publication date: January 05, 2023
The Directive on Copyright and Related Rights in the Digital Single Market (DSM Directive) is the most important directive harmonizing copyright in the European Union since the Directive on Copyright in the Information Society.
The purpose of this Directive is to adapt EU copyright law to the requirements of the digital economy. It contains new forms of fair use, i.e. the right to explore texts and data, and new forms of use for educational purposes. It also strengthens the position of authors in contractual relations, e.g. imposing a number of obligations to guarantee them adequate remuneration, which is a very important issue. The Directive also aims to meet the assumptions contained in the EU Treaty regarding the establishment of the internal market and the introduction of a system ensuring undistorted competition in the internal market.
The rapid development of digital technologies is changing the way works and other subject matter are created, produced, disseminated and exploited. New business models and new entities are constantly emerging. Appropriate legislation should take into account future developments so as not to constrain technological developments. The objectives and principles set out in the EU copyright framework remain robust. However, there is still a problem of legal uncertainty for both rightholders and users regarding certain uses, including cross-border uses, of works and other subject matter in the digital environment. In the field of research, innovation, education and preservation of cultural heritage, digital technologies enable new uses that are not explicitly covered by existing EU rules on exceptions and limitations.
Recitals 6 and 10 of the DSM Directive indicate that the exceptions and limitations provided for in the Directive aim to strike a fair balance between the rights and interests of authors and other rightholders on the one hand, and the rights and interests of users on the other. EU law provides for certain exceptions and limitations to scientific research use that may apply to text and data mining activities. However, these exceptions and limitations are optional and not fully adapted to the use of technology in scientific research. In addition, where researchers have lawful access to the content, for example through subscriptions to publications or open access licenses, the terms of the license may exclude text and data mining.
Recital 8 of the Directive describes the possibilities for the automatic mathematical analysis of information in digital form, such as texts, sounds, images or data, commonly referred to as text and data mining. Text and data mining enables the processing of large amounts of information to gain new knowledge and discover new trends. While text and data mining techniques are prevalent throughout the digital economy, it is widely recognized that text and data mining can be of particular benefit to researchers and thus foster innovation. Such technologies benefit universities and other research organizations as well as cultural heritage institutions as they too can carry out research as part of their core business. However, such organizations and institutions in the Union face legal uncertainty as to the extent to which they can carry out content analysis through text and data mining.
Recital 18 of the Directive emphasizes that, in addition to their importance for scientific research, text and data mining techniques are also widely used by private and public entities to analyze large amounts of data in various spheres of everyday life and for various purposes, including by state services, to take complex business decisions and to develop new applications and technologies. Rightholders should continue to be able to license uses of their works or other subject matter that go beyond the scope of the mandatory exception for text and data mining for scientific research purposes.
Recital 16 of the DSM Directive describes that due to the potentially large number of requests for access and downloads of works or other subject-matter, rightholders should be able to take appropriate measures where the security and integrity of their systems or databases may be at risk. Such measures may be used, for example, to ensure that only those with lawful access to the data of rightholders can access it, including through IP address authentication or user authentication. Those measures should be proportionate to the risk and should not go beyond what is necessary to achieve the objective of ensuring the security and integrity of the system and should not hamper the effective application of this exception.
Recital 24 of the Directive provides for fair compensation for the digital use of works and other subject matter protected by law. Member States should be free to provide such compensation. When determining the level of fair compensation, due account should be taken of, inter alia, the educational objectives of the Member States and the detriment to rightholders. According to recital 73 of the Directive, the remuneration of authors and performers should be appropriate and proportionate to the actual or potential economic value of the rights granted under the license or rights transferred, taking into account the contribution of the author or performer to the work or other subject-matter as a whole and all other circumstances of the case, such as market practices or the actual exploitation of the work. A lump sum may also constitute pro-rata remuneration, but should not be the rule.
Recital 37 of the Directive indicates that, given the diversity of works and other subject matter in the collections of cultural heritage institutions, it is important that the licensing mechanisms and exception or limitation provided for in this Directive are available and can be applied in practice to different types of works and other protected subject matter, including photos, software, phonograms, audiovisual works and unique works of art, including where they have never been commercially available.
