Art 4/2 goes against CJEU landmark ruling on copyright exceptions

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Do not set a dangerous precedent for user rights!
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The Court of Justice of the European Union has not had many opportunities to review the EU legal framework for exceptions and limitations to copyright, and in the few cases where it had to interpret an EU exception, it has not always adopted positions that are favourable to the beneficiaries of the exceptions. Yet, there is one case, a landmark case for user rights, involving the Technical University of Darmstadt and publisher Eugen Ulmer KG, where the Court exemplary defended the position of such beneficiaries against the rights holders. Now the EU lawmakers want to adopt a law that fundamentally undermines the protection granted by that CJEU ruling to user rights.

How did the CJEU ruling protect user rights?

The TU Darmstadt case revolved around the EU exception that allows public libraries and other institutions to digitize works in their collections and make them available in dedicated terminals located in the libraries reading rooms or elsewhere on their premises (art.5(3)(n) of the InfoSoc Directive). The dispute had several legal issues, but the one important for the analysis of art 4, paragraph 2 of the proposed Directive for Copyright in the Digital Single Market (DSM Directive) is whether the libraries could rely on said exception even if publishers were offering to license a digital version of the books.

The EU exception embodied in art.5(3)(n) of the InfoSoc Directive covers “works and other subject-matter not subject to purchase or licensing terms”. Publishers argued that the mere fact that the rightholder offers to conclude a licensing agreement with a library is sufficient for ruling out the exception. The CJEU considered, however, that, if the mere act of offering to conclude a licensing agreement were sufficient to rule out the application of the exception, such interpretation would:

  1. Be difficult to reconcile with the aim of the exception, which is “to maintain a fair balance between the rights and interests of rightholders, on the one hand, and, on the other hand, users of protected works who wish to communicate them to the public for the purpose of research or private study undertaken by individual members of the public.”
  2. Imply that “the rightholder could, by means of a unilateral and essentially discretionary action, deny the establishment concerned the right to benefit from that limitation and thereby prevent it from realising its core mission and promoting the public interest”.
  3. Be “liable to negate much of the substance of the limitation provided for in that provision, or indeed its effectiveness”, since the limitation would apply only to those increasingly rare works of which an electronic version is not yet offered on the market.

The CJEU further clarified that it was not against the 3-step test to require an existing contractual relation, and not mere prospects of contracts or licences, to rule out the application of the exception.

In conclusion, the Court decided, the concept of (works and other subject-matter not subject to) ‘purchase or licensing terms’ must be understood as requiring that the rightholder and an establishment must have actually agreed on contractual terms and concluded a licensing agreement.

How to bypass a court ruling that does not favour rightholders, and set a dangerous precedent for user rights?

The CJEU represented a major win for users’ rights, since it protected users’ “right to benefit” from an exception and made it clear that users could not be unilaterally forced to stop relying on an exception if rightsholders offered to license them the works and uses covered by the exception.

Naturally, the rightholders were not happy with the CJEU ruling and it was expectable that they would advocate for wording that would prevent the immediate application of that ruling to the new exceptions. What was not expectable was that the EU lawmakers would so easily bypass a decision that protects fundamental rights of the EU citizens.

In the proposed DSM Directive, the Commission opted to propose a new mandatory exception for educational purposes that Member States can decide to switch off, provided that licenses are “easily available in the market”. The selected wording is clearly intended to go against the CJEU ruling on TU Darmstadt: no contractual relation is needed to rule out the application of the exception; a mere license offer, a license that is “easily available in the market”, is enough to deny the establishments the right to benefit from the exception, even if they do not agree to the terms and conditions of said license.

The European Parliament understood the problems at issue and approved a version of art.4(2) that would only give priority to “license agreements”, and not mere license offers. However, that version did not made its way to the compromise position that will be discussed in tomorrow’s trilogue.

If the compromise position is approved, this means that over the coming years educators and learners could benefit from a new education exception only to see it disappear and be replaced by licensing schemes. Worst: the EU lawmakers would create a precedent for overrides to any public interest copyright law exceptions. As such, it is a great victory for rightsholders, and a great loss for users, who can no longer rely on the CJEU decisions that try to rebalance the public and private interests that justify the copyright system.

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