Interview with Michal Nulíček for Český rozhlas plus: reform of a copyright law on digital market

The internet may soon be a different place with the proposed reform of the copyright law currently under discussion. Its supporters claim that the reform will bring greater fairness for media publishers and authors of music, movies and photos. Its opponents on the contrary warn against this change. Is there anything to worry about? This is the topic of our regular summary of the news from the world of computers and the internet, with David Slížek as moderator.

David Slížek, radio moderator Online Plus
Petr Koubský, editor Deník N.
Michal Nulíček, attorney and partner, ROWAN LEGAL s.r.o.

David Slížek:
Recently, we started discussing the upcoming reform of the copyright law in the European Union. By we, I mean myself and of course our regular commentator, editor of Deník N., Petr Koubský. Hello Peter!

Petr Koubský:
Hello.

David Slížek:
Because neither me, nor Peter are lawyers, we’ve brought legal backup to the studio in the form of our special today’s guest today, attorney Michal Nulíček, a partner at ROWAN LEGAL, attorneys-at-law.

Michal Nulíček:
Hello and thank you for the invitation.

David Slížek:
Today, we can discuss some of the hot topics of the reform, because on Thursday night the proposed directive went through one of the last essential steps before its potential approval, the so-called “trialogue”. This means that we now have some compromise wording agreed on by the representatives of the Council of the EU, the European Parliament and the European Commission, so we have a text we can work with. This wording is yet to be approved by the Council of the EU and of course by the European Parliament and it is possible that it will not be approved by these institutions, but it is more likely that it will be. By way of reminder, the new directive contains a number of provisions but the most controversial are two of them, article 11 and article 13. Article 11 deals with the rights of media publishers to their content published on the internet and article 13 deals with illegal pirate content stored on various digital storage and file-sharing services. I will now ask Michal Nulíček, what the scope of this proposed directive is and what this directive contains apart from these two controversial articles.

Michal Nulíček:
Allow me to start by saying that this particular directive was presented in 2016 within the initiative directed to create a so-called “digital single market”, and this initiative of the European Commission led to several drafts of directives and regulations and brought significant changes such as for example the cancellation of EU roaming fees or the end of so-called “geoblocking”, which means we can freely access internet services while on holiday abroad without limitation based on our current geographical location.

As for this particular directive, you have already mentioned the controversial articles 11 and 13. Apart from these articles, the directive contains a lot of exceptions and provisions which have been introduced for the sake of public interest. These exceptions are meant for data and text mining for research purposes, for example to allow artificial intelligence to learn. A lot of us have seen the old movie “Short Circuit”, where a robot browses through books and videos in order to learn. To allow similar processes, there is an exception in this directive. But there are also exceptions for cross-border education, for the preservation of cultural heritage, and for the use of commercially unavailable works by cultural heritage institutions. In other words, this means a lot of provisions for use in the public interest.

David Slížek:
Is the new directive really necessary? Why did the directive come into existence? Is it only for the purpose of unification of copyright law across the member states of the European Union?

Michal Nulíček:
I think that it cannot be generally said whether all provisions are necessary. As I said, there are a number of exceptions which I believe are certainly right because of the reason you mentioned, i.e. these exceptions existed in some member states, but did not exist throughout the whole of Europe. As far as the rest is concerned, meaning articles 11 and 13, I think that from a purely legal point of view the legislation is not strictly necessary because the current law is balanced and based on good foundations.

On the other hand, the development of the internet since the approval of the Directive on Electronic Commerce cannot be ignored. Strong new players have entered together with new technologies, new business models and issues objectively involving the decrease in income for journalism in general, and lower income for music producers, movie makers etc. and these issues have been exacerbated by the entrance of big multinational companies like Facebook and Google who usually have stronger positions, i.e. negotiating positions, against traditional rights holders. However, I believe that a number of these issues should not be addressed by copyright law but are rather a question of competition law, i.e. the restriction of competition, and the rest could be solved by refining or tightening current legislation. Furthermore, I think that the current article 11 and article 13 do not bring rational and balanced change. They introduce a revolutionary change which in fact many rightsholders do not want.

David Slížek:
Let’s have a look at these two articles. Article 11 should give publishers the exclusive right to decide when and under what conditions their content can be displayed online and used. Concerning this, doesn’t the media have copyright to their content today?