Recital 48 of the Directive mentions the obligation to ensure that appropriate safeguards are put in place and applied in a non-discriminatory manner to protect the legitimate interests of rightholders who have not been authorized by the Member States to authorize the licensing organisation. In particular, to justify the extended effect of these mechanisms, an organization should, due to the mandates given to it by rightholders, be sufficiently representative of the types of works or other subject matter covered and the rights that are licensed. Member States should define the requirements that these organizations must meet in order to be considered sufficiently representative, taking into account the category of rights that the organization manages, the organization’s ability to manage rights effectively, the creative sector in which it operates and the fact whether the organization includes a significant number of rightholders for the relevant type of works or other subject-matter who have granted authorization to grant licenses for appropriate uses. In order to ensure that rightholders can easily regain control of their works and prevent uses of their works that could be detrimental to their interests, it is essential that rightholders have a real possibility to opt out of such mechanisms in relation to their works or other subject matter for all uses and works or other subject matter, or for specific uses and works or other subject matter, including before and during the term of the licence.
Recitals 51 and 52 of the Directive underline that video-on-demand services can play a decisive role in the dissemination of audiovisual works throughout the Union. However, the availability of such works, in particular European works, through video-on-demand services remains limited. Contracts for the online exploitation of such works may be hampered by problems with the licensing of rights. In order to facilitate the licensing of rights in audiovisual works through video-on-demand services, Member States should put in place a negotiation mechanism allowing parties wishing to conclude a contract to use an impartial body or one or more mediators.
A free and pluralistic press is essential to ensure quality journalism and citizens’ access to information, as stated in recital 54 of the Directive. The press makes a fundamental contribution to public debate and the proper functioning of a democratic society. The wide access to press publications on the Internet has led to the emergence of new online services, such as news aggregators or media monitoring services, where the reuse of press publications is an important part of their business models and revenue stream. Recital 55 of the Directive further addresses the contribution of the new online press to the accessibility of information. It is therefore appropriate to provide for harmonized legal protection of press publications at Union level with regard to online uses by information society service providers, leaving unchanged the existing copyright provisions in Union law applicable to the private or non-commercial use of press publications by individual users, including in the case of online access to press publications. Such protection should be effectively guaranteed by introducing into Union law copyright protection for the reproduction and making available to the public of press publications published by publishers established in a Member State in respect of online uses by information society service providers.
Recital 61 of the Directive draws attention to the development of the availability of various content via the Internet. Online services are a means of providing wider access to cultural works and works and offer the cultural and creative sectors great opportunities to develop new business models. However, while they allow for diversity and easy access to content, they also present challenges when copyrighted content is posted without the prior permission of rightholders. There is legal uncertainty as to whether providers of such services fall within the scope of activities covered by copyright and need to obtain authorization from rightholders for content uploaded by users who do not hold the relevant rights to the content uploaded, subject to the application of exceptions and limitations provided for in Union law. Such uncertainty affects the ability of rightholders to determine whether or not their works and other subject-matter is being used and, if so, under what conditions, as well as their ability to obtain appropriate remuneration for such use. Therefore, it is important to support the development of a licensing market between rightholders and online content sharing service providers. Licensing agreements should be fair and strike a reasonable balance for both parties.
Pursuant to Recital 68 of the Directive, online content sharing service providers should be transparent to rightholders regarding the steps taken in cooperation. As online content-sharing service providers may take various actions, they should provide rightholders, upon request, with relevant information on the type of actions taken and how they were carried out. Such information should be sufficiently detailed to ensure sufficient transparency for rightholders, without prejudice to the business secrets of online content-sharing service providers.
Before legislative work on the act implementing this Directive began in Poland, the Polish government questioned the validity of Art. 17 of the Directive. This article was believed to impose content filtering on online platforms and thus significantly lengthened the implementation process. There was indicated alleged incompatibility of the said article with Art. 11 of the Charter of Fundamental Rights, which provides for the right to freedom of expression and information. The problem with this provision is that it should take into account the interests of both rightholders, collective management organizations representing the interests of rightholders, as well as users, entrepreneurs and digital platforms. On April 26, 2022, the CJEU did not share the arguments of the Polish government regarding the invalidity of Art. 17 of the Directive and stated that it is possible to take into account the interests of all the parties listed above, and considered Article 17 of the Directive to be valid. On the other hand, the CJEU used the arguments of the Polish side for the proper interpretation of this article. The CJEU pointed out that it is unacceptable to use filtering systems that are unable to distinguish between infringing and non-infringing content. In essence, therefore, the CJEU very significantly limits the scope of the use of automated content filtering systems. The imposition of content monitoring obligations may, according to the CJEU, constitute a serious burden for Internet service providers and thus constitute an excessive restriction on the freedom to conduct business. Therefore, the CJEU stated that service providers should be free to define specific measures so that they can adapt them to their needs and possibilities and the solutions available on the market.
