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Media Newsletter, September 2016

ECJ: Links to Copyright Protected Works Published Without Consent May Constitute an Infringement if Posted for Profit 

On Sept. 8, the European Court of Justice (ECJ) held that posting a hyperlink to works protected by copyright and published without the author’s consent on another website does not constitute a copyright-infringing “communication to the public” as long as the person posting the link does not seek financial gain, and does not know that the works were published illegally.

In the underlying case before the Supreme Court of the Netherlands, the publisher of "Playboy" magazine sued the provider of a Dutch blog for publishing links to an Australian website where photos yet to be published in "Playboy" were available without authorisation. The ECJ emphasized that the internet is of particular importance to freedom of expression and freedom of information, and that links contribute to the sound operation of the internet. Also, the Court conceded that it may be difficult for individuals to ascertain whether the website to which the links would lead provides access to protected works, and whether the copyright holders of those works have consented to their posting on the internet. Therefore, the Court held that users who do not pursue a profit when posting links to third-party content cannot be reasonably expected to know or examine whether this content was first published without authorisation. However, this rule does not apply if knowledge of illegality is established (e.g., due to a notification by the rights holder), or if the posted link allows users to circumvent measures taken by the website where the work was originally posted to restrict public access, e.g., to subscribers. Also, when links are posted for profit, it may be expected that the poster carries out the checks necessary to ensure that the work concerned is not illegally published. Therefore, the Court held that knowledge of the illegality of the publication is generally presumed if someone posts a link for profit, and, unless the presumption is rebutted, such postings – as the links in question in the underlying case – are therefore deemed “communications to the public”.

 Digital Single Market Update: Draft EU Copyright Directive and Regulation Leaked 

On Sept. 1, first drafts of an EU Copyright Directive and an EU Copyright Regulation, along with accompanying documents, were leaked to the public. The drafts are part of the European Commission's strategy for a Digital Single Market, which was announced in May 2015 and first substantiated by an action plan for modernizing European copyright and a proposal for a regulation on cross-border portability of online content services in December 2015. In May 2016, the Commission proposed an update of the Audiovisual Media Services Directive and released its proposal for a Geoblocking Regulation. While audiovisual content is outside the scope of the proposed Geoblocking Regulation, and is expressly exempt from the geoblocking ban laid out therein, it was excluded only because questions of licensing were reserved for the legislative package on copyright, which was announced for the fall.

The leaked draft Copyright Directive, among other things, contains new and mandatory limitations to copyright (for text and data mining, cross-border teaching and preservation of cultural heritage); a new neighboring right for publishers of news publications; provisions concerning the use of out-of-commerce works; and disclosure obligations for exploiters of protected works in order for authors and performers to claim adequate remuneration.

Regarding the regulation of audiovisual works and relevant licensing practices, the Commission’s draft Copyright Directive contains only a rather surprising provision which is solely applicable to VOD platforms: Article 10 of the draft Directive obliges Member States to implement a "negotiation mechanism" to provide "assistance of an impartial body with relevant experience" to parties wishing to conclude an agreement for the making available of content via VOD platforms, and facing difficulties relating to the licensing of rights. In the recitals of the draft, the Commission emphasizes that the participation in the negotiation mechanism should be voluntary, and that the Member States may decide on the conditions and functioning of such mechanism. In the accompanying communication "Promoting a fair and efficient European copyright-based economy in the Digital Single Market", the Commission announces that it will further "lead a structured multiparty stakeholder dialogue to examine licensing issues and related legal and contractual obstacles hindering the exploitation of European audiovisual works on VOD services". The Commission also acknowledges that existing models of financing, production, and distribution of audiovisual content are based on minimum guarantees in exchange for exclusive territorial rights. While the development of alternative models "based notably on a greater collaboration along the value chain" will be encouraged, there is no mention of a ban on geoblocking or territorial licensing practices for any form of distribution of audiovisual content.
The leaked draft Copyright Regulation aims (i) to promote the cross-border provision of “online services ancillary to broadcasts”, i.e., essentially, broadcasters' simulcasting and catch-up services; and (ii) facilitate digital retransmissions of TV and radio programs provided by means of IPTV and other "closed" electronic communications networks. To this end, the Regulation provides for the application of the Country of Origin principle with regard to simultaneous streaming and catch-up services. VOD services not linked to a broadcast are expressly outside the scope of the draft Regulation, and would not be governed by the Country of Origin principle. Furthermore, rules on mandatory collective management are introduced to facilitate the clearance of rights for digital retransmission services provided over closed networks.