Michal Nulíček:
They do and do not, it’s a bit complicated. I think, it would be appropriate to explain to our listeners what the article 11 is in practical terms. Commercially, it is unsurprisingly about money, specifically about income from internet advertising. Legally, it is about how much someone, primarily so-called “news aggregators”, may use news content published by news portals which are run by third parties. These aggregators, which in the Czech environment are for example the seznam.cz homepage or Google News service, are services or portals which work as a sort of signpost and display content from other portals like Lidove Noviny, iHned, Aktuálně etc. These aggregators may display such content basically in three ways. They may take over the whole content or part of it, meaning the user stays on the aggregator’s site and likely does not visit the publisher’s website. The second, let’s say opposite, approach is that the aggregator provides only a hyperlink, meaning typically a title which is clickable and redirects to the publisher’s webpage, or something in between, i.e. publishing a clickable title, photo and maybe a few words from the original news story. Now article 11 is on the one hand about which of these uses infringes copyright, in other words for which use the aggregator will have to pay, and on the other hand whether the copyright right to royalties belongs to the publisher, who acts like an investor in this case, along with the author. According to the text approved yesterday, it seems that the publisher will even obtain a new right, i.e. the publisher would have a separate right apart from that of the author and the right would be related to the use of significant parts of the original text.

But to answer your question, authors alone have protection today and this applies even to quite short snippets of their texts. Publishers, i.e. “investors”, are able to access these rights and exercise them either through employee work, though I think that it is more common for journalists to work freelance, or by giving licenses to publishers. A result of this is that the legislation in article 11 is partly redundant from the practical point of view of the functioning market.

David Slížek:
Therefore, publishers, if they want, could somehow enforce or litigate regarding copyright even today.

Michal Nulíček:
Of course they could. Naturally it is another thing to enforce. It is a question of negotiating position against the big platforms I mentioned earlier. It is maybe even a question of more difficult proving of the right, because when you want to enforce it and you do not have it directly from legislation, then you have to somehow prove how you got the right.

David Slížek:
That was said by our guest Michal Nulíček, attorney from the law firm ROWAN LEGAL. I am now going to turn to our regular contributor, Petr Koubský. Petr, why have publishers strongly lobbied for the approval of article 11 in this form, when they could already protect their rights earlier?

Petr Koubský:
Media publishers in Europe, and ultimately all around the world, have seen a decrease in income for a long time, maybe the last 20 years, so they are looking for any opportunity to turn this situation to their profit. Nowadays the prevailing opinion is that the culprits behind the current state of affairs are content aggregators, which we are talking about, like Facebook and Google, and if it becomes possible to obtain some money from them on the basis of stronger negotiating position, everything will be better for publishers. This stronger negotiating position could be provided to publishers by the novelization of copyright laws. In my opinion, the mistake in this thinking is that media income has not decreased solely because of the existence of Facebook and Google. In addition, it is questionable if content aggregators have only a negative effect on the media’s function, because they also provide access and promote their work because they display them in search results. These two influences, less interest in ads because people don’t go to the media’s website versus the fact that people pay greater attention to the media thanks to content aggregators should be weighed up. However, no one knows if the result is positive or negative, because the numbers are not measurable.

David Slížek:
So according to you, will article 11 in its current form, which our discussion is about, not be possible to change now, and can it only be adopted or rejected by the EU? Do you think that it will have some perceptible impact?

Petr Koubský:
In my opinion, it will start a new round of business negotiations between aggregators and the media under new circumstances. It will now be about who is in a stronger position, who will enforce more. Aggregators will not want to pay anything because once they do they will be on a very slippery and very steep slope. The media will want everything according to the new legislation. They will have to meet somewhere in the middle. Nobody knows how the middle will look or where it will be. Google showed us a few weeks ago how a search could look when every result, apart from hyperlinks, is deleted, as mentioned by Mr. Nulíček. It was only for a few days, but very unpleasant, almost absurd for users. And I do not know, even this could be extreme. I am very concerned that Google needs European media less that the other way around.

David Slížek:
That was Petr Koubský. I will now turn to our lawyer with the same question. Will article 11 in its current form work?

Michal Nulíček:
That’s a very good question. It’s hard to predict. I have to add here that as a lawyer I see a lot of incompleteness. Search engines were mentioned. I think that it is a big question how search engines will be affected by the legislation and I see the same dangers that this might lead to a restriction of displayed results. I think the incompleteness of the process of license contract conclusions and royalty collection are grave issues of the legislation. The problem is mainly around the missing rules for collective management or some similar instrument. And this is not a theoretical problem but rather a practical one. And it is a practical one mainly for smaller publishers because their negotiating position will be diametrically opposite to the position of e.g. big German publishers.

It is often said that article 11 should be a tool to preserve the quality of journalism, but imagine a small portal consisting of investigative journalists which does not have a very well-known brand or high traffic, i.e. number of webpage visits, and maybe does not have interesting content for aggregators. What kind of motivation will aggregators have to deal with this small but high-quality publisher? So, this is a big issue which I see here, the first problem from a practical point of view.

The second note which I would like to add is that we have seen similar legislation in force e.g. in Spain and Germany. The legislation in Spain was a bit different, it was more or less a mandatory tax on news snippets. However, what happened? Google, providing the free Google News service, assessed that it was not beneficial for Google to provide such services and left Spain. This shows, as my colleague here has mentioned, that Spanish publishers need Google more than Google needs Spanish publishers. So, I think this example serves as a warning. And the thing about article 11 and 13 which bothers me most as a lawyer, is that the wording underwent many changes and the result is something that nobody is happy with.

