On April 15, the European Union's Directive on Copyright in the Digital Single Market (the directive) received approval from its member states. The directive was proposed to ensure that artists, authors and journalists are paid fairly for their work by tech entities that profit from such work. Critics fear, however, that it will result in significantly less freedom of speech on the internet.

The directive will require major changes for online content sharing services. Under existing law, services are immune from liability for copyright infringement resulting from user-posted content so long as they act promptly to remove material when an objection is raised. This regime is similar to the “safe harbor” provision of the United States' Digital Millennium Copyright Act of 1998. The directive, however, will require for-profit content sharing services to set up filters to prevent the upload of content containing copyrighted material. Companies will be liable for user-posted content unless their filtering systems are deemed adequate. The directive instructs member states to consider the size of the service, the amount of content uploaded and the effectiveness of the filtering system “in light of technological developments,” but otherwise provides little guidance as to when a system is sufficient to avoid infringement liability. This uncertainty leaves open the possibility that businesses will filter in an overly aggressive manner to ensure compliance, which may in turn create an unintended standard for others to attain.

The directive will also require companies to pay license fees to use material from press publications. Press publishers (i.e., news media) will no longer have to show that the individual authors assigned them copyright in the materials they publish—the directive grants the publisher with direct copyright control over the material. While hyperlinks will be permitted, payment must be made to use previously published material. This would potentially affect not only content-hosting platforms like YouTube or Pinterest, but also news aggregators, social networking sites like Facebook or LinkedIn, blogs that include others' online content in their discussions, and the like. Perhaps in recognition of the breadth of this requirement as well as the transient nature of typical news reporting, the right of press publishers to a licensee fee expires one year from initial publication. This right to a license would apply not only to full articles, but also to snippets of previously published material, so long as the snippet was not “insubstantial,” such as individual words or very short quotes. As member states will need to establish criteria for judging “insubstantiality,” this again creates an uncertain regulatory scheme that might stifle the sharing of online information.

The directive carves out exceptions to liability for text and data mining for scientific research, some noncommercial use by educational establishments, cloud storage services, nonprofit encyclopedias such as Wikipedia, and nonprofit educational or scientific services. There is also an exception to press publisher licensing for legitimate private noncommercial use by individual users, although there is no clarity as to the contours of this exception.

The directive has the potential to shape online activity both inside and outside of the European Union, much in the way the 2018 General Data Protection Regulation has impacted data collection worldwide. Most companies will simply adopt practices to achieve compliance on a worldwide basis, rather than attempt to comply with different sets of rules. The cost for compliance with this section could be considerable. Google, the owner of YouTube, said in a Nov. 7, 2018, blog posting that it spent more than $100 million on staffing and systems for its copyright management system that compares uploads against a database of copyrighted content, has removed more than 3 billion uploads in response to complaints from copyright owners, and has paid rights holders more than $3 billion.

Moreover, it is likely that automated filtering systems will be unable to distinguish fair uses of copyrighted material, such as quotations for criticism or review, caricature or parody or news reporting, which member states can exempt from liability under existing European standards that remain unchanged. Critics fear the resulting overbreadth of the ban could impact criticism, satire, and scholarly work; this led to an online petition by Change.org against adoption of the new rules that has received more than 5 million signatures to date, and to tens of thousands marching in protest throughout Germany. Indeed, Poland's leader has suggested that he will not implement the directive, calling it a threat to freedom of speech.

The actual scope of these new regulations remains to be seen. Member states have two years to change their national laws to comply with the directive, and it is likely that the specific rules each enacts will not be in complete agreement. Additionally, the magnitude of liability remains uncertain. It is clear, however, that companies should begin considering how they will ensure compliance with these new copyright rules.

Thomas McNulty, of the Cambridge Massachusetts law firm, Lando & Anastasi, handles all phases of intellectual property protection, with a focus on litigation. He can be reached at 617-395-7040 or [email protected], and his blog on intellectual property litigation in Massachusetts can be found at https://dmassiplitigation.com/.