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Policy Options for Improving the Functioning and Efficiency of The Policy Options for Improving the Functioning and Efficiency of the Digital Single Market in the Field of Copyright Andrea Renda, Felice Simonelli, Giuseppe Mazziotti and Giacomo Luchetta No. 121 / November 2015 Abstract This study provides an ex-post evaluation of the EU copyright framework as provided by EU Directive 29/2001 on Copyright in the Information Society (InfoSoc Directive) and related legislation, focusing on four key criteria: effectiveness, efficiency, coherence and relevance. The evaluation finds that the EU copyright framework scores poorly on all four accounts. Of the four main goals pursued by the InfoSoc, only the alignment with international legislation can be said to have been fully achieved. The wider framework on copyright still generates costs by inhibiting content production, distribution and creation and generating productive, allocative and dynamic inefficiencies. Several problems also remain in terms of both internal and external coherence. Finally, despite its overall importance and relevance as a domain of legislation in the fields of content and media, the EU copyright framework is outdated in light of technological developments. Policy options to reform the current framework are provided in the CEPS companion study on the functioning and efficiency of the Digital Single Market in the field of copyright (CEPS Special Report No. 121/November 2015). ISBN 978-94-6138-486-7 This study was carried out at the request of the Impact Assessment Unit of the Directorate for Impact Assessment and European Added Value, within the Directorate General for Parliamentary Research Services (DG EPRS) of the General Secretariat of the European Parliament. Originally entitled “The Internal Market aspects of EU copyright: The added value and options for improving the functioning and efficiency of the Single Market in the field of copyright”, it is part of a larger, 3- part study entitled “Review of the EU copyright Framework: European Implementation Assessment”, published on the Parliament’s website (http://www.europarl.europa.eu/thinktank/en/document.html?reference= EPRS_STU%282015%29558762). It is republished here by CEPS with the kind permission of the European Parliament. The opinions expressed in this document are the sole responsibility of the authors and do not represent the official position of the European Parliament or CEPS. Reproduction and translation for non-commercial purposes are authorised, provided the source is acknowledged and the publisher is given prior notice and sent a copy. Available for free downloading from the CEPS website (www.ceps.eu) Brussels © European Union, 2015.All rights reserved. Centre for European Policy Studies ▪ Place du Congrès 1 ▪ B-1000 Brussels ▪ Tel: (32.2) 229.39.11 ▪ www.ceps.eu TABLE OF CONTENTS Executive Summary ......................................................................................................................... i 1. Introduction ..............................................................................................................................1 2. The policy problem...................................................................................................................3 2.1 Problem #1: The ‘non-functioning’ of the Internal Market for online copyrighted content ................................................................................................................................3 2.1.1 Who is affected?.......................................................................................................5 2.1.2 Main drivers of the identified policy problem ......................................................5 2.2 Problem #2: Tension between the system of copyright exceptions and limitations and emerging uses of information in the online environment ......................................7 2.2.1 Who is affected?.......................................................................................................9 2.2.2 Main drivers of the identified policy problem ......................................................9 3. Policy options ......................................................................................................................... 10 3.1 ‘Zero’ option (no new policy action).............................................................................. 10 3.2 Option 1: A ‘Soft law’ approach ..................................................................................... 11 3.3 Option 2: Legislative intervention ................................................................................. 14 3.3.1 Option 2a: ‘light-handed regulation’, aimed at specifying licensing agreements and territorial restrictions that are incompatible with the free movement of goods and services (so-called ‘black list’) ....................... 14 3.3.2 Option 2b: ’comprehensive legislative reform’ ................................................... 14 3.4 Option 3: Unitary copyright title and a European copyright Code............................. 17 3.4.1 Option 3a: ‘complete unification’ ......................................................................... 17 3.4.2 Option 3b: ‘optional EU copyright registration system’ .................................... 18 4. Assessing the added value of alternative policy options: selected assessment questions 18 4.1 Methodological framework ............................................................................................ 19 4.1.1 Effectiveness: Policy objectives ............................................................................ 19 4.1.2 Efficiency: Relevant costs and benefits ................................................................ 20 4.1.3 Coherence .............................................................................................................. 21 4.1.4 Summary of policy options .................................................................................. 21 4.2 Assessment of policy options ......................................................................................... 22 4.2.1 Effectiveness .......................................................................................................... 22 4.2.2 Efficiency ................................................................................................................ 26 4.2.3 Coherence .............................................................................................................. 30 5. Conclusions: Specific assessment questions ......................................................................... 33 Selected references and case law .................................................................................................. 35 List of Abbreviations ARROW Accessible Registries of Rights Information and Orphan Works BEREC Body of European Regulators of Electronic Communications CJEU Court of Justice of the European Union CMO Collective Management Organisation ERG European Regulators Group GDP Gross Domestic Product InfoSoc Information Society IPRED Directive on the enforcement of intellectual property rights LCC Linked Content Coalition TFEU Treaty on the Functioning of the European Union TPM Technological Protection Measure TRIPS [Agreement on] Trade-Related Aspects of Intellectual Property Rights UGC User-Generated Content VPN Virtual Private Network WIPO World Intellectual Property Organization Executive Summary This briefing paper explores the existing policy problem and the possible options for reforming the EU copyright framework as provided by EU Directive 29/2001 on Copyright in the Information Society (InfoSoc Directive) and related legislation, with specific focus on the need to strengthen the Internal Market for creative content. We find two main policy problems: the non-functioning of the Single Market, and the tension generated between the current system of exceptions and limitations and emerging uses of information in the online environment. This briefing paper finds that there are many gaps in the existing legal framework. Of these, some gaps could be filled if the existing acquis was clarified and made more consistent both in terms of interpretation and implementation. However, the majority of existing gaps would require legislative intervention. These gaps include the absence of a clear legal framework for the remuneration and compensation of authors and performers; the existing uncertainty as regards the responsibility of online intermediaries; the lack of clear rules on ‘geo-blocking’ practices; the uncertainty as regards the determination of the applicable law in case of copyright infringements occurring online; uncertainty on the applicability of the exhaustion principle to the making available of ‘download-to-own’ content on intangible media; and the lack of clear rules on access to justice and collection of evidence to be used in civil proceedings. As demonstrated by the ongoing debate on copyright reform at the EU level, all these are issues that only legislative interventions could contribute to remedying. Addressing these gaps efficiently might lead to very significant gains in macroeconomic terms. To be sure, related benefits largely overlap with the expected benefits of enjoying a Digital Single Market, which are estimated conservatively as representing at least 1% of GDP. In our view, options available for addressing these gaps range from more narrowly crafted legislative actions (e.g. establishing a ‘black list’ of agreements that are incompatible with the Internal Market) to comprehensive legislation
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