Alternatives to the Ancillary Copyright for Press Publishers

An appeal to a sense of justice: the new ancillary copyright for press publishers

The Commission’s reading of the incentive justification is problematic, which is one of the factors why the new ancillary copyright is likely to fail.

1. Introduction

The digitisation of the press has come with its fair share of problems for traditional journalism. Traditional players, most notably the publishers of newspapers, magazines, books and scientific journals, compete with new emerging business models tailored to a digital environment.[1] A further challenge presents itself in successfully enforcing copyright. Problems like these confirm that traditional publishers have difficulty grappling with the ever-increasing digitisation of the media.[2]

The response of the European Union to this ongoing influence has been to adopt the ‘Digital Single Market proposal’.[3] The Commission warrants the proposal because the press takes up a vital role in a democratic society.[4] One of its included measures is the new ‘Ancillary Copyright for Press publishers’, which is of particular interest for this essay.[5] The neighbouring right prevents the reproduction and communication to the public with respect to the digital use of publishers’ press publications, and the Commission argues that the right is justified because it incentivises right holders.[6] This essay seeks to validate this claim.

In the Commission’s view, the ancillary right incentives creation and creativity.[7] The incentive justification[8] is peculiar, because it reconciles the interest of the right holder with the interest of the public.[9] It argues that the author is encouraged to invest time and effort in his activities because he is rewarded with ownership of a monopoly right. [10] This would ultimately lead to a wider variety of available information to the benefit of society.[11]

The Commission’s interpretation is that the ancillary copyright is necessary to incentivise creation and creativity because the loss of revenue caused by the digitisation of the press would force the industry to lay off their authors.[12] This would lead to less available content for dissemination by the public.[13] However, the Commission seemingly assumes that digital technology hurts the creative incentive that copyright is thought to provide for, and ancillary copyright strengthens the right of publishers in a digital environment to ‘safeguard’ this creative incentive.[14]

Critics argue that ancillary copyright will establish the exact opposite.[15] They support their opinion by stating that the precursors of the European ancillary copyright in Germany and Spain have achieved a vastly different outcome.[16] The Ancillary Copyright seems to attack the usage of short press excerpts by news aggregators,[17] but research shows that the relationship between aggregators and publishers is symbiotic instead of competitive.[18] In Spain, the dissemination of knowledge by the public has even dropped sharply after a similar right was introduced.[19] The Max Planck Institute rightly questions whether ancillary copyright solves a problem, or solely appeals to a ‘sense of justice’.[20]

This essay investigates the Commission’s claim that the ancillary copyright is necessary to incentivise creators. To do so, the essay critically assesses the following questions: what is ancillary copyright?[21] What is the reasoning behind the Commission’s claim?[22] Is ancillary copyright reconcilable with the theory of incentives?[23] Should the Commission change its approach towards adopting proposals like the Digital Single Market proposal?[24] After that, recommendations and a conclusion follow.[25]

2. Ancillary copyright explained

The Commission unveiled its proposal for the modernisation of copyright to achieve a Digital Single Market (DSM) on the 14^th of September 2016.[26] Ancillary copyright is one of the substantive rules included in the proposal. Only publishers of press publications[27] can use the ancillary copyright, so the publisher is assumed to look after the interests of the journalist and author. Furthermore, the right only protects press publications with a journalistic nature.[28] Whether material is ‘journalistic’ is unclear, so the definition in the proposal does not draw an unambiguous line between publishers that can and cannot use the ancillary copyright.

The core of the ancillary copyright itself is set out in paragraph 1 of Article 11 of the proposal. The article states that ‘Member States shall provide publishers of press publications with the rights provided for in Article 2 and Article 3(2) of Directive 2001/29/EC for the digital use of their press publications.’[29] The first element to notice is the word ‘shall’, meaning that member states are under an obligation to implement the ancillary copyright in their legal system. The second element to draw attention is that the right is only available when a press publication is used digitally, which confines the right to the policing of content on the internet.

The law does not give a substantive outline of the power conferred to press publishers. Instead, it refers to Article 2 and Article 3(2) of Directive 2001/29/EC, a piece of legislation mainly concerned with related rights.[30] Article 2 provides for the right of reproduction,[31] and Article 3(2) refers to the right of communication.[32] Consequently, press publishers can prohibit the digital[33] reproduction and communication of their ‘journalistic’ press publication. This further defines the nature of the ancillary copyright as a related right. Such a classification is fitting because its main aim following the press release is the protection of the commercial investment of journalists, authors, and publishers.[34]

The Reprobel[35]case by the European Court of Justice and the Verlegeranteil case by the Bundesgerichtshof in Germany seem to have triggered the inclusion of the Ancillary Copyright in the Digital Single Market proposal.[36] Both cases ruled that publishers were not entitled to collect a share of the fair remuneration of their authors under article 5(2)(a) of Directive 2001/29/EC[37], since the Directive did not list publishers among the beneficiaries of the reproduction right in article 2.[38] Supposedly, a lobby on a European level pushed for the ancillary right to be adopted to ‘turn back the clock’, so that collecting societies must pay a part of the fair remuneration of authors to the publisher again.[39]

According the Commission, the proposal guarantees that journalists, publishers and authors receive a fair remuneration for their work.[40] The proposal and consequently the ancillary copyright arguably achieve the goal of incentivising the author, which would then result in the benefit of society. Remarkably, the effect of the Rebrobel and Verlegeranteil cases are not among the reasons why the Commission proposed the neighbouring right.[41]

Additionally, the scope of the neighbouring right bears an odd overlap[42] with the outcome of the GS Media case.[43] Critics refer to the Ancillary Copyright as a ‘Link Tax’ or ‘Google News Tax’, which seems to be exactly what is established in GS Media.[44] The case revolves around article 3(1) of the Copyright Directive 2001/29, which confers the exclusive right to the copyright owner to communicate a work to the public, includes making the work available to the public.[45] The ruling in GS Media establishes that hyperlinking is, under varying circumstances, an infringement of copyright.[46]

Most importantly, when an entity operating for profit posts a hyperlink and the entity has not asked for the right holders’ consent, the entity ought to have known whether the linked content infringed the copyright of the right holder.[47] If this presumption is not rebutted, the entity infringes article 3(1) by making the infringing material available to the public.[48] The Ancillary Copyright provides for a similar function by allowing the publisher to allege infringement when an entity links to their content.

3.  To be or not to be, an incentive: is that the question?

In Europe, copyright is historically viewed as a natural right[49] which is inherently and inalienable the author’s own, since it is the produce of his mind.[50] Conversely, in the ‘Anglo-Saxon tradition’, copyright serves as a tool to aim for socioeconomic efficiency,[51] and other justifications are of secondary concern.[52] Academics have observed that the distinction between these grounds are disappearing,[53] which is apparent from the fact that on European level, the Commission interchangeably uses the theories to justify its legislation.[54] The incentive theory classifies as a market-place theory, with a focus on necessity of copyright protection resulting in what is good for the public or society,[55] instead of a focus on moral grounds such as fairness central to the natural right approach.[56]

In economics, legal intervention is only valid when there is market failure, meaning that copyright is necessary for full and effective use of a commodity.[57] The theory of incentives argues that copyright is necessary by reconciling the protection of authors with the public’s benefit. In this context, copyright is necessary when it encourages the creator, and this will benefit the public. The public will then disseminate more, which would lead to innovation in society.[58] Such socioeconomic necessity is central to the interpretation of the incentive argument by academics,[59] the legislator, and the court.[60]

At first glance, the ancillary copyright seems to serve the goal of protecting investment of mainly the publisher, and arguably the author.[61] This is not surprising, given that the digitisation of the market threatens the position of the independent press.[62] Furthermore, the substance of the ancillary right is based on Articles 2 and 3(2) of Directive 2001/29/EC. Those provisions follow the same premise that investment and organisational skills must receive protection.[63] This Lockean reasoning revolves around the desert argument that, considering the digitisation of the media, the press deserves another copyright to protect its efforts.[64]

However, the Commission argues in its explanatory memorandum that the Ancillary Copyright encourages[65] creation and creativity.[66] The DSM proposal would be necessary to negate a negative effect on European creativity and production. The Commission contents that ‘rightholders face difficulties when seeking to license their rights and be remunerated for the online distribution of their works. This could put at risk the development of European creativity and production. It is therefore necessary to guarantee that authors and rightholders receive a fair share of the value that is generated by the use of their works and other subject matter.’[67]

The claim of the Commission resembles the reasoning behind ‘the tragedy of commons’, where ‘public commodities would be overused and then destroyed if they were available to us all’.[68] Following the Commission’s claim, the protection of investments of right holders is necessary to prevent that the traditional press will slowly wither in the digital environment.[69] Consequently, the publisher’s loss of revenue caused by the digitisation of the press would lead to a reduction of authors that the publisher can support.[70] This would lead to less content being available for dissemination by the public.[71]

However, the Commission fails to establish that the new measure will in fact establish a noticeable incentive.[72] It does not establish that the ancillary copyright will guarantee right holders a ‘fair share’.[73] In what seems to be the view of the Commission, it expected copyright to protect against the failure of recouping investments in the digital age, and argues it did not. This is a tautological argument known as the ‘rhetoric of expectation’[74], or the ‘property right approach’.[75] The rhetoric establishes necessity by mere reference to the protection that copyright was expected to provide, which is the same reason that justified the level of copyright that is now falling short. And so, the cycle continues; when protection increases, expectation does too.[76]

Caused by reference to expectations, it assumes that the incentive is in a constant state of peril, and that the public’s interests are benefited by safeguarding it.[77] This is a logical fallacy, because the instrumental justification argues that incentivising creators is beneficial to society. It does not state that incentivising the author is appropriate because the costs involved with achieving an incentive will be less than the benefit conferred.[78] Therefore, when the rhetoric of expectation assumes necessity, it pushes for protection and has no reason to limit it. Nothing would prevent copyright from becoming all-encompassing and lasting forever.[79] The rhetoric of expectation reconfigures the interests of the shareholders based on an assumption.[80]

When costs are too high, the Commission’s expectations become a self-fulfilling prophecy. The benefit is not noticeable, which it seems to argue could only mean that the right holders’ incentive is at risk.[81] This completely disregards the possibility that the ancillary copyright and the already existing legislation might cost right holders and the public more than the assumed incentive benefits them.[82]

4. The big trade-off, theoretically

When it comes to socioeconomic necessity, monitoring the costs of a measure with an economic model has great appeal, given that the costs can be measured objectively if the prerequisite data is available.[83] As a starting point, NERA and The Max Planck Institute mention that per the first theorem of welfare economics, legal intervention that doesn’t forestall market failure risks functioning as a detriment to society.[84] So, if a resource is used fully and effectively, there is no need for intervention. The Kaldor-Hicks criterion can be used to measure if this is this the case.[85] In that context, the ancillary copyright must cost society less than it is beneficial, resulting in a surplus of value.[86] Finally, Sterk argues copyright is necessary when copying costs are low to prevent authors from changing profession.[87] However, copyright would deter creators if the cost to create were higher than the value of the work created.[88]

The most significant problem with these models is that they try to measure an incentive, which is very difficult to do.[89] Most authors do not merely create because they will be protected. Rather, they work for pleasure, status or reputation.[90] It can be argued that wanting to work is ingrained in human nature.[91] Monetary values can be measured, but it is a subjective issue to validate a link between social motivators and copyright.[92] Defined by a lack of objectivity, academics argue that it reduces the theory of incentives to a mere trope.[93] Regardless, proponents of additional copyright protection often argue that copyright functions as an incentive.[94] Supporting data is often not accessible to the public, which is likely to be the reason why proponents keep using the theory.[95] Furthermore, data for the ancillary right is not available since it has not been adopted yet.

Still, it is possible to apply the economic principles to the effects of similar rules in Germany and Spain to retrieve a limited theoretical inclination.[96] Most importantly, the precursors show that news aggregators play an immense role in the public’s and author’s ability to disseminate knowledge.[97] In both Germany and Spain, publisher imposed licencing fees on news aggregators for the use of their news snippets. Instead, the aggregators removed the disputed content, which led to a severe disruption in web traffic to the involved publishers’ websites. Both the public and a small group of publishers[98] rely on this effect[99] to argue that the European right is likely to harbour substantive costs for society too.[100]

Whilst the public fears that it restricts access to free available press articles, publishers still think the European ancillary right will increase their bargaining power and legal certainty for all publishers.[101] However, academics are sceptical that the right establishes such legal certainty. For example, Senftleben argues that the anticipated effect of ancillary copyright establishes an anti-innovative effect.[102] The ancillary copyright would impede the evolution of new business models and only encourage the inflexibility of traditional market players. [103]  The essay uses these indicators to assess the Commission’s claim.

5. Google and the law

The German ancillary copyright is codified in §87f of its copyright law,[104] and states that the press publisher has an exclusive right to make its publications ‘accessible for commercial purposes’.[105] Just like the Commission, the German legislator seemingly followed the rhetoric of expectation. Before the right entered into force, the ZBU[106] noted that an incentive was said to be needed, but the incentive’s necessity was not apparent at all.[107] Although the German ancillary right aims to prevent search engines from providing free access to valuable content,[108] the profit of the media in Germany had reached a record high just before adopting the German right.[109] Furthermore, the Max Planck Institute anticipated that publishers need search machines to generate traffic, and without their support, profits would fall.[110]

After implementation of the right, the most notable consequence established was that Google refused to pay licensing fees for Google News when publishers alleged it infringed their copyright.[111] Instead, Google removed the allegedly infringing material, which effected a decline of traffic on the publisher’s websites, just as academics had anticipated. [112] Attempting to regain their traffic and revenue stream, publishers signed a royalty free licensing agreement with Google. Then, disgruntled, the publishers issued a complaint with the German Federal Competition Authority[113] with their consortium VG Media, and argued that Google abused its dominant position.[114] However, the court rejected the claim by arguing that ‘if an online service does not want to acquire a licence for the display of snippets and hence only displays search results in a more limited, shorter version, it can do so’. [115]

Implementing the Spanish ancillary copyright has had dire consequences as well. The copyright is contained in article 32.2 of the ‘Spanish Copyright Act’, and it obligates news aggregators to pay a fee to the publishers if they link to the content of the publisher.[116] Especially the obligatory nature of the measure caused the complete retreat of the Spanish division of Google News. And as a direct result, the traffic to the websites of the Spanish publishers dropped significantly, sometimes by 14%.[117] Then, the AAEP, an organisation for publishers, requested NERA to research the impact of the Spanish right.

NERA found that the Spanish ancillary copyright resulted in several costs for society. Most notably, it argues that the retreat of Google News impedes the consumer’s variety of content.[118] The public must search longer to access and disseminate information, and the publishers consequently receive less revenue to support their authors.[119] NERA estimates that the loss of opportunity of the public is around 1.85 billion euros per year, while the publishers’ costs are estimated at 10 million euros per year.[120] This illustrates that the relationship between aggregators and press publishers is not one based on substitution, but it is very likely to be symbiotic. Without the press, the aggregators would not aggregate, and without aggregation, press articles would not be found as quickly and frequently.[121]

When applying the theory to the facts, the first point to make is that authors are very likely to be least partially reliant on the creations of others, which the precursors make more difficult to find. Isaac Newton is thought to have said that ‘If I have seen further, it is by standing on the shoulders of giants’.[122] Similarly, impeding access to content impedes the creator’s frame of reference. The European Ancillary copyright increases the time and effort required to create, so an alternative occupation is more likely to be economically efficient.[123] Therefore, following Sterk’s argument,such a loss in opportunity increases the risk that the author abstains from creating works.[124]

In relation to the arguments of Senftleben, it must be said that the relationship between the protection of intellectual property and innovation is far from clear.[125] However, there is evidence that anti-innovative effects work as a market barrier for entry of new aggregators[126] and the exploitation of new business models.[127]  NERA estimates the impact of the Spanish ancillary copyright on publishers to be a loss of 10 million euro’s.[128] So, the European ancillary copyright is likely to be bad news for publishers as well. The effects could possibly prevent the quantity and diversity of available content from growing since the profits of publishers dictate the quantity of authors they can support.[129]

The question that remains is whether the gains of the monopoly holder break even with the loss of the rest of society.[130]  That seems rather unlikely, since Google News branches in Germany and Spain both refuse to pay. In Spain, publishers would need to earn 1.85 billion euros through their ancillary copyright to make up for the public’s deficit.[131] This signifies that if the proposed Ancillary Copyright establishes the (partial) retreat of Google News in Europe, the loss of the public would be unfathomably large. Conversely, if any benefit is conferred, which even the Commission’s impact assessment regards as unlikely, it would be for the publishers.[132] If the Ancillary Copyright causes the clock to rewind on the Rebrobel case law,[133] it would prevent the authors to reclaim their share of the fair remuneration which was previously taken by the publishers.[134]

Following the Kaldor-Hicks principle, a surplus of value seems far from a considerable possibility. [135] Society’s loss is almost certainly bigger than its benefits. The relationship between news aggregators and press publishers is very likely to be symbiotic, but regardless, the Ancillary Right is hindering the press excerpts by the aggregators.[136] Furthermore, authors are unlikely to be noticeably more incentivised, so the legislation is unlikely to provide for more content to disseminate that would otherwise be unavailable for the public.[137] Therefore, instead of preventing market failure, the precursors have established one, since they hinder optimal use of property. The precursors are extremely unlikely to establish an incentive for authors,[138] serve in the interest of the public or the publishers,[139] and fit the premise of the theory of incentives.[140]

