a number of legislators trying to introduce Section 2921 from Canada, a special exception to promote user-generated content. Ironically, they were so tied up with other issues, legislators were not able to address these two controversial proposals on the floor.

Hong Kong may be important for two reasons, Yu said. First, it used to be a gateway to China, and it still has a lot of close engagement with policymakers and businesses in China. Secondly, he sees something similar to other former British colonies, and might provide insight into what will happen in other countries. Yu made his remarks prior to the recent outbreak of protests in Hong Kong.

Something that is different in Hong Kong is that it has seen a shift from talking about how to better protect rightsholders to how to better protect freedom of speech. Hong Kong does not have a lot of copyright litigation, he said, so the focus is less on protecting copyright and more on not setting a bad precedent in Asia about limiting UCG and fair use.

Yu identified three issues important to the copyright industry that were not in the last bill – set-top boxes (more broadly, the “last mile”), link aggregation, and website blocking. He thinks those are going to come back if they have another round of consultations on the bill, and the EU directive will be “quite influential” in that next round.

In Hong Kong and neighboring jurisdictions, they prefer to transpose legislation from major nations, he added. And in Hong Kong there are still a lot of people in a British mindset, legislation still reflects the British system, and they work closely with British companies, meaning EU legislation will be influential. As to how that will play out with Brexit, Yu said he did not know.

If the EU directive is on the table, the three issues he mentioned (set-top boxes, linking, website blocking) will be on the table, but the way consultation is in Hong Kong is if something is put on the copyright side, something also needs to be put on the user side, he said. But he did not know what those would be yet as it is not clear where the consultations are going.

On China, the copyright reform has slowed, in part because the person leading it has retired. In the meantime, the US-China trade war is ongoing and might affect the discussion. China has revised a lot of laws that were problematic from a World Trade Organization standpoint, so it is not likely China is going to use copyright as a bargaining chip in that debate, said Yu. That means copyright reform will be on the back burner for the moment.

But from the EU directive, licensing is something legislators are eager to utilize, he said, because a key point of the copyright reform discussion of the past few years is how to improve the copyright management system, and about collecting societies and other issues relating to licensing. But it will only work if it is what the copyright industry is hoping for, he said.

On filtering, China has pretty sophisticated filtering because of political issues and sensitive materials, he said, so it is somewhat different from what Hong Kong. And he noted that if content is not shown or marketed in China, it becomes a different issue as well.

Finally, he mentioned that operators in China like Alibaba will not be that responsive to copyright holders.

United States

In the United States there have already been calls by members of Congress, including House Speaker Nancy Pelosi, D-Calif., to hold platforms more to account broadly, but so far the music industry has not called directly for elements of the EU Copyright Directive to be brought on board in the United States.

Rep. Adam Schiff, D-Calif., recently questioned whether Congress should start looking to scale back Section 230 of the 1996 Communications Decency Act, and Sen. Mark Warner, D-Virginia, made similar noises. Section 230 provides immunity from liability for providers and users of an interactive computer service who publish information provided by others.

“There’s movement to do something,” an industry source said, but it is not yet clear if it will be similar to the EU directive.

In the US, the Copyright Office is expected to release its report on the DMCA safe harbors soon, though the source said it might be pushed to late summer/early fall because they are currently focused on choosing who to run the Mechanical Licensing Collective as set forth in the Music Modernization Act (MMA), and other issues related to the collective.

“My guess is, we’ll continue to hear members of Congress question the utility of Section 230 if platforms continue to take advantage of their liability immunity, perhaps some hearings, and then the Copyright Office will drop its report and we will have more hearings,” said the source.

Recording Industry Association of America (RIAA) CEO Mitch Glazier published a recent opinion piece in Variety on efforts in the US.

Glazier’s op-ed can be seen as “a call to action for the tech and creative communities to come together, like they did on the MMA, to work out business solutions and in this case, avoid legislative action,” the industry source said. “That’s our desire. So any action is likely a ways off.”

