When will the new provisions of the Copyright Act become applicable?

The new provisions are applicable as of 4 November 2021, meaning that there is not that much time left for those affected by the new legislation to adapt their internal processes in a way that would allow them to meet the recently introduced obligations and possibilities.

Besides, this “makeover” of the Copyright Act will need to be approved by the Spanish Parliament, which is why the possibility of any further amendments cannot be entirely ruled out.

Main aspects to be taken into account

Data mining

We already discussed the main aspects regarding the data mining provisions introduced by the Copyright Directive in one of our previous posts (available here). As a brief refresh, we would summarize the most relevant highlights as follows:

First of all: what is “data mining”? As explained by the preparatory papers published by the European Institutions involved (for instance, this one and this one), data mining would generally entail the following steps:

• Access to content (e.g. the Internet through web scraping techniques, etc.);
• Extraction and/or copying of content; and
• Mining of text and/or data, and knowledge discovery, which requires the pre-processing of relevant text and data and extraction of structured data, with the aim of analyzing such information, and then recombining it to detect patterns in the final output.

The main issue that stems from this process is that any company that engages in data mining techniques may, even inadvertently, infringe third parties' IP rights. The recent update of the Copyright Act includes an exception according to which the use of data mining techniques will not be regarded as an infringement of such rights, in particular: (i) databases’ IP rights (under Directive 96/9/EC); (ii) reproduction rights (in particular in the context of information society services under Directive 2001/29/EC); and (iii) reproduction, translation, adaptation and arrangement rights regarding computer programs (under Directive 2009/24/EC).

However, the aforementioned exception is subject to certain limits. Access will not be considered lawful to the extent that:

• The rightsholder reserves those rights by the use of machine-readable means, including metadata and relevant terms and conditions of use for a particular website or a service;
• The data is protected and only made accessible to registered users, in a way that unauthorized third parties may not “lawfully access” the information without having being granted sufficient access rights or privileges; and
• The data include information that does not benefit from the protection conferred by the Copyright Directive/Act, which means that its extraction may be otherwise protected/prevented by virtue of other applicable laws and regulations (e.g. data protection laws or different IP rights).

Memes and freedom of expression

The use of memes and GIFs (quotation, criticism, review, caricature, parody or pastiche) will, in many scenarios, either affect or directly involve IP rights concerning the original work which served as a basis for the creation of such memes. The European Parliament specifically addressed this topic as part of the right to freedom of expression, in the sense that the use of small pieces of works protected by IP laws will be deemed lawful to the extent it does not lead to confusion with the original work.

Use of third parties' IP rights by online content-sharing service providers

In our view, this may very well be one of the most impactful sections of the updated Copyright Act, due to its implications for large online content-sharing service providers, content producers (e.g. newspapers) and the liability of intermediary platforms under e-commerce laws. In this respect, the EU Commission issued a Communication (available here) to clarify article 17 of the Copyright Directive.

The article in question puts online content-sharing service providers in its crosshairs. The definition of online content-sharing service provider under the Spanish Copyright Act is, in substance, a replica of the definition contained in the Copyright Directive. The nuances introduced by the Copyright Act appear highlighted in bold: “It includes any company that is an information society service that has as its main or one of its main purposes to store and give the public access to a large amount (or with high level of audience) of copyright-protected works or other protected items uploaded by its users, which it organises and promotes for (either direct or indirect) profit-making purposes”. Therefore, online encyclopedias, cloud services, non-profit repositories (scientific, educational, etc.), marketplaces, etc. will be excluded from the scope of this definition.

According to article 17 of the Copyright Directive, online content-sharing service providers will need to obtain an authorisation from the relevant rightsholders to enable the act of communicating or making available to the public with regards to the rightsholder’s protected content (i.e. obtaining an authorisation for the content uploaded on their platform). In practice, this would mean that from a legal point of view, and as opposed to the recent CJEU judgement (here) that applied the former legislation, sharing content protected by IP laws entails a "communication to the public", which is subject to the relevant authorization of the rightsholder.

Notwithstanding the above, each EU Member State can provide for different authorisation models in order to "foster the development of the licensing market" (e.g. individual and/or voluntary collective licensing solutions, voluntary mechanisms to facilitate agreements between rightsholders and service providers, etc.). We already informed of the approach followed in Germany (available here) and France (available here).

