Copyright reform: a first look at the Commission's plans for cultural heritage institutions

Over the last week a number of European Commission documents have leaked, painting a relatively clear picture of what the Commission will propose later this month as part of its long awaited copyright reform package. We have seen leaks of the Commission’s Impact Assessment (a working document that compares the impact of different policy options) of the proposal for a Directive on Copyright in the Digital Single Market (‘DSM directive’ - the actual legal text containing new copyright rules) and the accompanying Communication ‘Promoting a fair and efficient European copyright-based economy in the digital single market’ (an explainer for the proposed legal measures).

While there has been quite some controversy around parts of these plans, as Europeana we should be aware of what these plans - if enacted - would mean for the cultural heritage sector. Measures aimed at improving the situation of cultural heritage institutions feature prominently among the issues that the Commission plans to address: Among the 10 proposed interventions are a new, mandatory exception that would allow cultural heritage institutions to digitize their collections and a EU law that would require Member States to implement (extended) collective licensing mechanisms for the making available of Out Of Commerce works.

The proposed directive also contains a new exception for text and data mining (see here for an analysis by COMMUNIA). However, a number of other issues raised by cultural heritage organisations such as e-Lending, remote access to collections via (closed) networks and non-commercial cross-border document supply are not addressed by the Commission in this copyright package. A mandatory exception for preservation! With regards to the issue of digitizing works that are in the collections of cultural heritage institutions the Commission proposal is fully in line with what cultural heritage institutions have asked for. Article 5 (‘preservation of cultural heritage’) of the proposed DSM Directive states that:

“Member States shall provide for an exception to the rights provided from in Article 2 of Directive 2001/29/EC [the InfoSoc directive], Article 5(a) and 7(1) of Directive 96/9/EC [the database directive], Article 4(1)(a) of directive 2009/24/EC […] and Article 11(1) of this directive [this refers to the new neighbouring right for publishers], permitting cultural heritage institutions, to make copies of any works or other subject matter that are permanently in their collections, in any format or medium, for the sole purpose and to the extent necessary for the preservation of such works and or other subject matter.”

While it is not explicitly mentioned in the text this article provides the legal basis for the (mass) digitization of works contained in the collections of cultural heritage institutions in all EU Member States. In many Member States digitization is already allowed under national implementation of article 5(2)c of the InfoSoc directive. However not all national implementations apply to digitization of full collections. Based on the above proposal cultural heritage institutions across Europe would have the same uniform right to digitize works in their collections and the Commission should be applauded for providing a level playing field here.

That being said, the question of whether cultural heritage institutions should be enabled to digitize works in their collections has been a relatively uncontested one. Almost no one disagrees that this is a core task of cultural heritage institutions that should not be hindered by copyright. But as cultural heritage institutions have been pointing out digitizing collections is only a first step towards making them available online. Whereas the question on whether there is a need for copyright rules to make it easier for cultural heritage institutions to make available online the Out of Commerce works in their collections has been much more controversial. Given this controversy, it is not surprising that the Commission is proposing a different, more modest, approach to this issue.

Collective Licenses for Out Of Commerce Works

First of all it needs to be noted that having the issue of access to Out Of Commerce works to be addressed in the Commission’s proposal is a huge success for the cultural heritage sector. Initially this issue was not on the radar of the Commission but sustained advocacy efforts by the sector have managed to have the issue recognised in this reform package. This is a huge success for all of those who have been involved in this process.

To facilitate access to Out Of Commerce works held by cultural heritage institutions the Commission is proposing a licensing based approach. Article 7 (‘use of out-of-commerce works by cultural heritage institutions) of the proposed directive on Copyright in the Digital Single Market states that:

(1) Member States shall provide that when a collective management organisation, on behalf of its members, concludes a non-exclusive license for non-commercial purposes with a cultural heritage institution for the digitization, distribution, communication to the public or making available of out-of-commerce works or other subject matter in the permanent collections of the institution, such a non-exclusive license may be extended or presumed to apply to rightsholders of the same category as those covered by the license who are not represented by the collective management organisation, provided that:

(a) the collective management organisation is, on the base of mandates from from rightsholders, broadly representative of rightsholders in the category of works of other subject matter and of the rights which are the subject of the license.

(b) equal treatment is guaranteed to all rights holders in relation to the terms of the license; and

(c) all rightsholders have at any time, the possibility of objecting to their works or other subject matter being deemed to be out-of-commerce and of excluding the application of the licence to their works or other subject matter

(2) A work or other subject matter shall be deemed to be Out Of Commerce when the whole work or other subject-matter, in all its translations , versions and manifestations, is not available to the public through the customary channels of commerce and cannot be reasonably expected to become so. […]

Leaving aside a number of technical issues with the proposed language (such as the fact that under the language of this proposal works would not qualify as Out Of Commerce if a single translation is still commercially available) the proposed language would be a substantial step forwards for the cultural heritage sector. Once implemented by all Member States there would be collective licensing mechanisms facilitating rights clearance for collections that are currently locked away because of their copyright status.