In the meantime, work was underway on a bill that would implement the Directive into the Polish legal order. Public consultations by correspondence were held in August and September 2020. They took this form due to the COVID-19 pandemic. 40 organizations participated in them.
In June, the European Commission published guidelines for the implementation of Art. 17 of the Directive.
In October 2021, the project was entered into the list of works of the Polish Council of Ministers.
The draft was published on the website of the Government Legislative Center on June 22, 2022, i.e. after the Polish government’s complaint was dismissed by the CJEU.
An important change is related to the introduction of the provisions on fair use in text and data mining (TDM) to the Polish act. The concept of text and data mining is defined in Art. 6 sec. 1 point 21 of the draft act and means their analysis using an automated technique used to analyze texts and data in digital form in order to generate information including, in particular, patterns, trends and correlations. According to some lawyers, the current rules on fair use are sufficient for legal data mining, however, this has remained the subject of controversy and created legal uncertainty. The use by authorized entities of this form of fair use depends on their fulfillment of certain conditions. The use of works should therefore be for text and data mining purposes only (Article 3(1) of the DSM Directive) and only for research purposes (Article 3(1) of the DSM Directive). The precondition for using the exception, in accordance with recital 14 of the Directive, is the legal access of entities listed in Art. 3 sec. 1 of the DSM Directive to explored content, based on an open access policy, as well as legally acquired or licensed access, including, for example, in the form of subscriptions or open access licenses.
The possibility of using digital technologies for text and data mining is of great importance not only for research organizations, but also for economic entities that use the results of mining in various spheres of everyday life and for various purposes, such as making complex business decisions, developing new business models, developing innovative applications and technologies. Therefore, Art. 4 of the DSM Directive introduces a research exception to copyright in the form of text and data mining, also for commercial purposes. Recital 18 of the DSM Directive emphasizes the uncertainty as to whether reproductions and downloads for the purposes of text and data mining are allowed under the current legal status. The aim of the Directive is therefore to increase legal certainty and stimulate the development of innovation in the private sector.
Art. 4 of the DSM Directive introduces a new form of fair use, analogous to that established in Art. 3, except that it includes text and data mining for commercial purposes. It follows from the content of the provision and recital 18 of the Directive that any entity, in particular a commercially profiled one, is entitled to conduct text and data mining under the discussed exception.
The objective scope of fair use in the form of text and data mining for commercial purposes is indicated in Art. 4 sec. 1 of the DSM Directive, which provides for an exception to the rights provided for in Art. 5 letter a) and Art. 7 sec. 1 of Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases, in art. 2 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonization of certain aspects of copyright and related rights in the information society, in art. 4 sec. 1 letter a) and b) of Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs and in art. 15 sec. 1 of the DSM Directive. The scope of works that can be explored on the basis of the above provision therefore coincides with the scope provided for in Art. 3 of the DSM Directive, and additionally also covers computer programs.
According to Art. 4 sec. 2 of the DSM Directive, reproductions and downloads made under this fair use may be kept for as long as necessary for text and data mining purposes. What is particularly important, the use of this form of fair use is not subject to the fulfillment of any conditions as to the purpose of use, therefore this form of fair use can be used for any purpose.
The DSM Directive extends the admissibility of the use of works and objects of related rights by educational institutions also to digitally expressed works and other subject matter for the purpose of using them in the online environment – this is a didactic exception. It specifies the conditions for the legal use of this form of fair use – the use of works and other protected objects for the purpose of illustrating as part of teaching, to the extent justified by the non-commercial goal to be achieved. It is possible to achieve it after meeting the conditions set out in the Act.
Article 6 of the Directive allows cultural heritage institutions to make copies of works and objects of related rights permanently in the collections of these institutions, for the purpose of their preservation and to the extent necessary for such preservation. The discussed form of fair use has already been regulated in the Copyright Act, but has a narrower scope than that resulting from the DSM Directive. Article 28 of the Copyright Act lists among the beneficiaries educational institutions, universities, research institutes, institutes of the Polish Academy of Sciences, libraries, museums and archives. On the basis of the DSM Directive, cultural heritage institutions are a publicly accessible library or museum, archive or film heritage institution or sound heritage institution. As can be seen, the scope of the DSM Directive is wider than that of the Polish act.