Christian Troncoso of the Business Software Alliance noted the characterization of the EU directive as having added a fifth element to the four existing safe harbors: online content sharing service providers. He said it will be interesting to watch how that term is construed. There’s a lot in the directive that suggests it should be fairly narrow, he said. There’s carveouts for cloud service providers, business-to-business cloud service providers, clouds that allow user content for their own use, and there’s a reference in the recitals saying what they are really targeting is online content sharing services that compete with other content sharing services like audio and video streaming. It could be read narrowly as only applying to something like YouTube, he said. That is something to watch closely, and ties into what may happen in the US, said Troncoso.

Already, he said, there have been op-eds from CEOs of big content associations saying they would like to s take the momentum from Europe and bring it to the US and try to kickstart a conversation about what should qualify as a standard technical measure under US Section 512(i), which states: in order to benefit from the safe harbor, you cannot interfere with any standard technical measures. That term is defined in a way that requires multi-industry consensus on what best standards would look like. It’s been a null set up till now because there’s never been a process to determine what those standards will look like, he said.

“I think they will likely try to leverage the momentum from Europe and the quote-unquote tech clashes that are happening in the US to try to push the tech industry into some sort of agreement along those lines,” he said. But one of the difficulties of that process will be that the US does not have this fifth category of service provider in the Digital Millennium Copyright Act (DMCA).

“If there’s an agreement among hosting providers about what a standard technical measure, a filtering obligation, is, it’s not just going to apply to YouTube, it’s also going to apply to a lot of services that are more infrastructure-like, such as Amazon web services and others, and that’s where things get potentially complicated,” he said. “It’s one thing to have a filtering obligation that applies only to edge services, it’s quite another to bring those filtering obligations much closer to the center of the network.”

Another question, he said, is: “if you’re an enterprise cloud provider, you may be providing services to other enterprises who have their own sets of licenses for what they are and are not allowed to make available on their networks. So I’m not even sure how the filtering obligations can as a practical matter work out.”

‘A Legal Earthquake’

Matt Schruers of CCIA said at the event that it’s unlikely anyone will cut and paste the directive in its entirety, but he has concerns of the “contagion” of the directive by “cherry-picking” parts of it, particularly licensing and filtering. This could lead to the loss of affirmations about the importance of limitations and exceptions and preserving user rights, he said.

He also said he sees a risk of “broad, collective, motivated licensing mandates” being adopted in other jurisdictions too, in part because of the value gap construct, he said morphed over time from a particular meaning into a “perhaps unintentional constructive ambiguity that just means, US companies are making too much money.”

“This buzzword perhaps papers over that protectionist motivation, and that’s why it hangs around,” he said. “It can mean a lot of things to a lot of people. It’s like “cyber”, you don’t really know what it means but everybody thinks we have a common understanding.”

Supporters of tech platforms argue a safe harbor can have a profoundly positive effect on the economy, and that when something goes viral on a platform like YouTube, it not only is entertaining but also brings a lot of revenue to all.

Senftleben said the legislation grants a very specific type of new exclusive right that can directly be asserted against these online content sharing service providers, which means the creative industry is free to assert that right in whatever way they wish.

He said the creative industries have to come together as there is some difference for instance with the audiovisual sector saying it is not too happy with the results as they would rather have strong enforcement instead of licensing deals that put them under pressure to offer broad licensing schemes, while the music industry seems quite content with a result that isn’t often achieved. “From a legal perspective, this really is an earthquake.”

Jonathan Band of policybandwidth.com, who was involved in the negotiation of the DMCA, asked how much creativity can there be in the transpositions. For instance if the uploader certifies that the content is not infringing or is under exception is there enough flexibility in the directive to allow a country to adopt something like that? he asked.

Senftleben said there are examples from the past of experimentation in implementation. The Netherlands for example had a very broad interpretation of implementation. On private copying, downloads from illegal sources, for instance if you downloaded from the Pirate Bay, it could still fall under the private copying exception. There was a practical motivation for that, saying that it falls under private copying so the remuneration paid for the illegal downloads, he said.

It went up to the Court of Justice, which said no, he said. This meant the Dutch state had to pay damages for all the private copying that had taken place. That was a very costly exercise. Countries have a tendency to follow directives relatively closely, Senftleben said. But he agreed that there are many open provisions of the directive so member states have to take certain decisions clarify it.