A sea change for protecting IP online

Information wants to be free, but intellectual property wants to be protected. The tension between this durable cliché and fundamental principle has informed much of the political and legal debate surrounding the commercial rise of the internet over the past 25 years.

This debate is presently centered in Europe, where the European Union seems poised to balance the rights of online service providers and intellectual property owners very differently from the United States. A majority of EU countries on Feb. 13 endorsed a "final" version of a new Copyright Directive that requires online service providers to license content they aggregate and third parties post on their websites. The European Parliament will likely take a final vote on the directive in late March or early April. If enacted, this directive will have a dramatic impact on how online service providers operate in Europe and, given the borderless nature of much online commerce, in the United States. It will dramatically shift the burden and cost of protecting intellectual property from copyright owners to online service providers.

One needs to recall how the internet changed our access to information to understand what is at stake in the Copyright Directive's proposed changes. One of the major contributions of the online world is its facilitation of access to information and content. Organization and aggregation of huge amounts of information has made it possible for anyone to locate in seconds what previously would have taken weeks, months or years of manual effort. The internet has given rise to what is called the "Information Age" for a reason.

However, most of that information resides in copyrighted works, and for technological reasons, providing online access to those works requires copying them on multiple occasions so that the information they contain can be efficiently organized and accessed by third parties. Similarly, the internet facilitates the easy uploading of millions of copyrighted works by third parties to provide greater access to them.

How should the copyrights of content owners be protected in such circumstances? When should online service providers be able to engage in such activities without fear of copyright infringement liability? And who should bear the burden of policing and enforcing content owners' intellectual property rights online?

As one would expect, intellectual property owners and online service providers have very different answers to these questions. At the dawn of the commercial internet age, the U.S. answered those questions in ways that were relatively favorable to the then-nascent online service providers, adopting what could be called a "forgiveness" model of copyright protection. The Digital Millennium Copyright Act of 1998 protected online service providers who allowed third-party users to upload content through the "safe harbor" provisions in what became 17 U.S.C. Section 512. Under those provisions, online service providers are not liable for infringing content users post on their sites so long as they create a statutorily compliant "take down" procedure after a request from the content owner. Similarly, courts decided that many (though not all) content aggregators were not liable for copyright infringement despite copying most or all of millions of copyrighted works because the copying was a non-actionable "fair use." See, e.g., Authors Guild Inc. v. Google, Inc., 804 F. 3d 202 (2d Cir. 2015); Kelly v. Arriba Soft Corporation, 336 F.3d 811 (9th Cir. 2003); Field v. Google, Inc., 412 F.Supp.2d 1106 (D.Nev. 2006). Although unsatisfactory to content owners, who for years have litigated and lobbied for greater protections with little success in the U.S., these statutory and judicial decisions have encouraged the birth and growth of multibillion-dollar companies through the "free" use of others' intellectual property. The legal and financial burden of protecting intellectual property used online is now almost exclusively the content owners', with online service providers avoiding legal responsibility and financial cost by simply stopping their infringement when a content owner asks them to.

The new EU Copyright Directed threatens to upend this balance by mandating what amounts to a "permission" model of IP protection. Article 11 will require that all but the very smallest online service providers obtain a license from news organizations whose content they aggregate. Article 13 will require online service providers to exercise "best efforts" to obtain licenses for all content posted on their sites. Should online service provides fail to do so, they can be sued for direct copyright infringement for the unlicensed uses. These provisions will force online service providers to use imperfect filtering technologies block the uploading of copyrighted content, thereby lessening the content viewable on their sites, but more importantly from the online service provider's perspective, will fundamentally shift the cost of rights enforcement from the content owners to the online service providers who historically have profited from that content's uncompensated use.

These provisions are controversial, and in the three years since they were first proposed, significant changes have been made to try and address some stated concerns. But they have not been enough, because they have not altered the fundamental "permission" model that online service providers characterize, rightly or wrongly, as an existential threat.

The directive not yet finally passed, and the online service provider community and others who prefer less copyright protection are fiercely lobbying against it. However, if enacted, the directive will have a significant impact on internet commerce not only in Europe, but worldwide, including in the U.S. Given the global nature of the internet, many online service providers will likely adopt its standards globally, as they did when the EU recently adopted stringent internet privacy standards. Further, even companies that decide to follow the directive only in Europe will face increased political pressure. If Europe can protect content owners, they can argue, why can't the United States? What was thought to be a settled political argument may once again be up for grabs.

In either event, the struggle will continue. Because information may want to be free, but intellectual property wants to be protected.