Juncker's Utopia: a virtual Europe without borders

It is 2015 and the relentless appetite for consumption of content has never been greater.

Consumers demand access to content that is immediate and available anytime anywhere in Europe without restriction.  Binge viewing is the new norm.  The desire for a virtual Europe without borders is palpable.  But how does all this sit with Europe’s copyright laws?

At the European level, copyright is rooted in the principle of territoriality i.e. copyright law is national and the way in which it is implemented may therefore vary from one Member State to another.  Consequently, online content which is lawful in one Member State (e.g. it is entitled to avail of a copyright exception such as parody), might constitute an infringement of copyright in another Member State (i.e. where there is no such exception).  Unfortunately, the differences between Member States laws on basic copyright issues, such as the definition of rights, the exceptions to rights and the differing approach to the implementation of copyright levies, creates an obstacle to the free flow of online content across Europe’s internal borders.

Cyber travel is however a reality and protected digital content is unlawfully moving across Europe's borders.  Ideally content should only be accessed and distributed in a way that ensures that the rights of authors and content owners are protected and copyright laws are respected, while at the same time meeting consumer demand.  The need for real reform at the European level is therefore undoubtedly long overdue. Is it time for a single EU Copyright Title? At a minimum, a further harmonised copyright system is essential to allow Europe to fully realise the internal market objective, to compete globally and to attract foreign investment to the EU.

The Commission’s agenda

Jean-Claude Juncker has set himself five core priorities for his tenure as President of the European Commission.  His first priority is to put policies that create growth and jobs at the centre of the Commission’s policy agenda. To achieve this, he states:

“We must create a digital single market for consumers and businesses – making use of the great opportunities of digital technologies which know no borders.”

President Juncker also refers to the need “to have courage to break down national silos” in regulation and legislation including in respect of copyright.  In particular, his vision for Europe is one where “consumers can access music, movies and sports events on their electronic devices wherever they are in Europe and regardless of borders.”

Juncker’s team of Digital Single Market (“DSM”) Commissioners aim to have a fully developed DSM strategy by May 2015.  No mean feat considering quite wide-ranging issues such as consumer rights, data protection, cyber-security, competition law issues and copyright will need to be considered.  As regards the latter, it is already quite clear where policy making on copyright is likely to go.  In a blog post following the first meeting of all the DSM Commissioners on 12 November 2014, Andrus Ansip, Vice President of the European Commission, poses the question “is there anyone who would not want to get rid of geo-blocking, which goes against the core principles of Europe’s single market?”.

The DSM and copyright harmonisation

The DSM Commissioners have set themselves an ambitious task – the creation of a Digital Single Market.  But is Europe’s copyright system ready for a virtual world without borders?

Stakeholders require predictability and legal certainty in respect of copyright issues when moving content across borders.  A borderless utopia cannot therefore be achieved without first making serious advancements on the harmonisation of copyright in Europe.  It is fair to say that this is an issue which has been on the Commission’s agenda for several years not least demonstrated by the following list of some of the Commission’s previous initiatives:-

2006: the Commission holds a wide ranging consultation on online content with a view to making Europe’s online content market more competitive;

2008: the Commission publishes a Green Paper entitled “Copyright in the Knowledge Economy”;

2009: a further consultation is held by the Commission on the challenges to creating a single market for creative content online, and the way those challenges could be addressed;

2011: the Commission issues a blueprint for IP rights entitled “A single market for intellectual property rights boosting creativity and innovation to provide economic growth, high quality jobs and first class products and services in Europe” – in it the Commission suggests considering the adoption of a European Copyright Code;

2012: the Commission issues a communication entitled “The Digital Agenda for Europe – Driving European growth digitally”; and 

2013/2014: the Commission holds a public consultation on the review of EU copyright rules and an “Internal Draft” White Paper entitled “A copyright policy for creativity and innovation in the European” is subsequently leaked.

Clearly the will is there at the European Commission level to bring about copyright harmonisation and reform but progress to date has been painfully slow, no doubt due in large part to the various conflicting stakeholder interests at play.

In the meantime, however, the Court of Justice of the European (CJEU) has been proactively tackling harmonisation by means of judicial interpretation.  Over the last number of years there has been an influx of references for preliminary rulings to the CJEU with Members States seeking guidance on how to interpret various aspects of the InfoSoc Directive.  Consequently, we have seen judicial interpretation of key principles of European copyright such as the originality requirement (Infopaq); what constitutes a "communication to the public" (TVCatchup, OSA), and issues such as whether linking and framing constitute copyright infringement (Svennson, BestWater).  Whilst these judicial developments are to be welcomed, this type of piecemeal harmonisation does not bring with it the level of legal certainty required to make Europe digitally fit for purpose.

