Things to come – what to expect from Germany’s current copyright reform?

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By 7 June 2021, the EU Directive 2019/790 on Copyright and Related Rights in the Digital Single Market must be transposed into German law. For the wider public, it is only associated with the keyword “upload filter”. In fact, the directive consists of a whole bundle of highly diverse regulatory issues, some of which will have a direct impact on the daily practice of companies dealing with copyright-protected works or services.

Introduction

It has not been long since the Copyright Act was last amended. The second reform of copyright contract law dates from 2016, the amendment on copyright and the knowledge society from 2017 and the implementation of the Marrakesh Directive for the benefit of persons who are blind or visually impaired from 2018. Nevertheless, this field of law does not come to rest. Another copyright reform is due in Germany in 2021. It will transpose the so-called DSM Copyright Directive (2019/790) from April 2019 on copyright and related rights in the Digital Single Market (hence the acronym) into German law. Time is of the essence: by 7 June 2021, the transposition must enter into force.

Overview of the regulations to be transposed into German law under the Directive

Although this Directive is basically a whole bundle of copyright directives with highly diverse areas of regulation, it was only a year before its adoption that it was noticed by a broader public because of the debate about the so-called ‘upload filter’ contained in Art. 17 of the Directive (at that time in Art. 13). In fact, only the word ‘upload filter’ was new. The regulation transposes into a formal law an existing legal situation which European and German case law had long since formulated in a binding manner: that of ‘notice and staydown’ (as the ECJ first stated back in 2011 in Case C-324/09 – L’Oréal / eBay, para. 131): It concerns operators of online platforms where users can upload content (the Directive speaks of ‘online content-sharing service provider’), i.e. the YouTubes and Facebooks of this world. If a rights holder notifies the operator of such a platform of an infringement committed by an uploading user, the operator must not only ensure that access to such infringing content is blocked, but is also obliged to prevent similar content from being uploaded again.

In addition to Art. 17, which has become highly controversial, the Directive also contains much less publicly discussed but nevertheless highly important regulations, namely

  • on ‘text and data mining’ (TDM) in Art. 3 and 4,
  • on use of works and other subject matter in digital and cross-border teaching activities in Art. 5,
  • on the preservation of cultural heritage in Art. 6,
  • on the use of out-of-commerce works and other subject matter by cultural heritage institutions in Art. 8 to 11,
  • on collective licensing with extended effect in Art. 12,
  • on access to and availability of audiovisual works on video-on-demand platforms in Art. 13
  • on images of works of visual art in the public domain in Art. 14,
  • on a neighbouring rights for press publications concerning online uses in Art. 15,
  • the participation of publishers in levies for reprography and private copying in Art. 16, and
  • on copyright contract law in Art. 18 to 23.

In addition, another directive is to be transposed at the same time, the so-called CabSat Directive (2019/789), which deals with the exercise of copyright and related rights applicable to certain online transmissions of broadcasting organisations and retransmissions of television and radio programmes.

On the transposition of the directive in Germany:
The “online content sharing platforms”

At the time this article appears, it is still uncertain whether the deadline will be met for all parts of the Directive. Just as in the European debate, the complex around the liability of online content-sharing service providers is the most controversial in the German transposition. It is not yet foreseeable where the journey will lead here, as the draft bill currently on the table tries to get by without an ‘upload filter’ as far as possible, although the directive actually prescribes it as a rule.

In particular, it will play a role here how the new copyright exceptions (required by the Directive) in favour of parodies, caricatures and pastiches (Section 51a draft German Copyright Act – hereinafter UrhG) will be linked to the liability rules in future.

These new regulations have great economic significance for rights holders and platforms alike – both with regard to the question of which uses can be licensed by them and which may be used freely for mere statutory remuneration, and of course with regard to liability for unauthorised offers.

In future, it will be a matter for every rights holder to optimally adapt to the new situation in order not to fall by the wayside economically by third party uses of protected content on online content-sharing platforms.

Transposition into German Law – the Other Subjects of Regulation

In contrast, most of the other regulations are much less controversial, especially since many of them are already laid down in current German copyright law, such as rules for use in the context of digital teaching and learning (Sections 60a and 60b UrhG), text and data mining (Section 60d UrhG), uses by cultural heritage institutions such as libraries, archives and museums (Sections 60e and 60f UrhG), publisher participation in statutory remuneration claims (Section 63a UrhG, which has been suspended since a decision by the BGH in I ZR 198/13 – Publisher Participation) or out-of-print works (Sections 51 and 52 Collecting Society Act – VGG), although in each of these fields the looming changes have caused much debate among the respective interested parties.

The curious case of the neighboring right for press publishers

This also applies to the neighboring right for press publishers (Sections 87f to 87h UrhG), which has been enshrined in German law since 2013, but was recently declared null and void by the European Court of Justice in its current form (in Case C 299/17) because Germany had failed at the time to officially inform the EU about the legislative project. So here we have the strange situation that a regulation that already existed in Germany, even though it has been largely been ineffective, is abolished by the ECJ because of a violation of EU law, only to have have it reintroduced it in a new form immediately afterwards due to a requirement of the EU legislator.