Collective Licensing vs Exceptions

However comparing this proposed approach to an exception based one (which had been advocated for by most cultural heritage institutions, which most unfortunately has not been analysed in the Commission’s impact assessment) a number of limitations become apparent:

• As implicitly conceded by the European Commission in it’s impact assessment this approach will take a long time before it will show any results on the ground. Where an exception would likely need to be implemented into national law within 2 years of being adopted by the EU legislator, the current proposal requires Member States to pass legislation that enable collective management organisations to include Out Of Commerce works of non-members in the scope of licenses that they grant. Licensing negotiations can take substantial amounts of time, which will likely delay the effects of such legislation for some time. Also there is no requirement on the collective management organisations to issue such licenses (although they will have a strong incentive to do so). In the end this means that while the Commission’s proposal creates the possibility for a solution, it makes the realisation of the solution dependent on the willingness of CMOs to offer licenses that meet the requirements of cultural heritage institutions.
• The approach proposed by the Commission does not apply to all types of Out Of Commerce works. While the impact assessment makes it look like the approach would cover all types of works and other subject matter this is not true. The language proposed by the Commission is limited to types of works for which there is an existing collective licensing practice and where collective rights management organisations are broadly representative. There are substantial differences with regards to the scope of collective rights management across Europe and with regards to the different types of collections held by cultural heritage institutions. By only extending the scope of existing licensing arrangements this approach will create a situation where there will be a new class of works in the collections of cultural heritage institutions that falls in between the solutions offered by the OOC regime established by the DSM directive and the works covered by the Orphan works directive.
• Finally the approach proposed by the Commission does not contribute to more harmonization between the Member States. Article 8 of the proposed DSM directive deals with the cross border recognition of Out Of Commerce works by requiring that such works are registered in a central EU database maintained by EUIPO. Proposing a solution that will result in 28 different implementations via national legislation for a problem that is essentially the same in all of them is very difficult to reconcile with the ambition of the Commission to create a Digital Single Market.

Finally the approach proposed by the European Commision is currently questioned in a case underway at the CJEU. Based on the Advocate General’s opinion in the Soulier and Doke case, extended collective licensing arrangements of the type proposed by the Commission may violate the exclusive rights granted by the InfoSoc directive. While it is out of scope of this analysis to assess the impact of the draft proposed directive on the questions raised in Soulier and Doke, it seems very likely that a decision in line with the AG opinion would severely undermine the approach chosen by the Commission.

The way forward

The above analysis is based on leaked draft versions of the Commission’s plans. While it is still possible that elements of these proposals change it is quite unlikely. Once the Commission has published its proposal for the Directive on Copyright in the Digital Single Market later this month, the directive needs to be approved by the European Parliament and the European Council. While the Commission has indicated that it expects a fast track procedure this is also rather unlikely and we can expect intensive discussions in the European Parliament over the course of the next year. While there are some indications that Parliament would like to see a more comprehensive approach to dealing with the issue of Out Of Commerce works (the Reda report which was adopted in 2015 called for an exception based approach) the position of the Council is likely to be more in line with what the Commission has proposed (as it gives Member States more leeway to find implementations in line with their own legal traditions).

In this situation the cultural heritage sector will need to decide whether it would like to move forward based on the Commission proposal and to focus its energy on remedying some of its technical shortcomings (which we will analyse further in a follow up-piece) or if it wants to continue its push for a comprehensive exceptions based approach instead.

Continuing on the basis of the Commission’s proposal it has the advantage that this approach is likely to meet less resistance from other stakeholders and from the Member States. The downside of this approach is that it is likely to be further weakened during the process. As a result the cultural heritage sector will end up with a very limited mechanism that only addresses parts of the issues faced by cultural heritage institutions.

In this context it is important to remember that the Orphan Works directive was substantially weakened during the parliamentary process through the addition of additional requirements and last minute compromises between the different the political groups. As a result the final directive is substantially less useful for Cultural Heritage Institutions than the original Commission proposal was. There is a considerable risk that the same will happen to the Commission’s proposal for dealing with Out Of Commerce works.

Continuing to push for an exceptions based approach will limit some of these risks as such an approach would establish a more comprehensive base-line. On the other hand there is a high risk of not managing to achieve such an ambitious objective, especially in respect of the position that can be expected from some of the Member States.

It would be a missed opportunity if the approach suggested by the Commission becomes reality. It is clear that even in the best case it would only unlock some parts of the Out Of Commerce works from the collections of Europe’s cultural heritage institutions. This will result in a situation where sooner or later the cultural heritage institutions will need to go back to the European legislator for a solution for the rest of the out of commerce works.

Interestingly one way to reconcile the interests of Member States with an exceptions based approach can be found in another part of the Commission’s proposal. The proposed exception for ‘Use of works and other subject-matter in digital and cross-border teaching activities’ includes an option for Member States to not apply the exception in areas where ‘adequate licenses’ are available in the market. This mechanism could be employed to ensure the coexistence of licensing based solutions and an exception for the making available online of Out of Commerce works. This would ensure that Licenses are used where possible while there is an exception as a fallback mechanism that kicks in where licensing does not work.