Article 12 of the Directive is optional. It sets out the rules on which Member States may introduce in their copyright systems the possibility of granting the so-called collective licenses with extended effect, i.e. licenses that authorize the use of works or objects of related rights also by those entitled who have not authorized the granting of such a license. Obtaining organizations’ extended collective licensing and similar mechanisms can “enable agreements in those areas where rightholder-based collective licensing does not provide an exhaustive solution to cover all works or other subject-matter to be used”. Such mechanisms “complement the collective management of rights based on the individual authorization of rightholders, providing users in some cases with complete legal certainty”, while allowing rightholders “to benefit from the lawful use of their works” (recital 45 of the Directive). There will be utilised the institution of the representative collective management organization referred to in Art. 10 of the Act on collective management. It should be recognized that among all collective management organizations currently operating on the Polish market (after the withdrawal of permits in several cases), each is “representative” within the meaning of the Directive in terms of the scope of the repertoire it manages. However, the Act on collective management sets the bar of “representativeness” even higher in the case of overlapping representation ranges of several organizations – then only one of them is representative in the intersecting scope and it is the one that “represents the largest number of persons entitled under a collective management agreement copyright or related rights and representation agreements” (Article 10(2) of the Act on Collective Management). In sec. 2 the provision provides for an opt-out mechanism for entitled persons, in accordance with Art. 12 sec. 3 letter c) of the Directive. Therefore, the rightholders will be able “at any time and with immediate effect”, by way of a declaration submitted to a collective management organization, to exclude their works or objects of related rights from the scope of extended collective licences. Section 3 provides for the information obligation, in accordance with Art. 12 sec. 3 letter d) of the Directives. Collective rights management organization, wishing to grant an extended collective licensing (“ECL”) shall “within a reasonable time” before granting it make public that it intends to grant such a license, and then that it has granted such a license and, in any case, that right holders may make a declaration that their works are exempt from ECL (opt -out).
Article 15 of the DSM Directive introduces a new category of exclusive right into Polish copyright law – the right of a press publisher to exclusive online exploitation of its press publications by internet platforms defined as “information society service providers”. In the current legal status, publishers are not entitled to such a separate right – exclusive rights to exploit online press publications can only be acquired in a derivative manner, i.e. under copyright purchased from the creators (authors) of press publications. Such a right is to last for a relatively short period of time – 2 years from the publication of a given press publication (counting from January 1 of the following year) and will not apply to those published before June 6, 2019. The DSM Directive defines a press publication as “a collection composed mainly of literary works of a journalistic nature”, which, among others, “constitutes a separate entity within a publication that is periodically or regularly updated under one title, such as a newspaper or magazine” and “is published in any medium at the service provider’s initiative, responsibility and control” (Article 2(4) of the DSM Directive). The Act, on the other hand, is to define this concept as “a collection of works or objects of related rights, composed mainly of journalistic textual works, constituting a separate whole within a periodical or regularly updated publication under one title, such as a newspaper or magazine, distributed for information purposes in any form and in any way as part of the business activity of the entity that exercises actual and legal control over the selection of the content distributed”.
The purpose of introducing this new exclusive right was to improve the situation of press publishers in the era of mass use of their publications by various types of websites, without paying due remuneration. However, some lawyers postulate that very short excerpts should be included with the link to the publication, so that it allows users to use Internet links effectively and consciously.
The content of the new related right will be specified in sec. 2 of the act. This right will be available to “publishers” in two fields of exploitation: reproduction and public access in such a way that everyone has access to publications at a place and time of their choice. This means, among others, that pursuant to Art. 15 sec. 2 of the DSM Directive, this right cannot be effectively invoked against authors (and other rightholders) in order to prevent them from using their works regardless of the press publication that includes these works. This also applies to situations where these authors have granted publishers only a non-exclusive license to use their works in a press publication.
