There is no unitary copyright title in Europe, so works are protected on the basis on 28 national legislations. The use of a work in all EU Member States therefore requires the clearing of rights for 28 territories. The varying availability and accessibility of content services in the EU can thus be caused by the difficulties that service providers have in obtaining all the rights needed in all territories.
As currently implemented in EU law, the definition of the right to make a copyright work available on the internet neither specifies what is covers (the upload of content by the service provider? accessibility by the public? the actual reception by the public?), nor where it is located (does the act take place in the country of the upload only? in each of the countries where the content is potentially accessible? in each of the countries where the content is actually accessed?). This may raise questions as regards the scope of the licences required to provide services online, and generate transaction costs when the transmission covers several territories. This is particularly true if the rights for different territories are in different hands.
The question arises as to whether there is a need to further define the act of “making available” on the internet. One option would be to redefine it by localising the act in one single Member State (“country of origin”), for example where the center of activities of the uploader is, or where the upload takes place. A licence from the relevant right holders for that country would suffice for service provision to take place legally in all Member States.
Another option, to some extent reflected in recent case-law by the Court of Justice of the European Union (CJEU), is to localise the act in the countries that the service provider “targets”, i.e. those countries whose residents it directs its activity to, for instance through advertisements, promotions or choice of language. Licences would only be required for those territories. A third option would be to substitute the current system of national copyright titles by a single unitary copyright title.
All three models could, to varying degrees, reduce the transaction costs of licencing in the single market. They would require a higher level harmonisation than is the case today. The definition of a “country of origin” is highly complex. A “country of origin” approach could induce service providers to engage in forms of “establishment shopping” to benefit from the Member States with lower copyright protection (including weaker collective management organisations and enforcement remedies).
Furthermore, this approach is likely to prompt the withdrawal of digital rights from collective management organisations (CMOs). The resulting disaggregation of the CMO-managed repertoire could generate higher transaction costs and jeopardise some of the objectives of the CRM Directive. The alternative solution of establishing which Member States are “targeted” would raise other difficulties, notably as regards legal certainty. The unitary copyright title would improve legal certainty but it would require a high degree of harmonisation as it would replace national titles.
Beyond the territorial definition of rights, issues related to the exercise of rights within the single market need to be considered in the assessment of the problems. For a variety of reasons, even right holders who have the rights for all Member States may opt, in some sectors, for licences with a limited territorial scope and may provide exclusivity in the given territory to the distributors therein. In exchange for exclusivity, the latter undertake not to provide services to consumers form other Member States. Cross-border access is thus blocked in practice. Furthermore, service providers themselves may also decide to offer their services on a territorial basis, for instance by launching “national shops” that cannot be accessed by consumers residing in other Member States.
Whilst contractual freedom should be preserved as a principle, measures could be considered that prevent certain types of territorial restrictions in agreements between right holders and distributors, where such restrictions are not necessary to preserve the essential reward function of copyright. This could be the case, for example, where access to protected content is linked to payment by the end-user, or for the portability of subscription services when traveling.
Consumers should be able to benefit from such measures irrespective of their place of residence. An option for this area could be to further define the act of “making available” on the internet. This could reduce the transaction costs of licencing in the single market but it could prove insufficient for the overall police objective.
With a view to making sure that consumers have access to online content services across borders, addressing restrictions of cross-border access to content resulting from purely contractual arrangements could be envisaged. Any future initiative in this area should serve the objective of enhancing consumers’ access to legitimate content services in the single market, whilst supporting the sustainability of the business models of creative industries.
A separate issue relates to the exhaustion of the distribution right. Today, when a tangible article such as a CD or a book is sold, the owner of the book can give or sell this book to someone else. The question is whether this should also apply to copies acquired via digital transmissions (e.g. via a “download-to-own” service). This raises both practical and economic questions (for example, the quality of a second-hand digital book does not deteriorate and the original owner of the digital book could keep “his” or “her” digital copy in addition to the one being sold).
Policy initiatives on the exhaustion principle would seem premature at this stage. It is important that the Commission continues to examine the issue. In particular, further observation of how licencing models and technologies evolve would be necessary, as well as an extensive assessment of the consequences that initiatives in this area could have on digital markets.