The economic models used illustrate that by proposing a European ancillary copyright, the Commission risks the retreat of Google News in the entirety of Europe. Simultaneously, potential gains for publishers are small, since Google is unwilling to pay royalties and is likely to cut the infringing materials from the search results. However, the inherent problem with these models is that they approach reality, but they cannot define reality or future events.[141] The European Ancillary Right is not implemented yet, so the analysis used in this essay is speculative. Furthermore, monetary values do not apply to the myriad of social factors that possibly play a role, which means that the interpretation of the theory of incentives is partly metaphorical, not literal.[142]

6. The Commission’s imperative

The foregoing illustrates that even though the theory of incentives revolves around the progression of society,[143] the commission uses its unquantifiable nature to deploy a rhetoric of expectation, and adopt a measure that is likely to be unnecessary and hazardous.[144]  Since socioeconomic necessity is empirically unmeasurable, it must be born in mind that the theory of incentives does not mean to restrict the Commission’s discretion forcing it to adopt efficient legislation. Instead, not unlike other copyright justifications, it is a metaphorical guideline helping the Commission to do so.[145]

In that sense, the instrumental justification is a theory gauged by fairness and justice instead of efficiency, because perceived efficiency is unverifiable and therefore up to debate. When the Commission argues that right holders deserve the Ancillary Copyright because it would incentivise creation, it fails to make the division between efficiency, which is indicatable with economic models, and justice, which is impossible to measure.[146] One can infer from the Commission’s claim that the fairness of the measure is empirically determinable, which it is not.[147] A fitting illustration is that although the Commission has done an impact assessment,[148] it still argued that the European ancillary copyright would be good for the public.[149]

Another explanation for such an outcome is the probability that the Commission follows its own narrative.[150] As Suthersanen puts it, ‘the latest stakeholders in the copyright game are not the large content providers but merely large organisations who were peripheral to the Internet or digitisation phenomena 20 years ago’.[151] Lobbyists have pushed on the European level to adopt an Ancillary Copyright, and it seems that the Commission has listened.[152] The anterior motive of the lobbyists would be to undo the effects of the Rebrobel case, enabling publishers to receive, once again, a share of the fair remuneration of their authors.[153] Similarly, throughout copyright history, the interests of powerful market players have paved the way for new legislation.[154]

If the Ancillary Copyright simply continues these trends, it beckons an often-recurring question concerning measures that strengthen copyright: should the legislator use this justification?[155] The author of this essay regards it as undesirable that the Commission either fails to divide empirical matter from subjective matter, or uses the theory of incentives as a trope to cover up an alternate motive. The Commission should have clearly stated what its intentions are.[156]

If copyright justifications were completely arbitrary, the natural right justification would have been a better justification for the DSM proposal. This is because the justification is not concerned with the public’s benefit.[157] The DSM proposal would be justified because it is ‘right and proper’ to grant copyright to the creator.[158] Consequently, although the justification might still induce the authors into thinking that the additional right will help them, at least the Commission would not be giving the public reason to believe they are benefitted. Furthermore, the natural right justification has less empirical

In reality, justifications are not completely arbitrary, because they aim to function as the Commission’s guide to a sense of justice.[159] Therefore, this essay poses a different question, albeit it being one less frequently asked. Should the legislator stop using the justification instead of attempting compliance with its core message and values?

That depends on the approach taken by the Commission. Fisher says that ‘justifications of copyright seem to be inadequate, but perhaps through continued reflection and conversations, we can do better.’[160] This essay cannot force the reflection of the commission on its own legislative processes — but maybe it will come from within. If the Commission lacks to the will to challenge its narrative and to increase its transparency, the theory of incentives will continue to mislead. However, if the Commission does have the will to make a division between empirical efficiency and moral justice, it could alleviate the theory of incentives from being a mere trope to a hefty guideline with legal weight.

7. Making the theory of incentives ‘great again’

The Commission has a myriad of options to comply with the values of the instrumental justification. However, this essay argues that balancing the interests of stakeholders is not one of them. From a social perspective, it is very likely that Ancillary Copyright does not benefit authors or society.[161] However, this essay establishes that these interests involve social factors that are unquantifiable, and are therefore up for debate. It is for this reason that, within the context of the Ancillary Copyright, it is inefficient to argue whether the stakeholders’ interests involved can be in balance, or are inherently ‘unbalanceable’.[162]

It is paramount to promote change, so that the Commission uses the instrumental justification as a guideline to reach just legislation, instead of deploying the rhetoric of expectation to argue that it does. The focus should be on dividing empirical evidence from moral grounds within the process of the Commission when evaluating the necessity and subsidiarity of its proposed legislation.

First, to prevent that the impact assessment looks like it is made to fit the narrative of the Commission, the assessment should no longer be led by the Directorate-General(s) responsible for the proposal.[163] An independent institution or department should lead the process instead.

Second, the impact assessment should base its findings on the principle that it carries the burden of proof to show the efficiency of copyright policy.[164] Although the theory of incentives is metaphorical, when it comes to the economic necessity of legislation, findings should indicate that the quantifiable monetary benefit is at least equal or bigger than its quantifiable costs.[165] Furthermore, to justify the economic use of the theory of incentives, a proposal must precede market failure, which the impact assessment of the DSM proposal fails to show adequately.[166]

Third, following the reasoning of the previous paragraph, the assessment should consider that limiting and abolishing copyright rules could lessen costs by such an amount that it would make the effects of incentivising creation more noticeable.[167]

Fourth, to justify the use of the theory of incentives socially, the Commission should involve more individuals as opposed to grouping stakeholders together by reference to their common features. To ask the Commission to engage on a personal level with every stakeholder would be impossible. However, a group of stakeholders should not be assumed to have an overarching interest shared by all either. The Commission must interact intensively with a diverse pick of individual stakeholders grouped together in a common pool to judge the perceived need for the measure within a single group.

Fifth, apart from theoretical necessity, subsidiary should play a bigger practical role within the assessment than it currently does. The implementation of reasonable alternatives must be practically required first, no matter how necessary the legislation might appear to be. Tied to this subsidiarity should be the presumption that if after implementation the proposed rule does not function as intended, a legislative measure is not necessary either.

Finally, when the Commission follows these recommendations, the use of the theory of incentives is justified when the perceived economic efficiency by of a measure positively aligns with the perceived need of the measure in society. How the Commission perceives the efficiency and social need of the rule should not be decisive. To combat the rhetoric of expectation, the perception of independent experts should align with the perception of the stakeholders.

8. Alternatives to the Ancillary Copyright

Since the Commission has issued the impact assessment already, it can no longer reach such a conclusion for the Ancillary Copyright. Regardless, the Commission can still separately review the subsidiarity of the measure.

First, the rule established in the GS Media case could act as a substitute.[168] When comparing the GS Media case to the ancillary copyright, their similar scope is immediately noticeable. Recital 33 of the Digital Single Market proposal states that ‘the protection’ for a press publication ‘does not extend to acts of hyperlinking which do not constitute communication to the public’.[169] Therefore, both the GS Media and the Ancillary Copyright are bound to govern hyperlinks that communicate an infringing work to the public.[170] Furthermore, both the ancillary copyright and the GS Media case delay the exhaustion of press article’s copyright.[171]

However, GS Media deals specifically with broadening the scope of pre-existing copyright,[172] while Ancillary Copyright establishes a new property right.[173] Therefore, if the author has not attributed its property right to a publisher, the publisher will not be able to use GS Media to allege infringement. With the Ancillary Copyright, it can, if it has published a work with permission of its author.[174] This issue can be easily resolved by requesting an attribution from the author. Therefore, the GS Media case should be tried as a reasonable alternative to the Ancillary copyright.

Simultaneously, it could relieve tension between publishers and search engines by reaching a contractual agreement. At first glance, such a contractual solution might sound far-fetched, since Google has refused to pay press publishers in Germany and in Spain. However, in France and Belgium Google has signed contracts that provided for the compensation of press publishers.[175] In Belgium, a five million fund was created, whilst in France, a sixty million fund was founded.[176]

If the Commission promises to abandon the Ancillary Copyright for press publishers in exchange for a written agreement, it might usher Google and other news aggregators to sign contracts with publishers in other countries too. Since publishers could use the GS Media case, they would have a reasonable alternative for the right. This would be the first step towards the effective use of the theory of incentives in the context of the Ancillary Copyright.

9. Conclusion

This essay holds that the Commission justifies the European ancillary copyright based on the theory of incentives. The Commission argues that the legislation is necessary to negate a risk to the incentive of the right holders, including authors and publishers. Expectations of both the Commission and right holders rise when protection for right holders increases. But, the expectation fallacy has no reason to limit copyright protection. Therefore, copyright is likely to turn very restrictive over time.

The European Ancillary copyright is argued to incentivise creators based on the rhetoric fallacy. The Commission expects current copyright law to protect publishers against ongoing digitisation of their market. The Commission argues it does so insufficiently, and therefore the incentive of the right holder would be in danger. The proposal would avert this danger. However, proving socioeconomic necessity is too subjective and unquantifiable. The economic impact of a measure establishing an incentive can be measured, and show that the European ancillary copyright is highly unlikely to be reconcilable with the incentives argument. However, models only approach reality, and social factors such as intrinsic motivation to create are not measurable.

The only conclusion that this essay reaches is that it is very likely that the Commission uses the instrumental justification to adopt legislation with an alternate motive, and that it seems to mix up subjective criteria with empirical evidence. To prevent the theory of incentives from being used a mere trope, the Commission should reflect on its legislative process. The use of the theory of incentives is only justified when the perceived economic efficiency of a measure positively aligns with the perceived need of the measure in society.

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Story ‘Balanced Copyright: not a magic solving word’ 34(8) 2012 493

Waldron ‘From Authors to Copiers: Individual Rights and Social Values in Intellectual Property’ (1993) 68 Chicago-Kent Law Review 841

Barabash, ‘Ancillary copyright for publishers: the end of search engines and news aggregators in Germany?’ (2014) 35(5) EIPR 243

Varian, ‘Copying and Copyright’, 19(2) Journal of Economic Perspectives 2005, p. 127

Opinions and Reports

NERA Consultation Report 7/2015 <http://www.aeepp.com/pdf/InformeNera.pdf> accessed 12 November 2016

Hilty and Others, ‘Position Statement of the Max Planck Institute for Innovation and Competition on the “Public Consultation on the role of publishers in the copyright value chain”, 2016 <www.ip.mpg.de/en/link/Positionspapier-2016-06-15.html> accessed 20 November 2016.

Geiger and Others, ‘Opinion of CEIPI on the EU Proposal on Neighbouring Rights for Press Publishers’ CEIPI Opinion 11/2016 <http://www.ceipi.edu/fileadmin/upload/DUN/CEIPI/Documents/CEIPI_Opinion_on_the_introduction_of_neighbouring_rights_for_press_publishers_in_EU_final.pdf> accessed at 24 December 2016

Kretschmer and Towse, ‘What constitutes evidence for copyright policy?’ CREATe Working Paper 2013/1 < https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2619184> accessed at 2 January 2017

Commission, ‘Impact Assessment on the modernisation of EU copyright rules’ (Working Document) SWD (2016) 302 final

Electronic sources

Europa.eu, ‘State of the Union 2016: Commission proposes modern EU copyright rules for European culture to flourish and circulate’ <http://europa.eu/rapid/press-release_IP-16-3010_en.htm> accessed 3 December 2016.

Ipkitten.blogspot.co.uk, ‘BREAKING: Commission unveils new copyright package’ (Ipkitten.blogspot.co.uk, 14 September 2016) <http://ipkitten.blogspot.co.uk/2016/09/breaking-commission-unveils-new.html> accessed at 4 December 2016.

Montagnani, ‘The EU Consultation on ancillary rights for publishers and the panorama exception: Modernising Copyright through a ‘one step forward and two steps back’ approach’, (kluwercopyrightblog.com, 20 September 2016) <http://kluwercopyrightblog.com/2016/09/20/the-eu-consultation-on-ancillary-rights-for-publishers-and-the-panorama-exception-modernising-copyright-through-a-one-step-forward-and-two-steps-back-approach/> accessed at 13 December 2016.

