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‘Fair Balance’: EU Top Court Upholds Bloc’s New Online Copyright Rules

The case claimed the new copyright law might lead to online censorship, but the court saw enough "safeguards" to prevent that.

LONDON — The European Union’s highest appeals court has upheld hard-fought copyright reforms that were hailed as a landmark victory for creators and rights holders when they were first passed in 2019.

Poland was seeking to annul Article 17 of the European Union’s so-called Copyright Directive — a key piece of legislation that requires user-generated-content (UGC) services like YouTube to screen for pirated material or risk direct liability. The Polish government argues that the legislation infringes freedom of expression in a way that is illegal.

On Tuesday, the Court of Justice of the European Union (CJEU) rejected that action, ruling that the legislation contains “appropriate safeguards” to protect UGC users’ “right to freedom of expression” and struck “a fair balance” between free speech and “the right to intellectual property.”

Representatives of the music industry welcomed the court ruling, with IFPI CEO Frances Moore saying it sends a “clear signal” to EU member states still yet to implement the copyright directive to do so “faithfully in order to help create a fair and well-functioning online environment for the creative industries in Europe.”

Helen Smith, executive chair of European independent labels body IMPALA, said that “correctly implemented, Article 17 will rebalance relations between rights holders and platforms.”

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When the European Parliament passed the Copyright Directive in 2019, following years of fierce lobbying from the music business and tech giants like Google, the 27 EU countries were given two years to incorporate its terms into their national laws.

Under earlier EU law, sites like YouTube were merely required to take down particular files when rights owners filed notice, similar to the U.S. system under the Digital Millennium Copyright Act – an arrangement that rights owners have long complained gives sites too much leeway to profit from creative works without paying fair prices.

Article 17 flipped the script, requiring services to actively prevent users from uploading such materials. That provision, fiercely opposed by tech giants at the time, effectively requires large platforms to use automated filtering technology or risk huge copyright liability, representing a major change in how copyrights are policed on the internet.

Platforms that rely on user-generated content, such as YouTube or Facebook, must make “best efforts” to remove unlicensed content, take concrete steps to ensure it wasn’t uploaded again and reach “fair remuneration” deals with rights holders. The Directive also places new transparency obligations on platforms around the reporting of how they use music.

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The deadline for EU member states to pass those reforms was last June. Only a handful of countries had implemented the copyright laws by then. (It’s not unusual for countries to run late when implementing changes in policy.)

To date, 16 EU countries have transposed the directive, including France, the Netherlands, Spain, Hungary, Italy and Croatia. The 11 remaining holdouts include Sweden, Finland, Cyprus, Bulgaria, Belgium and Portugal, all of which are in varying stages of implementing the new laws.

The United Kingdom left the European Union on Jan. 31, 2020, and the U.K. government has said that it will not be adopting the copyright directive. Legal experts tell Billboard that questions remain over whether the legislation implemented elsewhere in Europe applies to any contract signed under U.K. law.

Germany adopted the directive last year. At the time, more than 1,300 German acts, including Rammstein and Helene Fischer, criticized the German government for including controversial provisions that opponents said would exempt platforms from having to obtain permission from the rights holder for using song clips of under 15 seconds (considered “minor use”).

German music execs welcomed other elements of the legislation, most notably the requirement for user-generated content platforms like YouTube and Facebook to license content from rights holders and remove infringing material, which effectively ended safe harbor provisions.

Poland, which has a history of challenging European Union legislation, argued that those requirements could undermine freedom of expression by forcing platforms to impose new draconian blocking measures. In Tuesday’s decision, the CJEU called Article 17 a “proportional” response that was justified by the need to protect copyrights.

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In particular, the court noted that the law laid down a clear and precise limit on the measures that may be taken or required. For instance, Article 17 specifically bars any filtering measures that block the upload of lawful content, including parody or pastiche, the court said.

“A filtering system which might not distinguish adequately between unlawful content and lawful content, with the result that its introduction could lead to the blocking of lawful communications, would be incompatible with the right to freedom of expression and information and would not respect the fair balance between that right and the right to intellectual property,” the court wrote.

Tuesday’s court judgement “reiterates that the days of any existing or future digital upload service claiming safe harbor while using and profiting from music are done and dusted,” John Phelan, director general of the international music publishing trade association ICMP, tells Billboard.

“Addressing how these multi-billion customer services license, pay and report on music usage has by far the biggest potential to boost the pay of all songwriters, composers and publishers in the streaming environment,” says Phelan.

Responding to the court’s verdict, a spokesperson for YouTube said the platform “has long been a leader in copyright protection” and it supports the goals of Article 17 “to reconcile the interests of viewers, rights holders, artists, creators and platforms.” The Google-owned company said it will “examine the specifics” of Tuesday’s ruling “to understand how this impacts our viewers and the platform.”

Dr. Harald Heker, CEO of German collection society GEMA, which represents more than 80,000 members, said the ruling provide “a fair balance” between various fundamental rights. “The focus must now be to ensure that the major platform operators actually meet their responsibilities and that the situation of creators will finally improve noticeably.”

Read the whole ruling below: