BREAKING: First CJEU referral on press publishers’ related right (Italian-style)

Kat-negotiations ...

As expected, now that most – though not all – EU Member States have completed their own transpositions of the DSM Directive 2019/790 [IPKat here], the time for litigation has come and, with that, referrals for a preliminary ruling to the Court of Justice of the European Union (CJEU).

After the first DSM Directive-related referral from Belgium on the provisions concerning contracts of authors and performers [IPKat here], it is now the turn of Article 15 (the related right for press publishers) as implemented into Italian law.

Article 15 in brief

As readers know, together with Article 17, Article 15 was probably the most contentious of the provisions of the directive. It requires Member States to provide publishers of press publications established in the EU with the rights provided for in Article 2 and Article 3(2) of the InfoSoc Directive for the online use of their press publications by information society service providers (ISSPs).

The rationale supporting EU intervention is multi-fold yet, according to several commentators, still dubious. Recital 54 links the introduction of Article 15 to the need to facilitate press publishers when licensing the use of press publications to providers of ‘new online services’. This, in turn, would serve to support a ‘free and pluralist press’ in its function ‘to ensure quality journalism and citizens’ access to information’. Contributing to the realization of a ‘fair marketplace’ (recital 3) is one of the key objectives of the Directive: recital 55 is rooted within an idea of fairness in the part in which it stresses the need to acknowledge ‘[t]he organisational and financial contribution of publishers in producing press publications’. All this would serve to ‘foster the availability of reliable information’.

The eventual drafting of Article 15 raises several questions, though one is particularly important for the present discussion. It concerns the waivability of the right and the modalities for its exercise.

As I discussed in further detail here, Article 15 stems from earlier, unsuccessful experiences in Germany and Spain.

In 2013, Germany introduced legislation (Sections 87f, 87g and 87h of the German Copyright Act) vesting press publishers with a waivable right over their news content. In 2014, Spain reformed its quotation exception (Article 32 of the Intellectual Property Law) and introduced a non-waivable right to ‘equitable remuneration’ that, in its substance and despite the different nature, was not dissimilar in its end-goals from the German press publishers' right.

Neither initiative managed to achieve the underlying objectives though, given that no licensing market was really developed: in Germany the reason was that the targeted ISSPs successfully requested local press publishers to waive their right to remuneration, while in Spain some key players like Google News decided to discontinue their service in that country.

The Italian transposition

Considering the earlier, national experiences it remains frankly difficult to comprehend why the DSM Directive is silent on key issues like the waivability of the right and the modalities of its exercise. As regards the latter, a specific question was posed to Commissioner Breton regarding licensing modalities. On behalf of the European Commission, he noted that, since the text of the Directive is silent regarding how licensing under that provision is to be done, under corresponding national laws, press publishers should have the possibility of licensing the use of their press publications both individually and collectively. Vice versa, the sole provision of mandatory collective management under national law would be unduly restrictive and contrary to the wording of that provision.

France was the first EU Member State to transpose Article 15 and, immediately upon entry into force of the new legislation, a sense of déjà-vu clearly emerged, given that key addressees like Google announced that they would request French press publishers to waive their right. It was upon decisive input from the French Competition Authority that things took a different turn than in Germany.

Having taken a look at what was happening in neighbouring France, the Italian legislature thought of doing something different and something (hopefully) better [IPKat on Italian transposition of the DSM Directive here].

... are not always easy

Indeed, Article 43-bis of the Italian Copyright Act introduced a mechanism that is meant to apply in the event that no agreement is concluded between relevant parties.

In such a situation, Italian Communication Authority AGCOM shall determine the amount of the ‘fair compensation’ (equo compenso) due to press publishers for the use of their protected subject-matter by ISSPs.

To this end, AGCOM was tasked with adopting a regulation – which it did in early 2023 (delibera AGCOM n. 3/23/CONS) – identifying the criteria for determining the ‘fair compensation’ owed to press publishers, taking into account a series of factors, including:

• the number of online views of the press publication
• the advertising revenues generated
• the years of activity
• the market share of the press publisher and the number of journalists employed
• the costs incurred for technological and infrastructural investments by press publishers and ISSPs
• the economic benefits deriving, for both parties, from the publication in terms of visibility and advertising revenues.

Without prejudice to the right to take legal action, the parties (after 30 days from the request to start negotiations without having reached an agreement on the amount of compensation) shall have the right to apply to AGCOM, which - within 60 days from the request - shall assess the economic proposals made by the parties or, if not both are deemed to comply with the provisions of the relevant regulation, to fix the amount of fair compensation ex officio. In the absence of an agreement after AGCOM's decision, each party may refer the matter to the judicial authorities (with the clarification that any unjustified limitation of publishers' content in search results during the negotiation period may be assessed for the purposes of verifying compliance with the obligation of conducting negotiations in good faith).

The litigation before TAR Lazio and the referred questions

It is worth noting that, prior to the enactment of the transposition, Italian Competition Authority AGCM was also concerned that the then proposed mechanism would be inter alia incompatible with EU law. It was not alone.

Indeed, Meta has lodged an action before the competent administrative court (TAR Lazio) seeking the annulment of the AGCOM Regulation. The parent company to inter alia Facebook claims that – unlike the Italian transposition – Article 15 would not impose any obligation on the side of ISSPs to secure a licence for the use of press publications, nor an obligation to remunerate press publishers.

The Italian transposition of Article 15 would be, according to Meta, a clear instance of ‘goldplating’. This term refers to situations in which Member States go beyond the wording of EU law and impose additional requirements, obligations, or standards on the addressees of resulting national legislation that exceed the corresponding EU provision, with the resulting risk that the objectives of the relevant piece of EU legislation are negatively affected or even contradicted.

Furthermore, it would contradict the fundamental freedom to conduct a business, which is recognized by Article 16 of the EU Charter, with the result that freedom to contract and freedom to compete would be unduly compressed. It would also run contrary to the country of origin principle and free movement of services.

The TAR Lazio has now decided (sentenza 18790/2023) to stay the proceedings (thanks to Marco Scialdone for sharing this news item first) and ask the CJEU to clarify if Article 15 of the DSM Directive prevents national legislations that [the case is not yet available on the Curia website]:

• provide for obligations of remuneration (equo compenso) in addition to the exclusive rights granted under the EU provision;
• mandate ISSPs to (i) negotiate with press publishers, (ii) provide press publishers and AGCOM with information necessary to the determination of the equo compenso, and (iii) not to limit the visibility of press publications pending the negotiation
• confer upon an administrative authority like AGCOM the powers that the Italian legislation has given it, including (a) supervision and sanctioning, (b) determination of the remuneration criteria, (c) lacking an agreement between the parties, the remuneration due.

Furthermore, TAR Lazio is asking about the role that Article 16 and 52 of the EU Charter, as well as freedom of competition under Article 109 TFEU, play in such a scenario. Interestingly enough, in formulating its referral, the TAR Lazio quoted extensively from the Grand Chamber judgment in Poland, C-401/19 [IPKat here], stressing both the relevance of the internet to the exercise of freedom of expression and information and the need to ensure that any restriction to the rights and freedoms recognized in the EU Charter must comply with Article 52 and the general principle of proportionality.

Stay tuned for the next steps (and CJEU referral?)!