Article 17 of the Directive can be assessed as quite controversial one. The EU legislator, aware of the importance of this regulation, in para. 10 obliged the European Commission to issue guidelines as to the correct implementation and application of the entire Art. 17, without, however, setting a deadline for the Commission to fulfill this obligation. The guidelines in question were issued by the Commission on June 4, 2021. Article 17 of the DMS Directive provides for specific regulations regarding the use of content protected by copyright or related rights by “online content sharing service providers”. The main or one of the main purposes is to store and give public access to a large number of copyrighted works or other subject-matter uploaded by the users of those services, which they organize and promote for profit. The Directive specifies that this category does not include providers of such services as “non-profit online encyclopedias, non-profit scientific and educational repositories, open source development and open source sharing platforms, providers of electronic communications services as defined in Directive (EU) 2018/1972, online marketplaces and cloud services for enterprises and cloud computing services that allow users to upload content for their own use”.
Online content sharing service providers engage in public communication (distribution) of works when they “provide public access to copyrighted works or other subject matter posted by their users”.
The bill defines an online content-sharing service provider as “a provider of information society services whose main or one of the main purposes is to store and provide public access to a large number of works or subjects of related rights posted by users of these services, whose works or subjects of rights related activities are organized and promoted by him for profit”. Such sharing will be possible only with the consent of the authorized person. Suppliers are to be covered by copyright liability regulations. They will be able to release themselves from such liability if they prove that:
1) they exercised “the utmost diligence” (according to the Directive – “best efforts”) to obtain the consent of the rightholder (paragraph 1 point 1),
2) “have exercised the utmost diligence – in accordance with high standards of professional diligence in the sector – to ensure the lack of access to individual works for which the rightholders have provided the service providers with relevant and necessary information” (paragraph 1 point 2) and
3) acted “immediately after receiving from the entitled persons a duly justified request to block access to the works covered by the request or to remove them from their websites, and they also exercised the utmost diligence to ensure that such works would not be accessed in the future, on the terms set out in point 2”.
More lenient conditions for such an exemption are provided for new suppliers.
According to Art. 17 sec. 9 of the Directive, the drafted Article 218 of the Copyright Act obliges providers to provide users of their services with “an effective and efficient mechanism for submitting complaints and redress” in the event of disputes regarding the blocking of access to works posted by them or their removal. The provision expressly requires that the rightholder who requests such blocking “duly substantiates” his request. What is particularly important, disputes are to be resolved “without undue delay”, and the final decision of the provider to block a given content is to be subject to “human control”. Therefore, it is one of the mechanisms provided for in the Directive to protect the public interest – the right to freedom of expression and access to information. Under the Directive, it is expressly permitted to resolve such disputes also by mediation.
Implementation of Art. 18 of the DMS Directive will take place by modifying art. 43 of the Copyright Act, which in para. 1 establishes a general right to remuneration, unless otherwise agreed by the parties. Section 2, however, establishes a mechanism for determining the amount of remuneration in a situation where it has not been specified in the contract. Therefore, it will be clarified that the remuneration should be “appropriate and proportionate” to the benefits resulting from the use of the work, taking into account the scope of the right granted. The “appropriateness” criterion should be equated with the “adequacy” referred to in Art. 18 of the Directive.
Article 19 of the Directive requires authors and performers to be entitled to receive information “on the exploitation of their works” (in particular regarding “methods of exploitation, all revenues obtained and remuneration due”) from entities to whom they have licensed or transferred their rights or their legal successors. The purpose of this provision, in accordance with recitals 74 and 75 of the Directive, is to enable the “ongoing assessment of the financial value” of copyright and performance rights. The information provided should be “up-to-date, relevant and comprehensive” from the point of view of the above-mentioned purpose, taking into account the “specificities of each sector”. This provision of the DMS Directive will be implemented in Art. 471 section 1of the Copyright Act.
Article 20 of the Directive requires Member States to introduce mechanisms based on which authors will be able to demand from entities with which they concluded a contract for the exploitation of rights or from their legal successors, appropriate and fair remuneration, if the initially agreed remuneration turns out to be disproportionately low as compared to all subsequent relevant revenues derived from the exploitation of the works or performances. There is already an equivalent of this provision in Polish law – Art. 44 of the Copyright Act.
Additionally, the Directive excludes in Art. 20 sec. 2 the application of sec. 1 with regard to contracts concluded by collective management organizations and independent management entities. The Directive therefore gives priority to collective agreements. In view of the above, it is necessary to add in Art. 44 of the Copyright Act, the provision of para. 2, which will exclude the application of the paragraph in question in relation to contracts concluded with these entities.