What does the CJEU judgment in the Polish challenge to Article 17 (C-401/19) mean for the transposition and application of that provision?

On 26 April 2022, the Court of Justice of the European Union (CJEU) delivered its long-awaited judgment in Poland v European Parliament and Council (C-401/19). The Court held Article 17 of the DSM Directive compatible with freedom of expression and information under Article 11 of the EU Charter of Fundamental Rights. In so doing, it rejected the request of the Republic of Poland to annul said provision. The Court also noted how currently no valid alternatives appear to exist to the use of automatic recognition and filtering tools in order to comply with the obligations under Article 17(4)(b)-(c) (para 54).

The judgment considers that the liability regime established under Article 17(4) represents a restriction on freedom of expression/information (para 58). Nevertheless such a restriction is not undue. Internal safeguards are provided, of which six key ones are identified (see paras 85-98). Member States are required to consider such safeguards “when transposing Article 17” so to “take care to act on the basis of an interpretation of that provision which allows a fair balance to be struck between the various fundamental rights protected by the Charter” (para 99). The latter include not just the freedom guaranteed by Article 11, but also protection of rightholders’ intellectual property within the right to property (Article 17 of the Charter) and online content sharing services providers’ (OCSSPs) freedom to conduct a business (Article 16 of the Charter). In all this, Article 52(1) of the Charter, including the general principle of proportionality, must be complied with.

All the above raises several issues, including two fundamental ones that will be discussed in what follows:

1. The first is the mandate that the Court confers on national legislatures and authorities for a correct transposition and application of Article 17;
2. The second is how, in practice, automatic recognition and filtering tools are to be used by OCSSPs.

1. How to ensure the correct transposition and application of Article 17

How to solve the national transposition problem?

As I observed in my post a few days ago, the imposition, on the side of Member States, of an obligation for OCSSPs to carry out a generalized, ex ante blocking of content, while reserving the reinstating thereof solely to the complaint and redress mechanism phase, would be incompatible with the roadmap that the Court provided (para 85).

In all this, some commentators have argued that (1) minimalistic national transpositions of Article 17 (that is 'copy-and-paste' solutions) would be also unacceptable and that, instead, national models providing for statutory exemptions or ‘presumed’ lawful uses, as it is the case of German and Austrian laws, should be preferred. Neither suggestion is correct.

In favour of minimalistic transpositions

A national transposition of Article 17 that reproduced the EU text would not only be the ‘safest’ option from the point of view of compliance with EU law but would also best comply with the highly prescriptive wording of that provision.

Unlike other provisions of the DSM Directive, Article 17 does not leave Member States an option to choose whether to do something in the first place (cf, eg, Article 12) or how to do it (cf, eg, Article 18(2)).

With the sole and limited exception of Article 17(9), first and second subparagraphs, which allows national legislature to undertake some fine-tuning, the rest of the provision sets very specific obligations relating to concepts – including: communication/making available to the public, best efforts, quotation, parody, pastiche etc – that in no way refer to national law. This means that such concepts are autonomous concepts of EU and must, as a result, receive uniform interpretation and application across the EU.

As I discuss here, it is true that Article 288(3) TFEU allows in principle national authorities to determine the form and methods needed to achieve the result mandated by a certain EU directive. Nevertheless, the choice between different national transposition techniques is not always at the discretion of individual Member States. Article 17 requires a transposition that is as close as possible to the EU text (that is: a minimalistic/copy-and-paste approach). In all its level of detail, Article 17 is indeed more akin to a provision that could be found in an EU regulation than in a directive. In turn, it should be transposed in such a way that its normative content – including its safeguards – is not altered. This also serves to guarantee the uniform application of EU law and the respect of the principle of equality.

The argument that minimalistic transpositions of Article 17 would be incompatible with the CJEU ruling is untenable. The Court expressly acknowledged that Article 17 contains appropriate safeguards. The same cannot but be also true for national transpositions that reproduced the wording of the Directive in full.

In sum: what the CJEU judgment mandates is – for Member States – not to alter the content of Article 17 (more on that further below) and – for national courts and authorities – to interpret the resulting provisions in such a way that compliance with the CJEU ruling is ensured. This conclusion follows from para 99 of the judgment.

Against adding what is not in the EU text

National transpositions of Article 17 that incorporated requirements and conditions that are not to be found in the DSM Directive would alter the equilibrium reached by EU legislature, while also impairing the fundamental objective underlying the adoption of the DSM Directive as a whole, that is: the creation of a digital single market.

Like national transpositions providing for generalized ex ante blocking obligations, national transpositions introducing (i) generalized obligations to only block content ex post and/or (ii) envisaging statutory exclusions or ‘presumed’ lawful uses are contrary to EU law (see the discussion here).

As such, suggestions that solutions like the German and Austrian ones should be endorsed and inspire other national legislatures, including those that are yet to complete their own transpositions of the Directive, are inappropriate.

Not only do such solutions stem from an undue interpretation of EU law and the nature of the rights subject to Article 17 (not a different, special or even sui generis right of communication/making available to the public right but, instead, the same right as found in other EU legislation): they also significantly impair the harmonizing efforts of the EU legislature and the requirement of proportionality supporting the interpretation and application of Article 17(4).