Collective licensing with extended effect

This is a legal figure (that has even in Germany come to be known under the acronym ECL for ‘Extended Collective Licensing’) that would not necessarily have had to be transposed into German law. The concept originates from Scandinavian law and has developed there in the same area in which statutory remuneration claims are applied in Germany, e.g. for the remuneration of private copying. One speaks of ECL when a collecting society is legally entitled to administer the rights even of those who have not signed an administration agreement with it. In fact, we know similar rules in Germany in the area of statutory remuneration claims. If a collecting society asserts such claims, it is also presumed under current German law (Section 49 VGG) that it administers the rights of all rightholders. According to the draft bill, ECL is now also to be introduced in Germany in connection with the licensing of online content-sharing service providers, because statutory remuneration is excluded there under the Directive. However, the European legislator has set very tight limits on the application of this model precisely because of the danger that ECL interferes with the free and individual exercise of rights. It remains to be seen whether the emerging legislative solution for Germany will stand up to these requirements. Rights holders will have to be particularly vigilant here.

Caution with contracts for copyright works and other protected matter

The large and important complex on copyright contract law is largely based on the model of German law (Sections 32 to 41 UrhG), but in parts even goes beyond it, so that here all companies that use copyright-protected works and performances on the basis of contracts should check what new legal obligations they will face in future, because some obligations also relate to existing contracts and, under certain conditions, even to those for which the parties have agreed on a non-European contract law to be applicable to their agreement.

Conclusion

Six months before expiry of the deadline, it is not yet clear how the German implementation will proceed. Major political decisions are only now being taken. Therefore, extreme vigilance is required for all companies whose business is in any way copyright related. For them, it will not least be a matter of adapting administratively to the changed requirements, especially of copyright contract law. In view of the immense economic importance that online content-sharing service platforms have acquired, companies that deal with copyright-protected content in particular will also have to assess the impact of the new regulations in this area on existing business models. This will require an analysis in each individual case.

The never-ending Unitary Patent saga continues …

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The efforts to create a unitary EU patent and a pan-European patent court have experienced both setbacks and new impetus in the eventful past year. 2021 is likely to bring further important decisions.

In the B&B Bulletin, we have already repeatedly reported on the unitary patent project. While the European patent system has so far only provided for a centralized granting procedure that results in a bundle of national patents, in future the European Patent Office shall also grant a pan-European patent with unitary effect in all participating member states (currently all EU members with the exception of Spain and Croatia). In addition, these patents are to be enforceable in the future before a Unified Patent Court (UPC) against patent infringers with effect for all participating member states.

The ideas for such a unitary patent already existed when the European Patent Office was founded in the 1970s. Efforts have intensified over the past ten years, and since 2013 the relevant agreements to implement these ideas have been in place and have already been ratified by numerous EU member states. However, German ratification, which is essential for entry into force, was held up in 2017 by a constitutional complaint. In March 2020, the Federal Constitutional Court ruled that the German bill for implementing the ratification would have required a two-thirds majority in parliament. In fact, the approval in the parliament had been unanimous, but too few parliamentarians had been present for the vote.

Another setback in 2020 was related to Brexit: While the UK under Theresa May’s government had always announced that it would stick to the unitary patent and the Unified Patent Court, Boris Johnson’s successor government announced in February 2020 that the idea of a unitary European patent system was incompatible with Brexit, and in July 2020 it withdrew UK ratification. It was thus clear that the unitary patent would start without the UK, if at all.

The fact that one of the economically strongest European countries will not participate in the unitary patent system is a burden on the acceptance and significance of the unitary patent, especially since the UK was originally one of its most ardent advocates and also contributed greatly to the realization of the project before Brexit. In addition, the UK’s withdrawal creates significant organizational and legal challenges, not the least because London (along with Paris and Munich) is explicitly designated in the agreements as one of the three seats of the Unified Patent Court.

Despite the withdrawal of Great Britain, the remaining member states have declared their intention to move ahead with the project. Several countries have already signaled their interest in taking over the London seat. Italy, for example, has put Milan into play. France has stated that the tasks of the London branch could also be taken over by Paris, and Germany has proposed a split between Paris and Munich. It is to be expected that, despite the apparent continuing political will to proceed, we will see controversial discussions over the course of the year about how to move ahead. The agreements may also need to be amended to reflect the UK’s withdrawal.

In Germany, the legislative process restarted relatively quickly after the negative decision by the Federal Constitutional Court. In November 2020, the German parliament passed the bill again, this time with the necessary two-thirds majority, and the Bundesrat chamber followed unanimously in December 2020.

However, before the bill could enter into force, two new constitutional complaints were received by the Federal Constitutional Court on December 18, 2020. It is not yet publicly known who the plaintiffs are this time and on what arguments they rely. Depending on whether the Federal Constitutional Court accepts the constitutional complaints for decision, German ratification could be delayed once again. In this respect, 2021 will most likely be a year of important decisions that set the further course for the unitary patent project. We will keep you informed of all developments.