There are various potential options available for tackling further copyright harmonisation at the EU level. Firstly, after the entry into force of the Treaty of Lisbon, full harmonisation of the copyright laws of Member States through the introduction of a copyright regulation with effect throughout the EU may be possible under Article 118(1) TFEU.  This would allow for a single EU Copyright Title to replace national laws, which would have the merit of overcoming problems relating to the issue of territoriality.  However, if the pace at which Europe's plans for a unitary patent system has moved is to be provide a benchmark, the quest for a fully harmonised copyright system in the form of an EU Copyright Title might not be an attractive option. Other potential options would be to try to achieve further harmonisation through the enactment of ad-hoc directives or to rely on guidance through non-binding recommendations.

Alternatively, Europe could continue as it has done to date and wait for further copyright harmonisation to be achieved by the activity of the CJEU judiciary or by way of national courts following each other’s decisions.  This “laissez faire” approach is however probably the least satisfactory from a legal certainty and costs perspective i.e. all those affected will need to await the outcome of litigation (which is typically time consuming and costly), to understand how the law should be interpreted.

The real world

The comments from the European Commission come as no surprise when considered against the backdrop of what is happening online.

While cultural preferences and language differences can play a role in demand for cross border services, generally consumers want access to protected online content to be universally available, constant and flexible.  Much to their disdain, the vast majority of internet users will however have encountered geo-blocking tools at some point – essentially these tools allow content providers to pinpoint a user’s location (via Internet Protocol address identification) and limit the user’s access to content based on the location from which the user is connecting to the internet.  Geo-blocking therefore establishes virtual borders and enables content providers to partition markets.  For example, geo-blocking allows our national TV stations to ensure that content that is provided “for free” in the United Kingdom under the TV licensing regime, cannot be accessed from other countries where access to that content requires a subscription / charge.  Similarly, geo-blocking allows licensees of content to effectively ensure compliance with the terms of their licence by restricting user access to licensed content to the licensed territory – hence the block you will encounter when trying to access the full suite of content on your BBC iPlayer when overseas!

From the perspective of rights holders and content providers, geo-blocking technology serves various useful commercial and legal purposes, including ensuring that local copyright laws are complied with, by restricting access to content from only those territories where it is legally permissible (or indeed desirable) to do so.  Amongst other things, geo-blocking tools therefore provide a technical solution to a problem that the law has to date not sufficiently addressed.  These tools allow content providers to neutralise the effects of the impact of differences in copyright laws between Member States and as such play a pivotal role in the territorial functioning of copyright.  Until such time as copyright has been further harmonised at the EU level, content providers will need to continue to rely on geo-blocking and any call for its abolition may be premature.

Some potential implications of a borderless online Europe

Ideally Europe would like to achieve a reality that satisfies the needs and wishes of its citizens whilst also protecting the commercial interests of entities operating within its borders.

An abolition of digital borders would undoubtedly have implications for the status quo as it currently exists.  From a web-user's standpoint, a borderless online Europe would theoretically provide access to all available content across all Member States thereby providing much greater choice.  It would also instil confidence within the system and eliminate the consumer temptation (or indeed need) to avail of software that may be illegal or from dubious sources (e.g. geo-blocking evasion tools) to access the content that they wish to access. From a consumer standpoint, the potential for exposure to a greater volume and variety of online content across the entirety of the EU is always going to be an attractive proposition.

Likewise, for the rights-holders / content providers of digital content, the introduction of a digital single market with no borders would facilitate the cross border flow of their content with the potential to introduce it to a significantly wider audience/ consumer-base.  It would also potentially reduce enforcement costs.

However, such a position might not be as attractive to rights-holders / content providers as it sounds.  Typically they will impose royalty rates for specific territories which ensure optimum consumption and revenue within a territory.  In setting these rates, rights-holders will take into account factors such as maturity of the online content market, value placed on online content and acceptable royalty rates in that territory. Consequently they implement and manage licensing structures at a country level which ensures maximum return on their investment.  Under a borderless system, rights-holders may not be able to fully realise profits on their content as consumers would potentially be able to "forum shop" for the best deals available on the European market.  This could lead to rights-holders deciding to standardize / increase royalty rates across all territories to ensure their revenue position is protected.  The abolition of virtual borders may not ultimately be as beneficial to consumers as first envisaged.

Conclusion

The European Commission has ambitious plans for a Digital Single Market and aims to have its DSM strategy finalised by this coming May.  The vision involves a virtual Europe where consumers can access online content anytime anywhere within its borders without fear of contravening laws.  The Commission's strategy will therefore need to involve consideration of quite wide-ranging issues such as consumer rights, data protection, cyber-security, competition law and copyright law issues.

This article looks at how Europe's copyright laws fit within this wider plan.  At present, Europe's copyright system is rooted in the principle of territoriality where copyright laws may vary between the various Member States.  It is clear that Europe will need to further, arguably fully, harmonise its copyright laws in order to facilitate the objective of a borderless virtual market.  Whether, and if so, how Europe will do so – well, only time will tell.

Without intending to sound unduly pessimistic, we suspect that it is likely to be quite some time before Juncker's utopia becomes a virtual reality.  In the meantime, geo-blocking technology (and geo-blocking evasion tools) will remain a feature of the online world.