Upload filters, pre-flagging and snippets: copyright reform imminent

Written on 10 Feb 2021

At the beginning of June 2021, the deadline for transposition for the much-debated copyright reform expires. Copyright law is to be adapted to the internet age. The government draft of 3 February 2021 shows what concrete changes are to take place in Germany.

By 7 June 2021, EU member states, including Germany, must transpose Directive (EU) 2019/790 on Copyright in the Digital Single Market ("DSM Directive") into national law. On 3 February 2021, the German Federal Government has now agreed on a government draft, meaning that the reform is close to completion.

A central objective of this major EU copyright reform is to adapt copyright law to the technological developments of the last two decades, in particular a new copyright treatment of upload platforms on the internet, where user-generated content is made available for viewing. Before the DSM Directive came into force in 2019, the planned reform had caused considerable protests even outside the legal community. Critics feared in particular that upload filters on the platforms would endanger the freedom of the internet. Almost two years after the protests, the government draft now shows how the German legislator wants to change copyright law in concrete terms.

The UrhDaG as a separate law for platforms

At the centre of the reform is the newly created "Copyright Service Provider Act" (Urheberrechts-Diensteanbieter-Gesetz, UrhDaG). Section 1 (3) of the government's draft for this law (UrhDaG-E) stipulates that platforms will in future be assigned copyright responsibility for the content that can be retrieved from them. Up to now, all host providers have been able to invoke the liability privilege under Section 10 sentence 1 TMG, according to which they are generally not responsible for third-party content. According to the government draft, this privilege will no longer apply to service providers within the meaning of Section 2 (1) UrhDaG-E.

According to Section 1 (2) UrhDaG-E, a service provider can only escape this new copyright responsibility under newly created conditions: On the one hand, according to Section 4 (1) UrhDaG-E, the service provider must make "best efforts" to acquire licences for the copyrighted content that can be accessed from the service provider. In this way, the legislator wants to strengthen the position of rights holders and collecting societies vis-à-vis the platforms. On the other hand, according to Sections 7, 8 UrhDaG-E, service providers must ensure that no unauthorised reproductions occur on the platform and block corresponding content.

Attempt by the Federal Government to solve the problem of upload filters

One technical mechanism used by platforms to prevent such unauthorised reproductions are so-called upload filters, i.e. software that screens uploaded content for copyright infringements before publication. The government draft answers the question, which has been hotly debated since 2019, of whether such upload filters would be part of the German transposition of the directive with a yes. It provides that "automated procedures" for checking content pursuant to Section 7 (2) UrhDaG-E may be used in principle; this refers to the aforementioned upload filters, without this term being mentioned in the draft bill.

The criticism that such an upload filter could unjustly block many uploads because the software could not recognise, for example, the right of quotation and the freedom of parody and therefore could not accurately distinguish such legal uses from illegal ones, is attempted by the legislator with a detailed regulation on "presumably permitted content" in Section 9 et seq. UrhDaG-E. An upload is presumed to be permitted if it contains less than half of another person's work and combines this work with other content. In addition, the use must either be minor (so-called de minimis limit in Section 10 UrhDaG-E) or the uploader must have marked the content as permissible, for example because it is a parody (so-called pre-flagging in Section 11 UrhDaG-E). The presumption of permissibility is linked to an appeal procedure (Sections 14 et seq. UrhDaG-E), with which both uploaders and rights holders are to be able to appeal the decision of the platform.

Protection of press publishers concretised

In addition to the introduction of the UrhDaG, the government draft also provides for numerous amendments to the Copyright Act (UrhG) itself: For example, the ancillary copyright (Leistungsschutzrecht) for press publishers in Sections 87f et seq. UrhG are to be reformed. For example, the limits of the ancillary copyright in Section 87g (2) UrhG will be revised: the reproduction of facts contained in a press publication, private or non-commercial use by individual users and hyperlinks to a press article available online will remain free and unrestricted, as will the use of "individual words or very short excerpts" from a press article (so-called snippet exception).

The participation of publishers in lump-sum remuneration claims is also to be changed. In 2015, the European Court of Justice (ECJ) overturned the long-standing practice of sharing flat-rate royalties between authors and publishers, for example, for copying in copy shops or for the purchase of computers, printers and storage media. With Section 63 a (2) UrhG-E, a statutory right of participation for publishers is now to be introduced, so that publishers will once again participate in lump-sum royalty claims as in the time before the ECJ ruling.

Copyright contract law further tightened

The far-reaching provisions in favour of authors on equitable remuneration, which have been contained in German copyright contract law since 2002, are found in a similar construction in the DSM Directive. In this respect, far-reaching protection of authors will now also be introduced in all EU member states. In its government draft, however, the German legislator goes beyond the implementation of the Directive in some respects and tightens the existing copyright contract law again to the detriment of the exploiters of copyright-protected works.

On the other hand, new regulations draw broad boundaries for the evaluation of large text and data collections by means of text and data mining (TDM). Finally, new limitations to copyright are introduced for the use of works for cultural and teaching purposes and the regulation on the free use of works, which was found to be partially contrary to European law by the ECJ (C-476/17 - Pelham et al.) in 2019, is revised.

How the government draft continues

The draft is now being discussed further in both chambers of the German parliament, the Bundestag and the Bundesrat. At the same time, the legal policy discussion is continuing at a lively pace outside parliament as well, because criticism of the draft is being voiced from various sides. Even if the copyright reform were to be passed in the form of the current government draft, numerous questions for the practical application of the law would remain unanswered. This already begins with who is to be understood as a "service provider" in the sense of the UrhDaG-E. When the law speaks of commercial providers with the main purpose of "storing and making publicly accessible a large amount of copyrighted content uploaded by third parties", does this include social networks in addition to pure upload platforms? What applies to mixed forms, and how can smaller service providers in particular implement the legal requirements on liability? In press publisher law, it will have to be clarified how short the "very short excerpts" have to be in order to be considered a permissible snippet. And in copyright contract law, the rights of authors will be further strengthened, which, against the backdrop of an already complex legal situation, is likely to lead to further conflicts in the exploitation of copyright-protected works, which will only gradually be clarified by the courts.

A contribution by Dr. Martin Soppe and Christoph Fuchs