Daniel Dalton, ‘EU Commission’s copyright proposals not fit for the digital age’, (theparliamentmagazine.eu, 14 July 2016) <http://theparliamentmagazine.eu/articles/opinion/eu-commissions-copyright-proposals-not-fit-digital-age> accessed at 4 December 2016.  

[1] Geiger and others, ‘Declaration on a balanced Interpretation of the “Three-Step Test” in Copyright Law’ (2008) 39 IIC707, 708, Posada de la Concha and others, ‘Impacto del Nuevo Articulo 32.2 de la Ley de Propiedad Intelectual’ NERA Consultation Report 7/2015, x <http://www.aeepp.com/pdf/InformeNera.pdf> accessed 12 November 2016

[2] Sterling, ‘Philosophical and Legal Challenges in the Context of Copyright and Digital Technology’ (2000) 31(5) IIC 508, 514: ‘Every day, even every hour, internet communication grows towards being the universal means of exchanging data, whether in the form of protected work representations or other material, a means in which all geographical and political boundaries have disappeared.’

[3] Commission, ‘Proposal for a directive of the European Parliament and the Council on copyright in the Digital Single Market’, COM (2016) 593 (DSM proposal)

[4] Shapiro, ‘EU copyright will never be the same: a comment on the proposed Directive on copyright for the digital single market (DSM)’ (2016) 38(12) EIPR 771, 772

[5] DSM proposal (n 3)

[6] DSM prosal (n 3) ch I, art. 11. Referenced as ‘Ancillary Copyright’

[7] Europa.eu, ‘State of the Union 2016: Commission proposes modern EU copyright rules for European culture to flourish and circulate’ (Europa.eu, 14 september 2016) <http://europa.eu/rapid/press-release_IP-16-3010_en.htm> accessed 3 December 2016

[8] In this essay the creative incentive justification is understood to envelop ‘the incentive to be creative’ as well as ‘the incentive to create’

[9] Sterling, Sterling on World Copyright Law, (Sweet & Maxwell 2015), para 2:63

[10] Ibid para 2:63

[11] Laddie, ‘Copyright: over-strength, over-regulated, over-rated?’ (1996) 18(5) EIPR1996 253, 253

[12] Europe.eu (n 7)

[13] DSM proposal (n 3) page 3: ‘rightholders face difficulties when seeking to license their rights and be remunerated for the online distribution of their works. This could put at risk the development of European creativity and production of creative content. It is therefore necessary to guarantee that authors and rightholders receive a fair share of the value that is generated by the use of their works and other subject-matter.’

[14] Europa.eu (n 7)

[15] Kretschmer and others, ‘The European Commission’s public consultation on the role of publishers in the copyright value chain: a response by the European Copyright Society’ (2016) 38(10) EIPR 591, 594, Senftleben, ‘Copyright Reform, GS Media and Innovation Climate in the EU – Euphonious Chord or Dissonant Cacophony?’ (2016) 5 Tijdschrift voor Auteurs-, Media- en informatierecht 2016 130, 131 (forthcoming).

[16] Kretschmer and others (n 15) 592

[17] Hilty and Others, ‘Position Statement of the Max Planck Institute for Innovation and Competition on the “Public Consultation on the role of publishers in the copyright value chain”, 2016, 2 <www.ip.mpg.de/en/link/Positionspapier-2016-06-15.html> accessed 20 November 2016

[18] Posada de la Concha and others (n 1) x

[19] Posada de la Concha and others (n 1) xi

[20] Hilty and Others (n 17)

[21] Paragraph 2, p.2

[22] Paragraph 3, p. 4

[23] Paragraph 4 and 5, p. 6

[24] Paragraph 6, p. 10

[25] Paragraph 7, 8 and 9, p. 11

[26] Ipkitten.blogspot.co.uk, ‘BREAKING: Commission unveils new copyright package’ (Ipkitten.blogspot.co.uk, 14 September 2016) <http://ipkitten.blogspot.co.uk/2016/09/breaking-commission-unveils-new.html> accessed at 4 December 2016

[27] Hereafter referred to as ‘publishers’, ‘press publishers’

[28] DSM proposal (n 3), ch I, art. 2(4): ‘a fixation of a collection of literary works of a journalistic nature, which may also comprise other works or subject-matter and constitutes an individual item within a periodical or regularly-updated publication under a single title, such as a newspaper or a general or special interest magazine, having the purpose of providing information related to news or other topics and published in any media under initiative, editorial responsibility and control of a service provider.’

[29] DSM proposal (n 3), ch I, art. 11(1)

[30] Parliament and Council Directive 2001/29/EC of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society [2001] OJ L 167/10.

[31] Dir. 2001/29/EC, ch I, art. 2: ‘Member States shall provide for the exclusive right to authorise or prohibit direct or indirect, temporary or permanent reproduction’

[32] Dir. 2001/29/EC, ch I, art. 3: ‘Member States shall provide for the exclusive right to authorise or prohibit the making available to the public, by wire or wireless means, in such a way that members of the public may access them from a place and at a time individually chosen by them’

[33] Not necessarily online, as long as there is a digital medium is involved

[34] Sterling, Sterling on World Copyright Law (n 9) para 2:111

[35] Case C-572/13 Hewlett-Packard Belgium SPRL v Reprobel [2015] ECLI:EU:C:2015:750 [44] – [49]

[36] Kretschmer and others (n 15) 592

[37] Dir. 2001/29/EC, ch I, art. 5(2)(a)

[38] Montagnani, ‘The EU Consultation on ancillary rights for publishers and the panorama exception: Modernising Copyright through a ‘one step forward and two steps back’ approach’, (kluwercopyrightblog.com, 20 September 2016) <http://kluwercopyrightblog.com/2016/09/20/the-eu-consultation-on-ancillary-rights-for-publishers-and-the-panorama-exception-modernising-copyright-through-a-one-step-forward-and-two-steps-back-approach/> accessed at 13 December 2016

[39] Kretschmer and others (n 15) 592

[40] Europa.eu (n 7)

[41] Kretschmer and others (n 15) 592.

