Key regulatory approaches in the Federal Justice Ministry's draft on copyright reform

I. Background to the reform efforts

Through its Directive (EU) 2019/790 on Copyright in the Digital Single Market (‘the DSM Directive’) and the Cross-Border Online Transmission Directive (EU) 2019/789, the EU legislator has given Member States a major reform mandate. The European legislation, which addresses a wide range of copyright issues in the context of technological change, must be transposed into national law by 7 June 2021. The transposition proposal now presented in the Ministry of Justice and Consumer Protection’s ministerial draft takes account of these requirements and provides for a number of important legislative amendments. As expected, the regulatory approaches have seen a split response. In particular, the representative organisations of authors and performers criticise the fact that the draft does not sufficiently strengthen the position of rights holders. The main subject of the reform is the controversial liability of ‘upload platforms’; however, it also addresses issues such as copyright contract law, the introduction of collective licensing and clarifications on the technology-neutral retransmission of programmes.

II. Liability regime for upload portals

In the new German Basic Act on Copyright Liability of Service Providers for Online Content Sharing (UrhDaG), the draft takes into account the liability regime laid down in Article 17 of the DSM Directive in respect of internet platforms offering uploading and reproduction of copyright-protected content. Insofar as they publish material provided by users, they are now responsible for copyright issues related to making it available and, as far as is reasonable, they are required to obtain licences for the content in question. Otherwise, this content must be blocked by the platform.

However, taking into account the conflicting freedoms of speech, art and communication, this does not include uses for the purpose of caricature, parody or pastiche. The same applies to the use of short extracts of copyrighted content. For example, the reproduction of film and audio sequences of up to 20 seconds and up to 1,000 characters of a copyrighted text is to remain permissible. Given the popularity and usefulness of even very short clips and summaries, some of the exceptions are criticised as too far-reaching; publishers and producers in particular see their economic opportunities compromised.

On the other hand, authors and performers are entitled to the intended direct remuneration, which is to be granted directly from the platform to the author even in the event of further licensing. The issue of ‘over-blocking’ in order to minimise the risk of facing legal claims is reflected in a special liability privilege: accordingly, there is no liability of the service provider until a possible grievance procedure has been concluded if the user does not clearly inaccurately label their upload as lawful.

III. Collective licensing by collecting societies

Another key issue of the DSM Directive is collective licensing, which is intended to facilitate the licensing of the use of works. On the basis of the proposed new version of section 51 et seq. German Collecting Societies Act, collecting societies are able to also allow uses that have not been granted to them by the rights holders. One of the preconditions for this is that it is not reasonable for the user or the collecting society to obtain authorisation for use from all the external parties concerned. This tool will be particularly relevant in the case of mass usage on digital platforms and will also facilitate the newly created licensing obligation for service providers. The rights holders concerned can object to this at any time, which is why the collecting societies’ use of collective licensing must always be communicated to the public.

IV. Copyright-friendly adjustment of the ‘bestseller’ section

Finally, the draft includes important changes in copyright contract law. In particular, Article 20 of the DSM Directive, which reduces the threshold for a creator’s entitlement to additional remuneration in the event of a particular exploitation success, has a decisive effect here. While under section 32a German Copyright Act, known as the ‘bestseller’ section, the creator can only claim an amendment to the contract if the agreed consideration is strikingly disproportionate to the revenues and benefits from the use of the work, in future, remuneration which is disproportionately low in relation to the exploitation success will already give rise to an entitlement.

V. Other regulatory proposals

Especially in response to the growing share of digital press products, Article 15 of the DSM Directive also creates a new ancillary copyright for the press publisher which fully replaces the provisions of section 87f German Copyright Act. The numerous amendments include the extension of the scope of protection to acts of reproduction, the extension of the term of protection to two years and the regulation of exemptions from the scope, such as the posting of hyperlinks or the use of very short excerpts of the press publication.

To implement the online SatCabs Directive, which takes into account the increasing cross-border distribution of radio and television programmes via the internet, major new rules are planned regarding the right to (cable) retransmission and direct input of programme signals. The country-of-origin principle required by the Directive in relation to the live streaming of a programme or subsequent retrieval will also be introduced. To facilitate the purchase of rights, it will be presumed in future that these internet offerings take place exclusively in the Member State the broadcasting organisation is established in.

By repealing section 24 German Copyright Act, the German legislator is also responding to the recent ruling in the case C-476/17 (Pelham, ‘Metall auf Metall’) by the ECJ, which held the provision to be contrary to EU law. The legal authorisation to date of cartoons and parodies, and now also pastiches, will in future be transferred to section 51a German Copyright Act.