David Slížek:
Article 13, when simplified, should transfer the liability for content legality uploaded by users to webpages which allow this and place the liability directly with the provider. I also thought that providers are liable on some level even today but this is somehow restricted. So how does it work?

Michal Nulíček:
I think that in relation to this article it would also be better for listeners if we first summarize which services operate on the internet and what we are talking about. The first type of service, which we are all familiar with, is a service providing its own content. Thus content that is made or bought by it. The provider of the service decides which content will be made available. These are services like HBO, Netflix, and Spotify etc. Of course, the platform is fully liable for the content. Full control over the content, full liability. On the other hand, there is a service called “hosting”, where the provider provides space for us the users so we are able to upload our content on our own responsibility and further distribute it. The primary liability is in this case on the user who uploaded the content. In addition, the provider is also partly liable if certain requirements are met. The main condition is that when a copyright owner notifies the provider that there is illegal content on the website the provider must remove the content in question. The provider is liable if the content is not removed. The provider is also liable when it is actively involved in what is accessed and published. There is also at the same time an important rule that the obligation to monitor what is uploaded to these platforms is not permissible.

Simplified, the new legislation means that the second service mentioned, which allows us to distribute user content will, with a few exceptions, cease to exist. This is because, as you mentioned earlier, the provider will be directly liable for the content as the provider could decide on it, as the provider sees fit. What does this mean? What impact will it have? Well, the impact will be that the provider will be monitoring, sorting and deciding whether our content will be displayed or not because when the provider is liable, it has an obligation to get a license for every work protected by copyright. If the provider fails, maybe because the rightsholder does not want to give a license, which could happen e.g. because of different levels of negotiating positions, the provider has to do everything in order not to display this illegal content. And “do everything” means, as per the approved text, to introduce an automatic filter mechanism. What is the result of this? The legal extinction of services which allowed us to distribute content which we decided to upload on our own responsibility. And the content which we distribute is going to be under surveillance and automatic filtering, e.g. by big multinational companies.

David Slížek:
I thought that in some European legislation the requirement of automatic filtering and monitoring of content is inadmissible; that this is forbidden in the EU’s Directive on Electronic Commerce.

Michal Nulíček:
Yes, that’s right. It’s inadmissible according to current legislation and decisions of the highest court instances in Europe. There are of course some trends regarding filtering, but this is contemplated in relation to the fight against terrorism or child pornography, where the public interest in not displaying such content on websites is massive, so that such filtering was considered. But using that powerful tool to protect copyrights, I think that that is plain and simply disproportionate.

David Slížek:
Article 13 is evidently aimed against so-called “illegal pirate content”. Petr, I would like to ask you now. Do you think that this type of fight against internet piracy will be effective and will bring about some fundamental changes?

Petr Koubský:
Well, it will work. Of course, nothing will remain of a doghouse if you shoot at it with a cannon. Whether this was the right way to get rid of it is an entirely different question. I think that both articles, 11 and 13, as Mr. Nulíček put it so well, have a joint motive, which is the annihilation of small providers, small media houses and small providers of any internet services, in favor of the big providers. These will remain because it is in their power to ensure the fulfillment of all these obligations. The small ones, the ones experimenting with new methods and new types of content will be liquidated, destroyed, and it is good to remember that the potential sanctions stipulated in the novelization will really lead to liquidation and that is no exaggeration. So, I am worried that we will get an internet which we have never seen before and that we will not like.

David Slížek:
That was Petr Koubský. Our time is slowly coming to an end. I have one last question. There is always talk during debates that today the enforceability of rights on the internet is difficult and this new legislation should help through, for example, the punishment of those who upload illegal content. Will it help?

Michal Nulíček:
Firstly, regarding the difficulty of rights enforcement. To be frank, the issue with enforceability today is not limited only to copyright law. The courts in general are overloaded, they do not have enough personnel available, especially at the lower levels. Though there has been some slight improvement. However, on the other hand, it is important to note that we are dealing with the area of IT law. And this is an aspect which is hard for judges to grasp. The fragmentation of current legislation across member states does not help because it is impossible for judges to be inspired by decisions made by judges in other member states. For example, in Germany the legislation is completely different from ours.

Whether it helps, I think that when a right is hard to enforce, new legislation will not help. When a right is unenforceable, new legislation will probably be as unenforceable as the old legislation.

David Slížek:
Well, thank you gentleman. We could certainly continue with this topic. And we will surely get back to it because this directive has a long road ahead before implementation into Czech law. Thanks to our guests. The first one was attorney from law firm ROWAN LEGAL Michal Nulíček. Thank you and goodbye.

Michal Nulíček:
Thanks for the invitation.

David Slížek:
And of course our regular contributor, editor of Deník N, Petr Koubský. Peter, thanks and see you again soon.

Petr Koubský:
Goodbye.

David Slížek:
Goodbye listeners, also from me, David Slížek.

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