Politico leaks draft Digital Single Market strategy tackling geo-blocking, civil enforcement and role of ISPs

Yesterday Politico leaked copies of the draft Digital Single Market (DSM) Strategy and its supporting Evidence, which the EU Commission is officially due to release on 6 May 2015.

The Strategy starts by stressing the "need to create a Digital Single Market where everything that is also possible in the physical Single Market is possible in the digital world [yet, there is no mention of such topical issues as digital exhaustion, on which see latest Kat-instalment here]... [F]ragmentation and barriers that do not exist in the physical Single Market are holding the European Union back. Bringing down these barriers within Europe could contribute to an additional 340 billion euros to European GDP."

So the aims are apparently "simple: First, to create a Digital Single Market as an area where the free movement of goods, persons, services and capital is ensured and where citizens and businesses can seamlessly access and exercise online activities under conditions of fair competition, irrespective of their nationality or place of residence. Second, to create a Digital Single Market that will help restore Europe as a world leader in information and communications technology, with all the tools and skills required to succeed in the global digital economy."

The proposed Strategy is articulated around a number of pillars, including "to tackle a number of obstacles which prevent cross-border online activities from being as seamless as national ones. The Commission has identified a number of areas where immediate action is required. First, differences in contract law between Member States are creating a barrier to trade within the Single Market. Second, there is a lack of affordable and high quality cross-border parcel delivery services within Europe. Third, consumers should not be unfairly discriminated against when accessing content or buying goods and services online due to their nationality, residence or geographical location, within the borders of the EU ..."

Besides discussion of issues such as e-commerce and VAT rules, as expected the DSM Strategy reserves a prominent role to issues relating - in one way or another - to copyright.

In particular, this draft document announces legislative proposals to address: 

(1) "unjustified geo-blocking through a combination of actions"; 

(2) copyright reform - notably by allowing text and data mining and ameliorating civil enforcement [just these two? If this was the case, then the Commission agenda would end up being notably more limited than what MEP Julia Reda proposed in her draft Report, here, on which see the recent reactionof CISAC, here];

(3) and the role of intermediaries.

A Kat subscribing to Sky Italia
is only allowed to watch its programmes
when located in Italy, San Marino or Vatican City

Geo-blocking

"Geo-blocking refers to practices used for commercial reasons by online service providers that result in the denial of access to websites in other Member States or, where the consumer is able to access the website, they are still not able to purchase products or services from it. Sometimes the consumer will be re-routed to a local website with different prices. In other such cases, where the sale is not denied, geo-localising practices - where differing pricing structures are automatically applied based on geographic location - are often used to apply differentiated prices to consumers."

Possible actions that the Commission is considering in this area include targeted change to the e-Commerce framework and clarification of the application of Article 20 of the Services Directive, or a review of Unfair Commercial Practices Directive. In parallel, the Commission will launch a Competition Sector Inquiry focusing on the application of competition law in this area [possibly in continuation with the approach taken by the Court of Justice of the European Union in FAPL, here].

Copyright reform: geo-blocking, text and data mining and civil enforcement

Closely related to proposed initiatives on "unjustified" geo-blocking, the Commission intends to prevent rightholders from disallowing use of their content across borders. According to the Commission:

"Restrictions to access online media content are still frequent, particularly for audio-visual programmes. As soon as they cross an EU border consumers are prevented from using the content services (e.g. for video services) for which they have paid in their home country. In addition, when trying to access or purchase copyright-protected content from another Member State, they are sometimes confronted with the message that it is unavailable or cannot be accessed from their own country."

Overall, data suggest that:

• 45% of companies trying or considering selling digital services online to individuals consider that copyright, preventing them from selling abroad, is a problem;
• 20% of EU population indicated their interest in watching or listening to content from other EU countries and 33% in watching of listening to content from home when abroad;
• Of all the video on demand content in the EU, less than 4% of that content is available cross-border.

Being vague seems
increasingly en vogue

Coming to the topic of exceptions and limitations, it would seem that no major reform of Article 5 of the InfoSoc Directive would take place [let alone the introduction of an open norm as proposed by MEP Reda]. Rather, the only apparent (minor) change would be to provide legal certainty and enable researchers and education institutions to text and data mine.

What seems a bit clearer from the draft DSM Strategy is that there has been some 'bargaining' going on in Brussels. While rightholders would be clearly penalised from the prohibition of geo-blocking, it seems that the Commission would like to make the pill sweeter for them to swallow by promising initiatives on civil enforcement and reviewing the role of internet service providers (ISPs).

Indeed:

"From the creators' perspective, there is concern that inappropriate changes to the copyright framework may affect the overall value of the rights sold to distributors/platforms/broadcasters, which could also have a negative impact on the financing of EU media content, which is currently territorially based. There is need therefore for a balanced copyright reform including measures that would benefit rights holders, such as matching reforms to end the fragmented regulatory framework within the Digital Single Market. Likewise, the need for a more effective and balanced cross-border civil enforcement system against commercial scale infringements of intellectual property rights will be addressed ... This is also an issue to be taken into account in the Commission's ongoing analysis of the role of online platforms in the digital economy and the rules relating to liability for illegal content on the Internet."

Besides a reference to the ongoing antitrust investigation onto Google ("The market power of some online platforms in the digital economy raises a number of issues that warrant further analysis"), the DSM contains a fairly lengthy discussion of the role of ISPs:

"For content on the Internet, the principle, enshrined in the e-Commerce Directive, that Internet intermediary service providers should not be liable for the content that they hold and transmit passively, i.e. provided they do not alter it or take ownership of it, has underpinned the development of the Internet in Europe. At the same time there is also a need to ensure that when illegal content is identified, intermediaries take effective action to remove it, whether it be information that is against the public interest (e.g. terrorism/child pornography) or information that infringes the property rights of others (e.g. copyright). This obligation to assist is enshrined in the e-Commerce directive. Today the removal of illegal content can be slow and complicated while content that is actually legal can be taken down erroneously. There is also a lack of transparency in the process. Differences in national practices can impede enforcement (with a detrimental effect on the fight against online crime) and undermine confidence in the online world. As the amount of digital content available on the Internet grows, current arrangements are likely to be increasingly tested. It is also not always easy to define the limits on what intermediaries can do with the content they host without losing the immunity conferred on them by the e-Commerce Directive."

What will happen in this respect? "The Commission will further prepare proposals to tackle illegal content on the Internet and a common approach to the issue of duty of care. Alternatives include legislative proposals to harmonise the procedures for removing illegal content across the EU or establishing additional responsibilities on online companies and verify the resilience of their systems against illegal content."

Timeframe

As the Annex to the DSM Strategy clarifies, the proposed timeframe for any legislative proposals is as follows:

• Copyright reform proposals will be tabled in Autumn 2015;
• Proposals on cross-border access will be also tabled this year;
• Both the undertaking of a comprehensive analysis the role of online platforms in the market and the launch of an initiative leading to "possible" proposal [sounds rather vague: will it ever happen?] for combatting illegal content on the internet will take place in 2016.

***

Now we can just wait until 6 May to see if any substantial changes are made to the DSM Strategy. Stay tuned!