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memo/97/108

Brussels, 10 December 1997

Background to the proposal for Directive on Copyright and Related Rights in the Information Society

I. Copyright, the Information Society and the Single Market

Copyright and related rights aim to encourage creativity, and investment in creativity, by protecting authors, performers, broadcasters and record and film producers from unauthorised reproduction and dissemination of their works, performances, broadcasts, recordings and films. Many of these works and other protected subject matter are traded as goods, embodied in physical carriers, such as books, magazines, records, tapes, CDs, video-cassettes, and increasingly nowadays as multimedia products on CD-ROMs and DVDs (digital video discs). However the development of the Information Society has led to growing dissemination of such subject matter in digitised form over electronic networks.

While some of the Information Society services currently available rely on public domain information (e.g. bulletin boards, chat-lines), the provision of high value-added content over the network, with the advantages of speed and quality compared to traditional means of dissemination, can be expected to be a major contributor to the growth of on-line services such as electronic commerce. Typical examples of such content might include text, artwork, music, audio-visual material, software, databases, or combinations of any of these.

The consultations undertaken by the Commission in 1995 and 1996 on the basis of the Green Paper confirmed that copyright and related rights will play a crucial role in the emerging Single Market framework for the Information Society. While it is generally accepted that the basic principles of copyright protection still apply in the new digital environment, all interested circles agree that some adaptation and clarification of these principles is needed to meet the challenges of new methods of delivery.

Rightholders in particular will be reluctant to provide content for on-line services if they have any doubts about the extent to which their rights apply and can be enforced in the digital environment, or if their rights are not largely harmonised in as many countries as possible. In the absence of such legal certainty, the multiple, fast and high quality copying possibilities inherent over electronic networks could rapidly cause grave economic prejudice to rightholders.

Service providers and users will also wish to be certain about the extent of the rights available so that they do not unwittingly run the risk of infringement, or on the other hand enter into binding contracts which are either unnecessary or unclear.

Without appropriate adaptation and harmonisation therefore, lack of legal certainty will reduce the availability of subject matter.

The potential value of on-line services would then be restricted, and the development of both the service provider industry and the physical/electronic infrastructure would be correspondingly limited, to the detriment of user acceptance, industry growth and employment.

II. Frequently asked questions

Why does the proposal not harmonise rules on private copying?

Currently 11 Member States provide for private copying to be exempted from the scope of the exclusive reproduction right, ie the right of the rightholder to authorise or prevent copying. Those not making such a specific provision include the UK, Ireland and Luxembourg, and Denmark in respect of digital to digital copying. Reasons given for the exemption include the impracticality of enforcing an exclusive reproduction right in relation to private acts, and the desirability of protecting private life. The 11 Member States concerned provide for systems of compensation for right holders through levies on blank audio and audiovisual recording media, and in some cases on recording apparatus as well (e.g. Belgium, Greece, Italy and Spain). In general, with the exception of Denmark, such systems do not distinguish between analogue copying, which is less closely connected with the Information Society, and digital copying.

The Commission has to take into account a number of considerations relating to technological developments before deciding on the most appropriate course of action on this subject. In fact, the future development of the market in digital copying is still largely unknown. Digital private copying is not yet widespread. It has not yet been confirmed that technical systems of protection will be sufficiently reliable to allow rightholders to control private copying and thus exercise their exclusive right. That is why an exclusive right for digital reproduction, the solution already provided by Denmark, at present holds some uncertainty for right holders.

In view of these uncertainties with respect to the enforceability of rights against private copying in the digital environment as well as with respect to consumers' behaviour in this domain it appeared premature at this stage to provide for a more harmonised solution with respect to digital private copying. It is therefore proposed to leave Member States with the possibility of maintaining or introducing exceptions for private copying (digital or analogue). These must, of course, comply with the international obligations in this respect (notably the "three-step-test"). The Commission will closely follow market developments with respect to digital private copying and consult interested parties in the course of 1998 on further developments. The consultation will focus in particular on technological aspects and the balance of rights and interests.

Would the application of the exceptions for private copying in some Member States inhibit the use of anti-copying devices?

No. In most Member States, the private copying remuneration schemes give users no subjective "right to copy", but are considered as only generally tolerating private copying by depriving rightholders of their exclusive right of reproduction (to authorise or prohibit copying). However, even in those Member States which provide for a "legal licence" for private copying, such a licence would not imply a right to make a private copy of any work or other protected subject matter. Thus, even where the legal licence applies, rightholders are still in a position to limit private copying by means of technological measures (e.g. anti-copy devices).