Considering earlier CJEU case law that has resulted in a finding of incompatibility with EU law of transpositions of earlier directives – notably the InfoSoc Directive – in several Member States (just to mention but a few examples: certain Dutch, Belgian, Spanish, Italian, French, and German copyright provisions have been held in breach of EU law), if there is a model not to follow is one that removes or adds to an EU directive without any mandate in this sense. Article 17 does not confer any such mandate.

2. How automatic recognition and filtering tools are to be used in practice

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Agreeing with the Republic of Poland and substantially with the EC Guidance to Article 17 too, the CJEU acknowledged that, to comply with Article 17(4)(b)-(c), the use of automatic recognition and filtering tools is unavoidable and necessary.

To ensure that such tools comply with EU law, account must be taken of the principles enshrined in Article 52(1) of the Charter, including proportionality, and of the objective that a fair balance of rights and interests is struck between different rights and interests (paras 63-66).

Such a principled framework – which is flexible by design because it needs to accommodate developing industry practices and available technologies (para 73) binds not only Member States but also serves to assess the “actual measures” that OCSSPs will adopt in order to comply with their obligations under Article 17(4)(b)-(c) (paras 71-73).

Importantly, the CJEU refers to an obligation of result not only insofar as compliance with ‘user rights’ (exceptions and limitations in Article 17(7): paras 78 and 87) is concerned, but also when it comes to striking a fair balance between said rights, protection of intellectual property, and respect of OCSSPs’ freedom to conduct a business (para 75; see also para 83). As such, it is incorrect to suggest that the only ‘result’ that is to be achieved or even that matters under Article 17 is compliance with Article 17(7).

What OCSSPs are required to do is to adopt “strictly targeted” measures (para 81), which may “distinguish adequately between unlawful content and lawful content” (para 86), also bearing in mind that “in some cases availability of unauthorised content can only be avoided upon notification of rightholders” (para 91). The notion of adequacy is key and reflective of the principled framework detailed above.

In practice, this does not mean that the only tools that OCSSPs can adopt are those that are 100% error-free. If that was the case, then there would be no fair balance of rights and interests and compliance with Article 17(4)(b)-(c) could not be achieved. Instead, what is required is that, where an (alleged) error occurs, a complaint and redress mechanism like the one in Article 17(9) is readily available.

Let’s take YouTube’s Content-ID as an example of an automatic recognition and filtering tool. The recent YouTube Transparency Report highlights that less than 1% of the claims made in the first half of 2021 was disputed. Of these, 60%+ was resolved in favour of the uploader. Does this mean that Content-ID fails the test set by the CJEU because of a limited number of false positives? No. It means that the tool has a (slight) margin of error. Considering its overall numbers, this is nonetheless a system that adequately balances protection of intellectual property with user freedoms.

All the above is also in line with the case law of the CJEU itself, which has never suggested that only a 100% rate is acceptable.

Just think of Ziggo (the Pirate Bay case): in his Opinion, Advocate General (AG) Szpunar noted that the rightholder organization taking action against The Pirate Bay (TPB) had submitted that 90%+ files that could be accessed through that platform would be unlawful. This means that 10% or so of the content on TPB could be lawful. Yet, this did not prevent the AG from advising the Court to hold that the platform operators would be themselves liable for copyright infringement and that access to such a platform should be blocked: “In such circumstances […] depriving internet users of access to information, by blocking the TPB site, would be proportionate to the significance and seriousness of the copyright infringements committed on that site.” (para 76 of the Opinion). The CJEU agreed.

The same approach was adopted, more recently, in YouTube/Cyando. The CJEU noted that it might be the case (subject to the referring court confirming it) that 90-96% of the files hosted on cyberlocker Uploaded would be unlawful. Such a finding would contribute to establishing the direct liability of its platform operators. Again, no 100% rate of infringing content is required.

Ultimately, the test that the CJEU adopted in C-401/19 reminds one of that in UPC Telekabel see para 63 in that case) in relation to website blocking injunctions. Like in that case, for Article 17 the use of automatic recognition and filtering tools is allowed insofar as “(i) they do not unnecessarily deprive internet users of the possibility of lawfully accessing the information available and (ii) that they have the effect of preventing unauthorised access to protected subject-matter or, at least, of making it difficult to achieve and of seriously discouraging internet users who are using the services […] from accessing the subject-matter that has been made available to them in breach of the intellectual property right.”

Conclusion

Over the next several years, Article 17 will be likely the subject of referrals to the CJEU. For the time being, the guidance provided in the judgment on 26 April last indicates that, first, Article 17’s complex and delicate internal architecture must not be altered – in one sense or another – in the national transposition and application phase, so to ensure that the safeguards that the Court has identified can be complied with.

Second, the use of automatic recognition and filtering tools is unavoidable and necessary to protect copyright, albeit that it is subject to the principles of adequacy and proportionality. In this regard, the Court adopted a flexible test that, in the future, will serve to carry out an examination “in relation to the provisions adopted by the Member States for the purposes of transposing that directive or of the measures determined by [OCSSPs] in order to comply with that regime” (para 71).