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The European Commission has welcomed the political agreement confirmed on 8 June within the framework of the Council of Ministers on a Directive on Copyright and related rights in the information society. The proposed Directive will stimulate creativity and innovation by ensuring that music, films, videos and all materials protected by copyright are adequately protected throughout the Internal Market. Throughout the legislative process, the Commission has paid particular attention to safeguarding a fair balance between all the rights and interests involved including rightholders, network operators, consumers, consumer electronic industries and the educational community. The Directive will make cross-border trade in copyright-protected goods and services easier, with particular emphasis on "new" Information Society products and services (both on-line and on off line via CDs for example). Network operators will have the benefit of an obligatory exception for technical copies on the net. There is an exhaustive list of exceptions to copyright which Member States may maintain provided that copyright holders receive fair compensation for particular exceptions. The relationship of the exceptions with the legal protection of anti-copying devices especially where legitimate users are concerned is also clarified.
"This is a breakthrough in what is a vitally important dossier," said Internal Market Commissioner Frits Bolkestein. "Since the Commission's proposal was first tabled in 1997, we have seen an explosion in information technology. The internet is transforming film, video and music and reinventing the concept of audience participation. For Europe's creative artists and copyright-based industries to derive maximum benefit, we need to ensure their intellectual property rights are protected. But that has to be weighed against the rights of other interests – network operators, users including consumers, the educational community and society at large. The balance has been delicate, but it is finally secured."
Procedurally the proposed Directive will now be the subject of a formal Common Position, due to be adopted by the Council without discussion (probably before the end of July), and then go to the European Parliament for a second reading under the co-decision procedure.
The Directive will adjust and complement the existing EU framework on copyright and related rights to respond to the new challenges of technology and the information society, to the benefit of both rightholders and users. In particular, it covers the rights of reproduction, communication to the public, distribution, the legal protection of anti-copying devices and rights management systems. It extends protection in a global market since this Directive is also a pre-requisite for the ratification of the 1996 World Intellectual Property Organisation (WIPO) Treaties – the so called "Internet" Treaties (see IP/96/1244). These two Treaties, namely the WIPO Copyright Treaty (WCT) on the protection of authors and the WIPO Phonograms and Performances Treaty (WPPT) on the protection of performers and phonogram producers, were adopted by WIPO in December 1996.
All EU Member States and the European Community are signatories as well as European Economic Area members and the countries of Central and Eastern Europe.
Technical copies on the net
The Directive provides an obligatory exception for service providers, telecoms operators and certain others in limited circumstances for particular acts of reproduction which are considered technical copies. A satisfactory balance has been found for what has been an extremely controversial issue. There are many conditions to be fulfilled before the exemption applies. In particular, those acts of reproduction have to form an essential part of a technological process and take place in the context of a transmission in a network. The Directive ensures therefore that there will be effective operation of the worldwide web for those who place copyright material on the net and those who transmit or carry such material.
Exhaustive list of optional exceptions
There is now a detailed exhaustive list of exceptions to the reproduction right and right of communication to the public. All are optional and therefore Member States may choose to apply any or all of these exceptions. However, the list is exhaustive which means that no other exception may be applied. This proved controversial. Therefore, a "grandfather clause" has been included which allows Member States to continue to apply existing exceptions in minor cases for analogue (not digital use) only.
Fair compensation
This was originally suggested by the European Parliament in relation to certain exceptions and taken on board by the Commission in its amended proposal (see IP/99/337). It applies to two of the exceptions, namely reprography (photocopying) and private copying. However, Member States are given great flexibility in how to interpret this. In particular, in certain minor cases, there may be no obligation for payment. The precise form of such compensation (which may, but does not have to, take the form of levies on copy shops, sales of blank tapes and equipment, as exists in most Member States) would be up to the Member States to decide in accordance with their own legal traditions and practices.
Member States would also have some flexibility concerning how they treat the question of fair compensation for time shifting i.e. private copies made off the air from radio or television for the purpose of viewing or listening to the broadcast at a later more convenient time.
The relationship between the legal protection of anti-copying devices (technological measures) and the exceptions
This has been amongst the most political and controversial topics of the whole debate. The problem has been how to ensure that an exception e.g. an act of reproduction or copying for illustration for teaching can be made use of where a copyrightholder also has in place an anti-copying device e.g. a digital tracker designed to spot pirate copies. Failure to address this would have meant that the exceptions could have been meaningless in some cases. Here too there has been a compromise. Firstly, rightholders have complete control over the manufacture, distribution etc. of devices designed to circumvent anti-copying devices. A more flexible solution in this regard would have carried a greater risk of abuse and piracy.
Secondly, the Directive provides that rightholders either voluntarily or by way of agreements with other parties have to provide those who would benefit from an exception e.g. schools, libraries in the case of teaching, with the means to do so. It will be up to Member States to ensure that such means exist.
However, as far as private copying is concerned, the quality and quantity of private copying and the growth of electronic commerce all mean that there should be greater protection for rightholders in digital recording media (whereby unlimited numbers of perfect copies may be made rapidly). In certain limited cases, where rightholders have made the means available, private copying may be carried out.
Community exhaustion
The Directive applies Community exhaustion and not international exhaustion for the distribution right. This is in line with previous Directives in the field of copyright. Therefore, once a copyright protected product such as a CD or CD-ROM is marketed in the Community by or with the consent of the rightholder, the distribution right is said to be "exhausted" i.e. there is no right to restrict further distribution in the Community. Parallel imports throughout the Community will therefore be permitted but the rightholder will retain protection against parallel imports from third countries.
Relationship with the E-Commerce Directive
Both the E-Commerce Directive (see IP/00/442) and this Directive are important pieces of legislation in the EU objective to create a harmonised legal framework to encourage the development of the Information Society. They complement each other, as this Directive deals with aspects of copyright law whilst the E-Commerce Directive harmonises various legal issues relating to the functioning of the internal market. This Directive supplements the liability provisions of the E-Commerce Directive by confirming that injunctive relief i.e. the ability to stop infringing activity by court or other action must also be available to rightholders against intermediaries when their services are used by third parties to infringe copyright or related rights.
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