Why does the draft not include a provision on liability for copyright infringements?

The proposed Directive does not include provisions concerning liability of on-line service providers because liability is a horizontal issue concerning not only copyright, but also such issues as defamation, privacy, unfair competition, trademarks, misleading advertising and obscene, racist and violent content. Moreover, liability is not included in the provisions of the new Treaties agreed in December 1996 in the framework of the World Intellectual Property Organisation (WIPO) on the protection of authors and the protection of performers and phonogram producers (see IP/96/1244), on which the proposed Directive is based. During the WIPO Conference, despite intensive lobbying, it was the common view that these Treaties do not alter the existing national regimes on liability and that the issue should be left to the national or domestic legislator. Service and access providers have confirmed their support for the WIPO Treaties in their present form, i.e., without any provision on liability.

None of the existing EU copyright Directives feature provisions on liability, even though they too have introduced new forms of protection. Moreover, the provisions of the current proposal make clear that access and service providers would be exempted from reproduction rights for certain incidental temporary 'cache' copies arising during transmission over the Internet. This obligatory exception for incidental acts of reproduction goes a long way to meeting the concerns of service and access providers.

In view of the need to clarify the situation for the various parties concerned (notably access providers, service providers and others), liability of on-line service providers is due to be the subject of a separate, specific proposal for legislation due to be put forward by the Commission during 1998 as part of proposals for a regulatory framework for electronic commerce and other electronic services.

Why is there an exception for certain temporary acts of reproduction?

The proposed Directive recognises that particular technical acts of reproduction should be exempted from the scope of the reproduction right because they have no separate economic significance. This provision in particular applies to temporary reproductions which form an integral part of transmissions over the Internet. It seeks to accommodate particularly concerns of service and access providers by providing them and rightholders with legal certainty with respect to incidental acts of reproduction. The proposal excepts those copies from the reproduction right which are of a mere technical nature, are an integral part of another act, and have no separate economic significance; certain forms of "browsing" or "caching" may thus not be subject to the control of the rightholder.

Rightholders have argued that only those incidental copies made during an authorised use of protected material should be excepted from the scope of the reproduction right. However, it may not always be easy nor indeed necessary to distinguish whether the act in the course of which the incidental copying occurred was itself authorised or not. Moreover, even if the exception for incidental copying applies also in the context of unauthorised use, a sufficient number of other conditions have to be fulfilled (no separate economic significance, temporary, etc.), so that this exception still reflects a fair balance of rights and interests.

Are the rules on circumvention of anti-copying and rights management systems likely to prove effective?

Yes, because the proposal's provisions are not directed against the "circumvention of technological measures" as such (like the WIPO text), but focus on preparatory activities. This is fundamental, because the real danger for intellectual property rights will not be a single act of circumvention by individuals but preparatory activities to produce devices or offer services to circumvent. In accordance with a formal proposal by the Community and its Member States to WIPO, the provision furthermore adds an element of knowledge by the party liable for the circumvention and only outlaws those circumventions which aim at an infringement of a copyright or a related right granted by law. As in the WIPO Treaties, the provision contains an element concerning the technical "effectiveness" of the protection measure, which is further defined in the provision. Furthermore it makes clear that general-purpose electronic equipment and services are not outlawed merely because they may also be used in breaking copy protection or similar measures.

Have there been sufficient consultations with the private sector before presenting the proposal?

Consultations with interested parties have been going on for more than 3 years on a continuous basis. The private sector was consulted first in a the hearing in 1994. In 1995, the Commission launched a consultation process with the publication of the Green Paper on copyright and related rights in the Information Society (see IP/95/798) which resulted in a Communication by the Commission of 20 November 1996 announcing the issues to be contained in the initiative (see IP/96/1042). The private sector was also consulted on the same issues in the run up towards and during the WIPO Diplomatic Conference. Further bilateral consultations with all interested parties have been held prior to, and during the drafting period.

Does the proposal strike the right balance between all rights and interests concerned?

