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Content Portability Regulation

Nick Rose
16/12/2015

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United Kingdom

Last week the European Commission published the latest in its Digital Single Market (DSM) copyright reform series. This included a Regulation on portable content that aims at enabling consumers to use their home online subscription while they stay temporarily in another Member State. It does this by effectively removing the right for copyright owners to bring infringement action in the temporary state of residence. "Temporary" has been given a wide interpretation and appears to mean anything other than permanent residency. It has been left to rights holders to require providers to periodically authenticate the Member State of residence of subscribers in order to avoid abuses.

Only subscribers from the original Member State will have access to the portable content and the Commission has not said that consumers in one Member State must have free access to services in other Member States. This is a more controversial issue, which may be addressed in Spring 2016 when the Commission considers legislative proposals to enhance cross-border access to online television and radio broadcasting services via its review of the Satellite and Cable Directive.

1. Regulation on ensuring the cross-border portability of online content services in the EU

Currently consumers are cut off from online audio-visual services and premium sports offers as soon as they leave their home country. The Regulation therefore aims at enabling consumers to use their home online subscription while they stay temporarily in another Member State. For example, Sky's NOW TV is an online service offered in Germany and the UK, which includes unbundled online sports offerings. These services can't be accessed by consumers travelling across the EU (although German content can be accessed in Austria). The Commission wants this type of content to be portable because of the projected growth of online content services, the increasing mobile use of content and the high interest in cross-border portability expressed by young Europeans. Currently, many Europeans are tempted to resort to technological workarounds like VPNs to access content across borders.

Key points from the Regulation:

(1) Definitions of "Portable" and "Temporarily present"

The Regulation defines "portable" as subscribers effectively accessing and using the online content service in the Member State of residence without being limited to a specific location. "Temporarily present" has been given a broad definition; a presence of a subscriber in a Member State other than the Member State of residence eg those on holiday or business trips. This seems to be anything short of permanent residence.

There are no set time limits on the use of the portability feature. Instead, service providers need to inform their subscribers of the exact conditions of their portability offers. Rights holders can also require providers to periodically authenticate the Member State of residence of subscribers in order to avoid abuses.

(2) Rights clearance and territorial exclusivity

The Regulation deals with the issue of copyright infringement and rights clearance by stating that the relevant acts of reproduction, communication to the public and making available of works should be deemed to occur in the subscribers' Member State of residence. This removes the rights holder's ability to take action in the temporary state of residence so there is no need for a separate licence to cover the temporary use of the service in other Member States.

The net result is that content owners who have licensed their content to an online service are going to have to live with the fact that the content will be available through the same service in other Member States (albeit only to subscribers from the original member state) and that there will be nothing they or the service provider can do to prevent this.

(3) Cross- border distribution of content

Because portability does not extend the range of users of the service (i.e. only subscribers from the original Member State will have access), the Commission envisages the impact of the Regulation to be minimal. Currently the proposals do not challenge the territorial exclusivity of licences and the Commission has not yet gone so far as to say that consumers in one Member State must have free access to services in other Member States.

The Commission will, however, consider legislative proposals by Spring 2016 aimed at further enhancing cross-border access to online television and radio broadcasting services. The Satellite and Cable Directive (the "SatCab Directive") currently only requires copyright clearance in the "country of origin" of a satellite broadcast. As this Directive was devised before the advent of the Internet, the Commission may extend the country of origin principle to the online distribution of TV and radio programmes. Whilst the Commission has stated that it is not introducing pan-European licences, it may adopt proposals to encourage rights holders and distributors to reach agreement on licences that allow both cross-border access to content and cross-border requests to access content.

(4) Service provider obligations, proportionality and costs

The obligation on service providers to enable cross-border portability is imposed only under certain conditions. The Regulation won't require rights holders and service providers to renegotiate existing contracts, as it will simply make unenforceable any provisions in the contracts which are contrary to cross-border portability.

Whilst online service providers must ensure they are providing their subscribers access to the same content on the same range and number of devices, number of users and functionalities as those offered in their Member State of residence, the Regulation does not require the provider to ensure quality of delivery of such services beyond the quality available via the local online access chosen by the subscriber in the temporary Member State. However, providers will be bound by any express agreement guaranteeing certain quality of delivery to subscribers while temporarily present in other Member States.

The Regulation does capture online content services which are provided for without payment to the extent that those providers verify the Member State of residence of their subscriber. For example, the BBC iPlayer will be exempt from the rules because it currently doesn't do this, although the BBC can choose to opt in to provide portable services in any event. The BBC has stated that it will undergo a technical overhaul of the iPlayer to ensure licence fee players can log in to watch programmes whilst temporarily abroad while non-licence fee payers remain excluded.

Costs of the services and introduction of portability should not be increased and passed on to consumers. The Commission envisages that implementing the Regulation will imply only marginal costs for service providers, which will mainly relate to adapting their technical infrastructure i.e. moving from a geo-blocking to a temporary access approach.

Further, the Commission has made it clear that it is not appropriate to require service providers that do not offer portable services in their home country to do so across borders.

(4) Retrospective effect

Given the fact that many content licences are concluded for a relatively long duration, the Regulation will apply to contracts concluded before the date of its application. As such, there will be a reasonable period (6 months) between the date of entry into force of the Regulation and the date of its application, allowing rights holders and service providers to make necessary arrangements and amend terms of use.

(5) Next Steps

The new rules will need to be discussed with and endorsed by the European Parliament and the Council of the European Union. However, the Commission wants to have the Regulation approved swiftly in 2016 so it is fully operational during the course of 2017, in the same year as the end of roaming charges in the EU. The Regulation will enter into force on the day it is published in the Official Journal of the European Union and will apply six months after it is published. The Regulation will be directly applicable – there will be no need for Member States to implement the rules into national law.

2. Communication "Towards a modern, more European Copyright Framework" 

The Commission also published this communication providing further guidance on its vision for the future of copyright. We have previously commented on a leaked version of this document and much remains unchanged.  One major change is that the Commission has announced that it will consider whether it needs to take specific action with respect to news aggregators, including intervening on rights. The Commission recognises that news aggregators not only use hyperlinks but also extracts of articles and may gain revenue from doing so. Whilst it is not proposing to tax hyperlinks, the Commission is monitoring certain national systems such as ancillary rights in Spain and Germany to establish whether it should implement an EU wide ancillary right over news content. It is interesting to note, however, that reports indicate that the press publishers who would be possible beneficiaries of these ancillary rights over news content don't actually want them because they create barriers between them and their readers.

3. Consultation to analyse the legal framework for the enforcement of intellectual property rights 

The Commission also launched this consultation with a view to a possible revision of this framework in 2016. It will take immediate action to engage in setting up and applying "follow-the-money" mechanisms to disrupt the money trail for commercial-scale IP infringing activities and make them economically unviable. This will initially be based on a self-regulatory approach: the Commission aims to reach balanced agreements for the protection of all IP rights by Spring 2016. However, codes of conduct at EU level could be backed by legislation to ensure their full effectiveness.

Comment

It is certainly encouraging that the Commission has proposed at least one piece of legislation so soon after the launch of the DSM in May. Whilst users will like being able to access their online media subscriptions whilst on holiday, portability of online content services isn’t a major concern to a lot of EU citizens and businesses. It is also of some concern that the Regulation hasn't defined "temporarily present" and leaves it to commercial contracts to tackle possible abuses of the system.

The more controversial issue of cross-border distribution of content will be tackled early next year. It still appears that this could be done via reform of the Satellite and Cable Directive and we will keep a close watch on this.  

Great thanks to Aliyah Hussein for her help with this article.