A World Of Difference: Copyright in TPP and the EU

The full and final text of the Trans Pacific Partnership agreement was officially released today, giving the public and Congress their first look at the long-gestating and controversial trade deal. And it’s clear from the chapters on intellectual property and investment that content creators and copyright owners got more or less everything they were seeking from the deal.

The treaty, which Congress will now have 90 days to vote up or down but cannot change, would require countries to ban the circumvention of EU headquarterstechnical protection measures (i.e. DRM) and, like the the Digital Millennium Copyright Act in the U.S., to sever liability for circumvention from any actual infringement of copyright. In other words, circumvention is verboten whether or not it results in an infringement under a participating country’s national copyright law.

The text does allow countries to pass exceptions to the ban on circumvention for non-infringing uses, as the DMCA permits through a triennial rulemaking by the Library of Congress, but it does not make those exceptions mandatory. The text also avoids any reference to a U.S.-style fair use principal while extending the term of copyright in all TPP countries to the U.S. standard of the life of the author plus 70 years.

The biggest surprise comes in the chapter on investment, which defines intellectual property as an asset that can be subject to the highly controversial investor-state dispute settlement process (ISDS) outlined in the agreement. Under ISDS, investors (i.e. companies) from one country can challenge the government of another over rules or laws that allegedly violate the investors’ rights under the treaty, and the challenge is heard by an international tribunal of arbiters whose rulings are not subject to review by national courts. According to critics of the deal, that means companies could sue any of the TPP nations for introducing rules that they allege harm their right to exploit their copyright interests, such as a rule to limit civil penalties for copyright infringement of orphan works.

Half way around the world, however, content creators and rights owners have more to worry about this week. A leaked draft of Communication from the European Commission (h/t IPKat) regarding the long-envisioned “digital single market” within the European Union signaled major changes to how content is licensed and sold throughout the 28-member bloc in the near future.

The draft communique, which looks pretty final, lacking only an official publication date on the cover sheet, reveals the Commission plans to introduce legislation early in 2016 to begin the gradual prohibition of exclusive territorial licenses on copyrighted content throughout the EU. In a nod to the interests of content creators, who have long relied on the sale of exclusive rights to finance production and maximize revenue, the proposed legislation will call for a “balanced approach” to their elimination to give markets and businesses time to adjust. But the clear goal is to ensure the “portability” of content across borders irrespective of its provenance:

The ultimate objective of full cross-border access for all types of content across Europe needs to be balanced with the readiness of markets to respond rapidly to legal and policy changes and the need to ensure viable financing models for those who are primarily responsible for content creation. The Commission is therefore proposing a gradual approach to removing obstacles to cross-border access to content and to the circulation of works.

As a first step, the Commission is presenting together with this Communication a proposal for a regulation on the ‘portability’ of online content services, to ensure that users who have subscribed to or acquired content in their home country can access it when they are temporarily in another Member State.

Furthermore, in order to allow for wider online access to works by users across the EU, the Commission is assessing options and will consider legislative proposals for adoption in spring 2016 aiming at:

  • Enhancing cross-border distribution of television and radio programmes online via the possible extension of some of the provisions of the Satellite and Cable Directive to broadcasters’ online transmissions;
  • Supporting right holders and distributors to reach agreement on licences that allow for cross-border access to content, including catering for cross-border requests from other Member States, for the benefit of both European citizens and stakeholders in the audiovisual chain. In this context, the role of mediation, or similar alternative dispute resolution mechanisms, to help the granting of such licences, will be considered;
  • Making it easier to the digitise out-of-commerce collections and make them available, including across the EU [sic].

The Commission also seems intent on reining in the power of national organizations that currently collect and distribute levies imposed on a wide variety of copying equipment in many EU countries meant to compensate rights owners for private copying:

The Commission will assess the need for action to ensure that, when Member States impose levies for private copying and reprography to compensate right holders, their different systems work well in the single market and do not raise barriers to the free movement of goods and services. Issues that may need to be addressed include the link between compensation and harm to right holders, double payments, exemptions and the principles governing refund schemes, and non-discrimination between nationals and non-nationals in the distribution of any levies collected. The Commission will also promote a reflection on how levies can be more efficiently distributed to right holders [sic].

The Communication also tees up further proceedings to consider other highly contentious topics, such as the balance of rights between content creators and aggregators:

The Commission is reflecting on the different factors around the sharing of the value created by new forms of online distribution of copyright-protected works to the various market players and, by spring 2016, will consider measures in this area. The objective will be that the value is fairly allocated to the players that contribute to generating it, and that the use of copyright-protected content is adequately remunerated for online uses.

In this context, the Commission will examine whether action is needed on the definition of the rights of ‘communication to the public’ and of ‘making available’. It will also consider other possible actions, including intervening on rights more generally. The role of alternative dispute resolution mechanisms will also be assessed. The Commission will take into account the different factors that influence this situation beyond copyright law, to ensure consistent and effective policy responses.

While TPP and the the EU’s steps toward a digital single market are not directly related, they offer a striking contrast in the preoccupations of rights owners. By and large, the U.S. copyright industries poured far more effort into shaping TPP than the EU digital single market, but as a practical matter they have more to lose in Europe than they stand to gain from TPP.

The copyright provisions in TPP are by and large about downside protection. They enshrine legal and technical measures aimed at limiting unauthorized uses of content in an effort to contain losses — both real and theoretical. Licensing is about the upside: the exploitation of rights for profit.

The exclusive licensing of rights by geographic territory has been a lynchpin of copyright owners’ business model for decades. A change to that system on the order being contemplated by the European Commission will change much more than how contracts are written.

The number of potential distributors capable of affording and exploiting EU-wide rights is likely to be far smaller than the aggregate number of distributors under the current system. Having fewer potential buyers in the market is likely to change the dynamic of rights negotiations in ways that rights owners will not much like.

Windowed releases will also become harder to orchestrate.

The changes likely to be wrought by the digital single market initiative in the EU will likely bring material changes to how and to how well content is monetized in the market of over 300 million people. The protections won in TPP will mostly accrue to the lawyers.