The proposal represents a fair balance between the divergent and often conflicting rights and interests concerned in the light of the very extensive consultations with all categories of users, rightholders and investors, such as content providers (e.g. software industry, phonographic industry, film producers, publishers, authors, broadcasters), consumers, on-line service providers and other investors. This compromise is based on the solutions found in the new WIPO Treaties, in the acquis communautaire (the already existing 5 copyright Directives), as well as on several elements agreed upon by Member States during the WIPO Diplomatic Conference last year. This balance corresponds also to the Resolution adopted by the European Parliament on 22 October 1997.

Does the draft go far enough in terms of harmonisation?

While providing Member States with some flexibility, the draft still achieves the main objective of the draft directive which is to implement the new international WIPO obligations at Community level, to prepare for ratification of the new WIPO Treaties by the Community, and to provide for a level playing field for the content of the new services in the Information Society. The draft reflects a common denominator, which at the same time provides Member States with some flexibility. Some flexibility is needed: different legal and cultural traditions in the Member States have to be accommodated, and the principles of subsidiarity and proportionality have to be respected.

In some areas, such as private copying, the Commission will review economic and technological developments with a view to initiating appropriate complementary action where necessary. (See page 2 above.)

Does the draft go beyond the obligations arising under the new WIPO Treaties?

No; the proposal limits itself to implementing the new international WIPO obligations, adapted however to the acquis communautaire. All four elements of the draft, namely (1) reproduction right, (2) right of communication to the public/making available, (3) distribution right, (4) technological measures/rights management information, are in their essence included in the new WIPO Treaties. Only one element goes beyond the WIPO Treaty obligations: it is the obligatory exception from the reproduction right for incidental copies an exception which specifically seeks to accommodate the needs of service and access providers. Its wording is based on proposals discussed and agreed upon by EC Member States during the Diplomatic Conference. Apart from this exception, the only elements added to the WIPO Treaty language are those needed to make the (sometimes rather general) WIPO terms workable in practice and to harmonise them according to the standards of the acquis communautaire, the 5 existing Directives. Some examples:

  • * The WIPO Performances Treaty gives rights only to audio performers. The Community Directives treat audio and audio-visual performers on an equal footing. The new proposal therefore extends the rights to audio-visual performers as well.
  • * Both new WIPO Treaties include a fairly general provision on exceptions to the rights (the "three steps test"). The Community Directives (particularly on databases and software) provide for more explicit exceptions, which are derived from the Berne Convention. The new proposal takes the WIPO provision as the basis, and interprets it by following the list of exceptions contained in the existing Directives as well as those set out in Member States.
  • * The WIPO Copyright Treaty provides for a general distribution right, but for no specific rule on exhaustion. The proposal takes up this distribution right and combines it with the principle of Community exhaustion, which is already reflected in three Community Directives and is based on ECJ jurisprudence.

Why can Member States exempt libraries only from the reproduction right? Why does the exemption not extend to other rights?

The proposal would allow Member States to allow an exception to the reproduction right for libraries and similar establishments accessible to the public for certain activities because this is already the case in most Member States. Furthermore, the Rental Rights Directive of 1992 already allows libraries to enjoy privileges with respect to their lending activities.

However, the new proposal envisages no exceptions for libraries from the right of communication/making available to the public. Their communication to the public and making available of protected material on-line must therefore be based on licensing agreements.

This correspond to the legal situation in most Member States. It is justified, in particular with respect to the making available of material on-line by libraries (on-site or off-site), as such new use in the digital environment differs significantly in economic terms from the traditional "lending of physical copies", which can only be seen by one at a time. In the on-line situation, perfect quality copies of any work can be made available on-demand to a large number of users , be it on-site (with a multiplicity of screens in the library) or off-site (to other libraries or remote users).

If there was an exception for making available works on-line, even when limited to the physical site of the establishment, there would be a risk of impeding the development of new ("normal") on-line exploitation of works. It would give libraries an undue privilege over other net content providers.

Why are there exceptions for research purposes?

To accommodate Member States' existing rules on exceptions for research and education and rules at the international level. However, a compromise had to be found between some parties calling for wider exceptions and others calling for narrower exceptions in view of the digital environment, which makes copyright infringements easier and potentially more damaging. The compromise used in the proposal is identical with the language of the Berne Convention and of the database protection Directive (96/9 - see IP/96/171). Providing for wider exceptions on these topics would therefore violate the Berne Convention and not be in line with the acquis communautaire. However, the draft gives Member States two additional options for exceptions, one on "criticism and review", the other on use by disabled persons. These two exceptions are based on existing Member States' legislation.


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