Reforming of copyright in EU and one of the questions concerned: territoriality of copyright

In the light of coming copyright reforms in EU the draft impact assessment concerns some important copyright issues. One of them is territoriality of copyright.

Protection under copyright comes into existence automatically with the creation of a work and does not, contrary to industrial property rights like e.g. trade marks or patents, depend on registration with a public body. Copyright is territorial (referring to national territories) in the sense that the rights granted under copyright are provided for in national law, and not in the form of unitary rights at EU level. For example, the author of a book does not have a single EU-wide right of reproduction but 28 different national rights of reproduction. The geographical scope of each of these 28 rights is limited to the territory of the Member State that grants the right in question.

The internet offers, more than ever before, the possibility to distribute and communicate content across borders. As a result, a single online cross-border transmission may fall under the territorial scope of the exclusive national right granted by the Member State in which the transmission is initiated (e.g. the French right of making available to the public) and under the territorial scope of the exclusive national right granted by the Member State in which the transmission is received (e.g. the Belgian right of making available). A service provider responsible for such a transmission must therefore acquire a licence not only in the Member State in which it initiates the transmission but also, in principle, in all Member States to which the content transmitted.

On the basis of the current legal framework for cross-border infringements including transmissions over the Internet, the most recent case law of the Court of Justice of the European Union (CJEU) suggests that a relevant criterion to localise where an infringing act of making content available to the public occurs is the “targeting” of persons in another Member State. According to this approach, the copyright-relevant act (which must be licensed) occurs at least in those countries which are “targeted” by the alleged infringer.

If this approach is applied to licencing, a service provider would not need to acquire a licence for all Member States in which the service is receivable but only for those that are actively targeted.  A service provider “targets” a group of customers residing in a specific country when it directs its activity to that group, e.g. via advertisements, promotions, a language or a currency specifically targeted at that group.

The territoriality of copyright is understood as the requirement to clear rights country by country and the ability of rightsholders to take action against alleged infringers on a country by country basis. It therefore has an impact on the freedom to provide and receive services across borders, and on the Digital Single Market in general. It also increases transactions costs for online service providers, to the extent that the rights for the different territories cannot be cleared by a single transaction (e.g. with a producer or with a collective management organisation).

Indeed, whereas the territoriality of copyright does not prevent the possibility to grant multiterritorial licences for a particular work, difficulties arise when the rights for different territories are in different hands. Sometimes, even the rights in a work with regard to a single territory are in different hands. The sector where these types of problem have most frequently arisen in the past is the licensing of rights in musical works which is normally done by collective rights management organisations.

Finally, exceptions and limitations to exclusive rights are territorial. There are few express mechanisms for the cross-border effect of exceptions to exclusive rights save where the legislator has introduced mandatory exceptions. This is the case with the mandatory exception for technical copies in Article 5(1) of the Infosoc Directive and to a lesser extent the mandatory exceptions in the Software and the Database Directive. This implies that content which is made available in one territory under an optional exception in one Member State cannot be legally accessed in another Member State under the terms of that exception where that exception has not been introduced into the law of that Member State.

The negative effects of contractual agreements based on absolute territorial exclusivity (that prohibit all cross-border sales including passive sales) can currently only be addressed through the enforcement of competition law. Nevertheless, competition law is enforced ex post on a case by case basis, and assessments are necessarily fact-specific. Moreover, the freedom to provide and receive services in the Single Market falls under rules of the EU Treaty separate from its competition law provisions.

Another difficulty lies in the current legal uncertainty as to the precise scope of permissible provisions in licence agreements based on territorial exclusivity. Finally, views among stakeholders also differ as to how to define passive sales in the context of online services related to copyright. Some stakeholders argue that e.g. services provided on an English language online platform do not allow for a proper delineation between active and passive sales.

The territoriality of copyright is inherent in the current copyright system and can, as such, only be eliminated via introducing a European Copyright Code providing for unitary exclusive rights (as opposed to national copyright codes providing for national exclusive rights). Naturally, this cannot be done at national level. Absolute territoriality and geo-blocking can incite consumers to turn to copyright infringing products as a substitute.