[42] DSM proposal (n 3) Recital 33: ‘This protection does not extend to acts of hyperlinking which do not constitute communication to the public’.

[43] Case C-160/15 GS Media BV v Sanoma Media Netherlands BV and Others [2016] ECLI:EU:C:2016:644.

[44] Daniel Dalton, ‘EU Commission’s copyright proposals not fit for the digital age’, (theparliamentmagazine.eu, 14 July 2016) <http://theparliamentmagazine.eu/articles/opinion/eu-commissions-copyright-proposals-not-fit-digital-age> accessed at 4 December 2016.  

[45] DSM proposal (n 3) art 3(1).

[46] Smith and Newton, ‘Hyperlinking to material on the internet: the CJEU expands on the circumstances when it may amount to copyright infringement’, 2016 EIPR 768, 769.

[47] Ibid

[48] Ibid

[49] Koelman, ‘Copyright Law and Economics in the EU Copyright Directive: Is the Droit d’Auteur Passé?’ (2004) 35(6) IIC 603, 603.

[50] Hughes, ‘The Philosophy of Intellectual Property’ (1988) 77 The Georgetown Law Journal 287, 297.

[51] Fisher, ‘Theories of Intellectual Property’, in: Stephen Munzer (ed), New Essays in the Legal and Political Theory of Property (Cambridge University Press 2001), 168-169.

[52] Koelman (n 49).

[53] Ibid

[54] Ibid

[55] Bentley and Sherman, Intellectual Property (Oxford University Press 4^th edition 2014) 37-38

[56] Emilianides, ‘The author revived: harmonisation without justification’ (2004) 26(12) EIPR 538, 539

[57] Shiffrin, ‘The Incentives Argument for Intellectual Property Protection’, in: Gosseries and Others (ed), Intellectual Property and Theories of Justice (Palgrave Macmillan 2008) 95

[58] Balganesh, ‘Foreseeability and copyright incentives’ (2009) 122 Harvard Law Review 1569, 1581

[59] Macmillan, Intellectual Property Law (Palgrave Macmillan 6^th ed. 2016) 3

[60] Laddie (n 11) 253 – 254. Sterk, ‘Rhetoric and Reality in Copyright Law’ (1996) 94 Michigan Law Review 1997, 1209: ‘If copyright law were founded on the incentive justification, one would expect doctrine to be most protective when economic incentives are most necessary to generate creative activity.’ (emphasis added)

[61] DSM proposal (n 5) recital 32: ‘The organisational and financial contribution of publishers in producing press publications needs to be recognised and further encouraged to ensure the sustainability of the publishing industry. It is therefore necessary to provide at Union level a harmonised legal protection for press publications in respect of digital uses.’

[62] DSM proposal (n 5) preamble para 31

[63] Sterling, Sterling on World Copyright Law (n 9) para 2:111

[64] Hughes (n 50) 297

[65] DSM proposal (n 61) recital 32

[66] DSM proposal (n 3) page 3

[67] Ibid (emphasis added)

[68] Lenk and Hoppe, Ethics and Law of Intellectual Property (Ashgate publishing company 2007) 215

Suthersanen, ‘Copyright Law: A Stakeholders’ Palimpsest’, in: Macmillan (ed), New Directions in Copyright Law, (Edward Elgar 2007), 122.

[69] Wiese, ‘The justification of the copyright system in a digital age’ (2002) 24(8) EIPR 387, 390

[70] Europe.eu (n 7).

[71] DSM proposal (n 63) page 3.

[72] Geiger and Others, ‘Opinion of CEIPI on the EU Proposal on Neighbouring Rights for Press Publishers’ CEIPI Opinion 11/2016, 14 <http://www.ceipi.edu/fileadmin/upload/DUN/CEIPI/Documents/CEIPI_Opinion_on_the_introduction_of_neighbouring_rights_for_press_publishers_in_EU_final.pdf> accessed at 24 December 2016.

[73] See n 51.

[74] Stadler, ‘Incentive and Expectation in Copyright’, 58 Hastings Law Journal 2007 433, 435.

[75] Koelman (n 46) 607.

[76] Ibid 435.

[77] Ibid 122.

[78] Waldron ‘From Authors to Copiers: Individual Rights and Social Values in Intellectual Property’ (1993) 68 Chicago-Kent Law Review 841, 852.

[79] Balganesh (n 58).

[80] Suthersanen, ‘Copyright Law: A Stakeholders’ Palimpsest’, in: Macmillan (ed), New Directions in Copyright Law, (Edward Elgar 2007), 122.

[81] Commission, ‘Impact Assessment on the modernisation of EU copyright rules’ (Working Document) SWD (2016) 302 final, 1 (Impact Assessment)

[82] Geiger and Others, Opinion of CEIPI (n. 72) 2.

[83] Latai, ‘Don’t think twice, it’s all right: towards a new copyright protection system’, 37(12) EIPR 2015, p. 771.

[84] Posada de la Concha and others (n 1) xi. Hilty and Others (n 17), 3.

[85] Latai (n 83).

[86] Ibid 771.

[87] Sterk (n 60) 1207.

[88] Ibid.

[89] Latai (n 83).

[90] Shiffrin (n 57) 96.

[91] Merges, Justifying Intellectual property (Harvard University Press 2011) 73

[92] Spence, Intellectual Property (Oxford University Press, 2007) 48.

[93] Sterk (n 60) 1197. Balganesh (n 58) 1573.

[94] Latai (n 83) 765.

[95] Ibid.

[96] Kretschmer and others (n 15) 594.

[97] Posada de la Concha and others (n 1) xiv.

[98] Europa.eu, ‘Public consultation on the role of publishers in the copyright value chain and on the panorama exception’, (ec.europa.eu, 23 March 2016) <https://ec.europa.eu/digital-single-market/en/news/public-consultation-role-publishers-copyright-value-chain-and-panorama-exception> accessed on 12 December 2016.