It remains to be seen whether the leaked documents are the ones actually being discussed by the EU bodies. In any case they are subject to further amendments before their official publication.

 Audiovisual Industry Calls on European Commission President Juncker to Preserve Territorial Rights Licensing

With an open letter of July 11, numerous organisations, companies, and individuals representing film and television producers, publishers, sports event organisers, distributors, broadcasters, screenwriters, cinemas, film agencies, platforms, media, and entertainment trade unions throughout Europe and across the world have addressed the European Commission. In the letter they ask the Commission to respect the value of rights in the audiovisual sector by preserving the integrity of territorial exclusivity when executing its Digital Single Market strategy. Producing, distributing, and marketing film and television content requires substantial upfront investment and involves significant financial risk. Therefore, film and television is licensed and distributed on an exclusive country-by-country basis to enable sustainably financed productions and to tailor projects to specific national audiences. The letter contends that an erosion of territorial rights licensing would undermine the value of audiovisual rights as well as the diversity of offers, and thus damage growth, employment and investment, and harm consumers. The signatories claim that the most problematic proposal currently under consideration is the possible extension to online services of the principles enshrined in the Satellite and Cable Directive, including the Country of Origin principle for satellite broadcasts. This would force right-holders into pan-European licensing models and undermine the functioning of the market for production and distribution of audiovisual content in the EU. The letter therefore asks the Commission to "maintain the indispensable market incentives for the film, TV, and sports industries to finance, produce and distribute audiovisual content in Europe for the benefit of all audiences."

German Film Fund DFFF Exhausted for 2016; GMPF Update   

As announced (in German only) Aug. 8, the EUR 50 million annual budget of German federal film fund DFFF (Deutscher Filmförderfonds) has been exhausted, meaning that no additional funding will be granted in 2016. DFFF reviews applications on a first come, first served basis until the annual budget runs dry. Applications received later may get a positive grant only in the next calendar year from the new annual budget.
The German Motion Picture Fund (GMPF), newly introduced as a federal film fund by the German Ministry of Economics in December 2015 and focusing on internationally co-produced films and high quality serial formats, has also been popular. GMPF works on the same basis as DFFF, and reports (in German only) indicate that by June 2016, at least EUR 7 million of its 10 million annual budget was already granted in funding awards. Among the projects funded were Tom Tykwer's series "Babylon Berlin" and Amazon original series production "You Are Wanted". The amounts of funding for each, however, remain undisclosed. 

German Film Subsidy Act: European Commission Approves Collection of Film Levy also from Foreign VOD Providers 
In its decision of Sept. 1, the European Commission approved a provision in the German Film Subsidy Act (Filmförderungsgesetz, FFG) imposing the German film levy on VOD providers outside of Germany. The provision (Sec. 66a para. 2, sentence 2, of the current FFG) extends the obligation to pay a certain percentage of proceeds – as imposed on German-based film exploiters such as cinemas, broadcasters, DVD distributors, and VOD providers – to foreign VOD providers offering services to German customers. While the current FFG has been in effect since 2014, the provision was not officially applied due to the Commission investigating a possible violation of single market rules. It is currently under review if the Federal Film Board (FFA) will start collecting the levy from such VOD providers retroactively from January 2014. Once the collection of the levy from foreign VOD providers (on the basis of 1.8 –2.3 percent of their net proceeds derived from business with customers in Germany) is up and running, the new contributors will then be eligible for FFG funding for the production of theatrical films.