The creative industries—2015 in review (part five)

08.01.2016

This article was first published by LexisNexis on 8 Jan 2016/7 Dec 2015. Click for a free trial of Lexis®PSL
IP & IT analysis: In the fifth of a five part series looking at IP & IT in the creative industries, Mark Brown, partner
at Bristows, and Katey Popova, trainee solicitor, consider the key developments that took place in 2015 and what practitioners can expect in 2016.

What has happened with the developments in 2015?

The Commission presented its Digital Single Market Strategy (DSM) on 6 May 2015 which is aimed at generating
significant growth in Europe. Particularly to allow businesses to grow beyond the EU market and make the EU more attractive for global companies.

The DSM is particularly relevant to the creative industries from advertising and design through to film, music and
publishing.

The DSM is built on ‘three pillars’:
• better access to online goods and services
• shaping the environment for digital networks and services to flourish, and
• creating a European digital economy and society with long-term growth potential
The DSM outlines sixteen initiatives underlying the three pillars and the following are the most relevant to the creative industries:
• cross-border e-commerce rules—the aim is to make cross-border online selling easier, particularly for SMEs and to give confidence to consumers. This will be of particular interest to those in the creative industries who do or would like to sell their products across the EU
• geo-blocking—the aim is to lift the restrictions of access to online services, rerouting and restriction of offers based on the country of residence of a consumer. Geo-blocking is a problem unique to the online services and there is no equivalent offline
• the Satellite and Cable Directive 93/83/EEC—aiming to assess whether the scope should be expanded to include broadcasters’ online transmissions and to boost cross-border access to broadcasters’ services across Europe. The outcome of any amendments to be made to the Directive will affect television and radio broadcasters in particular
• modernise copyright law—the aim is to achieve the correct balance between creators’ and consumers’ interests and to step up enforcement against commercial-scale infringements of intellectual property rights.This area will be of great interest to and will affect all those in the creative industries who produce and make available new content
• simplify VAT rules—to make it easier for business to buy and sell across borders
• audiovisual sector (Audiovisual Directive 2010/13/EU)—review the rules in light of the changes in the sector, particularly the roles and responsibilities of the relevant players and the promotion of European content online and review advertising rules, and is therefore likely to have an impact on online broadcasters and those who put creative content online such as the music industry
• online platforms—comprehensive review of the role of platforms to address issues such as transparency, use of information, constraints of moving between platforms and tackling illegal content, review the notice and take down procedure. Those who put their works on digital platforms will want to keep an eye on the developments in this area
• trust in online services—the aim is to better protect critical infrastructure and personal data. The review of the personal data protection regime is ongoing but moving much slower than hoped for or anticipated
• free flow of data initiative—aiming to tackle the restrictions on free movement of data
What has the Commission achieved in 2015?

The Commission launched public consultations on a number of topics discussed above and below is a summary of what has happened so far:
• legislative proposals for simple and effective cross-border contract rules—the Commission published a ‘roadmap’ in July 2015 which included the Inception Impact Assessment and a public consultation has been carried out. The Commission is aiming for a fully harmonised targeted set of key rules and European model contracts but has not yet issued any further information as to what this may look like. The aim is to fill the legislative gap in relation to digital content to level the playing field, so will be of interest to the film, interactive leisure software and music industries among others
• competition sector inquiry into e-commerce—the investigation is centred on how widespread potential barriers are and the effect these have on consumers and competition—there is a particular focus on digital content. If the Commission does find any anti-competitive issues then it will take action through European anti-trust legislation. A public consultation has been carried out and EU businesses have been contacted to give their views. The findings included that potential barriers are being erected by companies to (control) trade
• tackling geo-blocking—the Commission has launched a public consultation, which is seeking input from businesses and consumers on how geo-blocking has affected them. The Commission has also now published a proposal for a Regulation to enable consumers to have access to content paid or subscribed for in their home country while travelling in other parts of the EU. Under the proposed Regulation content providers will be obliged to offer cross-border portability features to their subscribers. The Commission is expecting the Regulation to come into force in 2017
• review of the Satellite and Cable Directive—the Commission has carried out a public consultation with a view to reassessing the Directive
• role of platforms—the Commission has launched a public consultation which addresses issues such as illegal content and liability of online intermediaries. The Commission is keen to ensure that intermediaries such as ISPs are not liable for online content but that they do take swift action to remove any illegal or infringing content and talks about more rigorous procedures such as a duty of care on behalf of the intermediaries
• VAT rules—the Commission has launched a public consultation in relation to the VAT regime. The Commission will look to reducing the administrative burden of differing VAT regimes and extending the single electronic registration and payment system. Those in the creative industries who operate across the EU, be that fashion, crafts or software, will have an interest in the simplification of the VAT regime across the EU
• copyright—in a green paper entitled ‘Towards a modern, more European copyright framework’ the Commission is seeking to address the new technology, consumer behaviour and market conditions, which have come into existence since the last set of rules dating back to 2001. The key points include:
o portability of content—ensuring that users who have subscribed for content in their home country are able to use it when they are in another Member State
o private copying exception—assessment of whether the current fragmented regime is raising barriers to free movement of goods and services. It is likely to address the following issues: link between compensation and harm to rights holders; double payments; exemptions and principles governing refund schemes; and non-discrimination between nationals and non-nationals in the distribution of collected levies
o clarification of communication to the public and making available right—there is an unsatisfactory lack of clarity of what these concepts mean and how the creative industries can claim rights and negotiate licences and remuneration and the definitions will be considered
o enforcement—advocating the ‘follow the money’ approach involving a number of intermediaries. The aim is to engage with relevant stakeholders to reach agreement by spring 2016. More rigorous enforcement will increase security and certainty for rights holders, particularly in the creative industries
o other legislative proposals—the Commission is considering other proposals such as supporting rights holders/distributors to reach agreement on licences which allow for cross border access to content and making it easier to digitise out-of-commerce collections and make them available across the EU
o remuneration of authors and performers—the Commission is considering whether intervention at EU level is required to increase certainty, transparency and balance in this area
o single code for copyright—the ultimate aim of the Commission is to harmonise copyright in the EU into a single code—this is a long term goal and is unlikely to be put into effect quickly
The Commission is keen to reiterate that the principles of territoriality of rights will not change and in particular the Commission understands that this is a particularly crucial concept in relation to the film industry. It seeks not to change established distribution models but wants to facilitate licensing and access to digital content.
• Single Market Strategy—launched on 28 October 2015 and which overlaps with the DSM strategy in certain areas. These include the review of the E-Commerce Directive 2000/31/EC and geo-blocking, although the remit is broader than under the DSM and will look at online and offline restrictions
What’s happening in 2016?