[99] Kretschmer and others (n 15) 594.

[100] Latai (n 83) 766.

[101] The Commission, ‘Synopsis Report on the results of the public consultation on the role of publishers in the copyright value chain’, (ec.europa.eu, 14 September 2016) <http://ec.europa.eu/information_society  /newsroom/image/document/2016-37/synopsis_report_-_publishers_-_final_17048.pdf>  accessed on 12 December 2016, p. 7, Impact Assessment (n 81) 3

[102] Senftleben (n 15).

[103] Senftleben (n 15), 133.

[104] 1965 UrhG, §87f (Gesetz über Urheberrecht und verwandte Schutzrechte).

[105] Kretschmer and others (n 15) 597.

[106] Leibniz-Informationszentrum Wirtschaft.

[107] Dawenter and Haucap, ‘Ökonomische Auswirkungen der Einführung eines Leistungsschutzrechts für Presseinhalte im Internet (Leistungsschutzrecht für Presseverleger)’ 1/2013, <http://hdl.handle.net/10419/68484> accessed 14 December 2016, iii.

[108] Nordemann, ‘Germany’s publishers take on Google’ (Kluwercopyrightblog, 30 August 2016)  <http://kluwercopyrightblog.com/2016/08/30/germanys-publishers-take-google/> accessed on December 25 2016

[109] Dawenter and Haucap (n 100) i.

[110] Supra nr. 59, p. 3.

[111] Kretschmer and others (n 15) 597.

[112] Inter alia: Barabash, ‘Ancillary copyright for publishers: the end of search engines and news aggregators in Germany?’ (2014) 35(5) EIPR 243, 245. Max-Planck-Institut für Immaterialgüter- und Wettbewerbsrecht, ‘Stellungnahme zum Gesetzesentwurf für eine Ergänzung des Urheberrechtsgesetzes durch ein Leistungsschutzrecht für Verleger’, 2016, available at: <http://www.ip.mpg.de/fileadmin/ipmpg/content/stellungnahmen/leistungsschutzrecht_fuer_verleger_01.pdf> accessed on 15 December 2016.

[113] Hilty and Others (n 17), 3.

[114]Bellon, ‘German court rejects suit by publishers against Google’ (Reuters, 19 February 2016) <http://www.reuters.com/article/us-google-media-germany-idUSKCN0VS1LG> accessed 15 December 2016

[115] Hilty and Others (n 17), 5, citing the Bundeskartellamt

[116] 1987 Copyright for the Author in Spain Act, art. 32.2 (Derecho de Autor en Espania)

[117] Posada de la Concha and others (n 1) xiv.

[118] Ibid.

[119] Ibid xiii.

[120] Ibid xiv.

[121] Ibid.

[122] Where you got the quote

[123] Sterk (n 60) 1207.

[124] Ibid.

[125] Latai (n 83) 765.

[126] Posada de la Concha and others (n 1) xiii.

[127] Senftleben (n 15), 132.

[128] Posada de la Concha and others (n 1) xiv.

[129] Senftleben (n 15), 130

[130] Varian, ‘Copying and Copyright’, 19(2) Journal of Economic Perspectives 2005, p. 127

[131] Posada de la Concha and others (n 1) xiv

[132] Geiger and Others, Opinion of CEIPI (n. 72)

[133] See n 37

[134] Kretschmer and others (n 15) 594

[135] Varian (n 130) 127

[136] Posada de la Concha and others (n 1) xiv

[137] Spence (n 85) 66

[138] Sterk (n 60) 1207

[139] Barabash, ‘Ancillary copyright for publishers: the end of search engines and news aggregators in Germany?’ (2014) 35(5) EIPR 243, 245

[140] Posada de la Concha and others (n 1) xv

[141] Latai (n 83) 768

[142] Fisher (n 51) 189

[143] Bentley and Sherman (n 55), 36

[144] Geiger and Others, Opinion of CEIPI (n. 72) 14

[145] Fisher (n 51) 193

[146] DSM proposal (n 3) page 3

[147] Waldron (n 75) 851

[148] Impact Assessment (n 81)

[149] Geiger and Others, Opinion of CEIPI (n. 72) 2

[150] Sterk (n 60) 1244

[151] Suthersanen (n 75) 122

[152] Kretschmer and others (n 15) 592

[153] Ibid.

[154] Cooper and Deazley ‘Interrogating copyright history’ 38(8) (2016) 467, 470

[155] Emilianides, (n 56).

[156] Kretschmer and others (n 15) 592

[157] Bentley and Sherman (n 55), 36

[158] Ibid.

[159] Fisher (n 51) 193.

[160] Fisher (n 51) 198.

[161] Stadler (n 74) 460

[162] Story ‘Balanced Copyright: not a magic solving word’ 34(8) 2012 493, 495.

[163] Europa.eu, ‘Guidelines on Impact Assessment’ (Europa.eu, 19 May 2015) <http://ec.europa.eu/smart-regulation/guidelines/ug_chap3_en.htm> accessed 2 January 2017

[164] Kretschmer and Towse, ‘What constitutes evidence for copyright policy?’ CREATe Working Paper 1/2013, 109 < https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2619184> accessed at 2 January 2017

[165] Varian (n 130) 127, Latai (n 83)

[166] Hilty and Others (n 17), 3, Geiger and Others, Opinion of CEIPI (n. 72) 2

[167] Fisher (n 51) 172

[168] Case C-160/15 GS Media BV v Sanoma Media Netherlands BV and Others [2016] ECLI:EU:C:2016:644.

[169] DSM proposal (n 3) recital 33

[170] Senftleben (n 15)

[171] Senftleben (n 15) 132.

[172]Smith and Newton (n 46)

[173] DSM proposal (n 3), ch I, art. 11.

[174] DSM proposal (n 3), ch I, art. 11(2)

[175] Geiger and Others, Opinion of CEIPI (n. 72) 6.

[176] Ibid.