A Year of Copyright Reform: Winners and Losers

by Professor Dr. Christian Heiner Hench

01.08.2022

The law was in effect for a year, which also led to the introduction of download filters that many fear the German law. But in practice, the problems lie elsewhere Christian Heiner Hench in its interim report.


One year of the Upload Filter Act – On August 1, 2021, the Copyright Service Provider Act (UrhDaG) came into effect with new regulations regarding the liability of social media platforms. In particular, the legislator applied the politically controversial Section 17 of the DSM’s Copyright Directive. The aim of copyright reform was above all to create a single digital marketplace. In addition, there must finally be legal certainty about whether social media platforms implement copyright actions and whether they need to obtain permission from rights holders to upload content by their users who do not own the relevant rights in the content that has been uploaded. suppository.

With the UrhDaG, the German legislator has implemented the specifications of the EU directive in its Basic Law. The law addresses service providers whose primary purpose is to store and make available to the public a large amount of copyrighted content uploaded by third parties. Startups and small service providers in addition to services listed in Section 3 UrhDaG, such as online marketplaces or online encyclopedias, are excluded.

Ultimately, this law targets social media platforms such as YouTube, Facebook, TikTok or Instagram. They are obligated to do their best to obtain contractual rights to use public copies of copyrighted works. Here, no new exploitation right is created or public access extended in accordance with Section 19A of the Copyright Act (UrhG), only codes of conduct are presented. So social media platforms do not interfere with the exploitation rights, but are only liable if they violate the code of conduct.

Private users are not responsible

Even UrhDaG completely absolves platform users from liability by extending the permissions of service providers to private users via legal fiction. This regulation does not apply to Commercial Influencers or Let’s Players who monetize their videos using third party copyrighted material via advertisements. If a platform of copyrighted content does not receive permission for use by private users and no legal permission is also applied, the upload must be removed from the platform if the rights holder provides a corresponding notice.

Fear-of-debate upload filters are only allowed under strict conditions. To guard against over-blocking, there is a rebuttable assumption that user-generated content is allowed if it contains less than half the work, aggregates works, or is only lightly used. Uses may also be distinguished as permitted by law (reliable reporting). The law also provides for complaints procedures and measures against abuse.

Authors and those entitled to additional copyrights receive an additional irrevocable remuneration that can be realized through the collection societies for the uses legally permitted under § 51a UrhG (caricatures, parodies, and cutscenes) as well as for the minor described and therefore presumed permitted uses. In addition, however, authors must still be eligible for an indispensable right to direct compensation for license payments that will be newly negotiated between platforms and users. Since authors are usually already adequately paid by their exploiters, this leads to an additional bonus.

Legal peace has been achieved – no cases of excessive bans have appeared

Ultimately, in the year since UrhDaG went into effect, no case of override the ban has been discussed in the press — nor has the range of services provided by the providers decreased. It appears that the German legislature’s primary objective of creating legal peace and implementing the directive with as little collateral damage as possible through loading filters has been achieved.

However, this may be at the expense of the regulatory objective of the European Union, which ultimately wanted to create a single digital market. In fact, it has been implemented in very different ways in member states and is still being worked on in many countries. This leads to a fragmentation in the field of social media platforms, which can only be eradicated by private service provider solutions that work with all member states.

The winners of the fix are definitely the private users, who are effectively relieved of any responsibility. In addition, the authors will certainly be able to record more income from collecting societies in the future. However, it remains to be seen if this additional income will have an impact on license payments due to the lower associated income for users.

Exploiters such as music companies, Hollywood studios or the Bundesliga, who had hoped reform would strengthen their position, are in danger of coming out of the reform as losers if viable licensing models like TikTok are compensated at a fixed price in the future by collecting societies and a share of this must be paid to authors and performers . Against this background, the music industry has filed a constitutional complaint, in particular, having the authors’ right to direct pay review.

DSA will bring more stringent obligations

Overall, UrhDaG represents a balanced solution after an initial assessment. The business models and actions already implemented for existing platforms are not questioned – however, regulations create nearly insurmountable barriers to market entry. On the other hand, every startup will try not to fall within the scope. On the other hand, the Digital Services Act (DSA) creates new obligations for all service providers anyway, some of which are stricter than the UrhDaG regulations. Since UrhDaG is a lex specialis, some platforms may still want to submit to UrhDaG.

With regard to users, copyright is increasingly evolving into an industrial property right that distinguishes between commercial and private uses and is no longer oriented towards the public. This trend can also be observed with many new copyright barriers and is supposed to “depoliticize” copyright again. For rights holders, UrhDaG means less contractual freedom and more management of collective rights. Collecting associations help ensure ongoing and appropriate remuneration. However, new business models such as TikTok can be stifled by this strict framework.

With the DSM directive, the European legislator has new experience on how much a technical legislative initiative can mobilize the masses and the need for further reforms in copyright law appears to have been covered for the time being. In the next few years, it will be a matter of interpreting the new regulations uniformly across Europe and, in particular, of standardizing the implementation of Article 17 of the DSM directives. However, the numerous issues associated with it make further coordination inevitable for the foreseeable future. The differentiated implementation in Germany by the UrhDaG, which far exceeds the requirements of the directive, paves the way for an EU regulation on statutory liability in copyright law – such as the DSA.

Mr. Dr. Christian Heiner Hench is Professor of Copyright and Media Law at the Cologne University of Applied Sciences and was an expert at the hearing in the Bundestag at the UrhDaG. In addition, he is the head of law and regulation in the game – the Federation of the German Game Industry.

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