In Spain, the legislator opted for the following model:

• Online content-sharing service providers shall obtain the relevant authorization from the rightsholder for the purposes of the right to "communicate to the public" (including Article 3 of Directive 2001/29/EC for non-commercial or profitable purposes). This negotiation must be carried out in accordance with the principles of contractual good faith, due diligence, transparency and respect for free competition, excluding the exercise of a dominant position. Online content-sharing service providers are not allowed to link other agreements or obligations to this authorization. Regardless of this, newsletters and editorial agencies are entitled to provide authorizations by applying the mechanisms of collective licensing under the Spanish Copyright Act.
• However, in those cases where the online content-sharing service provider has not obtained the relevant authorization, it will become responsible for any and all non-authorized acts of "communication to the public", unless the relevant online content-sharing service provider:
  • Demonstrates that they have made their best efforts to obtain the authorization;
  • Ensures that, in accordance with high industry standards of professional diligence, they employed their best efforts to ensure the unavailability of specific works and other items for which the rightsholders have facilitated the service provider with the relevant and necessary information; and
  • Has acted expeditiously, upon receiving a sufficiently substantiated notice from the rightsholders, to disable access to, or to remove from their platforms, the notified works or items, and made their best efforts to prevent their future uploads.

In line with the abovementioned requirements, the Spanish legislator has specified that, in relation to “live” content (such as streaming platforms), the online content-sharing service providers will have to disable the access or retire the infringed IP content during the live broadcasting of the event at hand.

Without prejudice to the foregoing, online content-sharing service providers will not find themselves under an obligation to carry out a general monitoring of the content disseminated on their platforms.

In addition, online content-sharing service providers shall:

• Provide rightsholders with appropriate information every six (6) months regarding the cooperation practices set out above;
• Put in place an effective and expeditious complaint and redress mechanisms and make them available to users of their services in the event of disputes over the disabling of access to, or the removal of, works or other items uploaded by them. The affected works shall not be available during the period of decision within scope. There is a deadline of ten (10) natural days to decide, and the decisions shall have human intervention (i.e. without fully-automated techniques); and
• Inform users about the general applicable conditions of use and the limits of IP rights, in line with Regulation 2019/1150, which includes the need to inform about raking parameters, etc. Please note that we assessed this regulation in a separate post, available here.

All in all, the new requirements set out above impose several obligations on the content-sharing service providers who, until now, have acted as mere intermediaries. In light of the recent updates, new and increasingly burdensome obligations and requirements seem to be unfolding onto these companies who will, in principle, be expected to design and implement technical procedures to ensure compliance with the legislation.

Equitable remuneration of authors and performers in contracts for exploitation

Where authors and performers grant authorizations or assign their exclusive rights for the exploitation of their works or other items, they shall be entitled to receive adequate and proportionate remuneration. The negotiation of the corresponding authorizations or assignments must be carried out in accordance with the principles of contractual good faith, due diligence, transparency and respect for free competition, excluding the exercise of a dominant position.

The updated Copyright Act also sets out certain transparency obligations for assignees of exploitation rights and holders of authorizations to make use of a particular work or item, as well of a repertoire managed by an IP rights management organisation, who shall provide the authors or performers, at least once a year and by electronic means, with updated information on the exploitation of their works or items. In addition, in the event that the holder assigns the authorization to third parties, the affected authors and performers may request from the assignor the identity of the successive assignees and request any additional information they may need from the latter.

Notwithstanding the foregoing, where such obligation turns out to be disproportionate in relation to the revenues generated by the exploitation of the particular work or item, said obligation will be limited to a reasonable, proportionate and effective level of information.

The referred obligation will not apply if the author's or performer's contribution is not significant in relation to the particular work or item, unless they need that information to exercise the legal action for review due to non-equitable remuneration, or where article 167 of the Copyright Act is deemed applicable.

This will not apply to authors of computer programs.

Next steps

• Companies that apply data mining techniques should assess the lawfulness of this activity in each case, and review the parameters of algorithms, etc. Companies that wish to avoid the use of data mining by third parties shall apply the appropriate measures;
• Potential online content-sharing service providers should assess whether they are under the scope of the obligations of the Copyright Act, and if so, they shall enter into negotiations with publishers and rightsholders. Besides, they shall ensure compliance with the rest of applicable obligations (e.g. creation of complaint and redress mechanisms);
• Rightsholders of content used by online content-sharing service providers should assess whether or not to provide the authorization for the public communication of their content. In any event, they should enter into negotiations in good faith or, as the case may be, monitor that no content has been uploaded without authorization, or even ask for the removal of content.
• Authors, performers and rightsholders shall take into account the obligation to receive/provide adequate and proportionate remuneration.