The Commission is aiming to present all relevant proposals relating to DSM before the end of 2016 to achieve full implementation by autumn 2019 (end of the Commission’s five-year mandate).
• review of Satellite and Cable Directive—public consultation has now closed and proposals are due in 2016. Generally, the Commission is aiming to enhance cross-border online distribution of television and radio programmes and a possible extension to Satellite and Cable Directive is anticipated. The Commission published a report on the functioning of the Directive in 2002 but since then there have been a number of new technological and business models for the transmission of services so a likely extension will be needed. Preliminary proposals include the extension of scope of the directive to certain broadcaster’s online services
• VAT regime—the Commission is aiming to publish legislative proposals to reduce the administrative burden on business flowing from the current VAT regime. The Commission is conducting a public consultation with proposals due in 2016. The Commission will also look at the taxation of digital books and online publications with a communication on the topic due in 2016
• Audiovisual Media Services Directive—the Commission is conducting a public consultation with proposals on the issues due in 2016. Television and radio broadcasters should keep an eye out for the proposals which the Commission will issue
• free flow of data initiatives—this includes European Cloud proposals and data ownership. The consultation on online platforms covers the free flow of data and asks participants whether their businesses have been affected by restriction in an attempt to identify the most prominent barriers. There are currently no guidelines for the use of non-personal data and the Commission is keen to remove any unnecessary restrictions so that that data could be utilised. The Commission wants to promote the use of a European Cloud and will look at measures to increase security such as certification measures as the response from business identified security risks as the largest deterrent to its use
• competition sector inquiry into e-commerce—a report is due in mid-2016, following the consultation which identified that barriers are being used to control trade
• geo-blocking—the Commission’s proposals are likely to spark discussions in 2016, particularly around the implementation of these proposals and possible licensing issues which some content providers might face. There are likely to be further proposals in relation to geo-blocking, which may take the current proposals a step further but there has been no indication as to what these may be. These proposals and the discussions around them will be of great interest to digital broadcasters and others in the creative industries who use varying websites in different Member States as their ability to restrict access will be diminished
• role of platforms—a comprehensive assessment on the role of platforms flowing from the public consultation will be undertaken in the first part of 2016. Removal of illegal and infringing content is likely to be a key issue along with the role of intermediaries in relation to this, which will be of importance to rights owners within the creative industries who distribute their works online
• copyright—in relation to enforcement the aim is to engage with relevant stakeholders to reach agreement by spring 2016 based on a self-regulatory approach. If it is required the codes of conduct could be backed by EU legislation. The Commission is also assessing the broader legal framework for enforcement by autumn 2016 and is likely to look at the rules for identifying infringers, cross border application of provisional, precautionary and injunctive measures and the calculation and allocation of damages and costs. The Commission is planning to publish a number of legal proposals in spring 2016, which will relate to, among other issues, facilitating licensing to allow cross-border access to content, improving cross-border distribution of TV and radio programmes in an online environment and exceptions. These proposals will be of great interest to those in the creative industries
The DSM Strategy is in an early stage with the Commission completing or having completed public consultations on a number of issues but currently with few concrete proposals. It therefore remains to be seen exactly how the creative sector will be affected. All those with an interest in a creative industry or those advising creative industries will do well to keep an ear to the ground as now may be a useful time to engage in lobbying activities before further concrete proposals are issued and the European legal framework is altered as a result of the DSM Strategy.