Internal Market Commissioner Frits Bolkestein commented that:
"This is a very significant achievement. Not only is this Directive the most important measure ever to be adopted by Europe in the copyright field but it brings European copyright rules into the digital age. Europe's creators, artists and copyright industries can now look forward with renewed confidence to the challenges posed by electronic commerce. At the same time, the Directive secures the legitimate interests of users, consumers and society at large."
The Directive harmonises the rights of reproduction, distribution, communication to the public, the legal protection of anti-copying devices and rights management systems.
Particular novel features of the Directive include a mandatory exception for technical copies on the net for network operators in certain circumstances, an exhaustive, optional list of exceptions to copyright which includes private copying, the introduction of the concept of fair compensation for right holders and finally a mechanism to secure the benefit for users for certain exceptions where anti-copying devices are in place.
Adoption and implementation of the Directive will enable the Community and its Member states to ratify the 1996 World Intellectual Property (WIPO)Treaties - the so-called Internet Treaties. These two treaties, namely the WIPO Copyright Treaty (WCT) on the protection of authors and the WIPO Phonograms and Performances Treaty (WPPT) on the protection of performers and phonogram producers, were adopted by WIPO in December 1996. The Internet Treaties were ratified by the US in 1998 with its Digital Millennium Copyright Act.
The Directive provides an obligatory exception for service providers, telecommunications operators and certain others in limited circumstances for particular acts of reproduction which are considered technical copies. A compromise has been taken for what has been an extremely controversial issue. There are many conditions to be fulfilled before the exemption applies. In particular, those acts of reproduction have to form an essential part of a technological process and take place in the context of a transmission in a network. The Directive ensures therefore that there will be effective operation of the World Wide Web for those who place copyrighted material on the net and those who transmit or carry such material.
There is now a detailed exhaustive list of exceptions to the reproduction right and right of communication to the public. All are optional and therefore Member States may choose to apply any or all of these exceptions. However, the list is exhaustive which means that no other exception may be applied. This proved controversial. Therefore, a "grandfather clause" has been included which allows Member States to continue to apply existing exceptions in minor cases for analogue (not digital use) only.
This was originally suggested by the European Parliament in relation to certain exceptions and taken on board by the Commission in its amended proposal. It applies to three of the exceptions, namely reprography (photocopying), private copying and broadcasts reproduced for viewing or listening in certain social institutions. However, Member States are given flexibility in how to interpret this. In particular, in certain minor cases, there may be no obligation for payment or further payment. The precise form of such compensation (which may, but does not have to, take the form of levies on copy shops, sales of blank tapes and equipment, as exists in most Member States) would be up to the Member States to decide in accordance with their own legal traditions and practices.
Member States would also have a degree of flexibility in their treatment of fair compensation for time shifting i.e. private copies made off the air from radio or television for the purpose of viewing or listening to the broadcast at a later more convenient time.
This has been amongst the most political and controversial topics of the whole debate. The problem has been how to ensure that an exception, e.g. an act of reproduction or copying for illustration for teaching, can be made use of where a copyright holder also has in place an anti-copying device, e.g. a digital tracker designed to prevent piracy. Failure to address this would have meant that the exceptions could have been meaningless in some cases. Here too there has been a compromise.
Firstly, right holders have complete control over the manufacture, distribution etc. of devices designed to circumvent anti-copying devices. A more flexible solution in this regard would have carried a greater risk of abuse and piracy.
Secondly, the Directive provides that right holders either voluntarily or by way of agreements with other parties have to provide those who would benefit from a particular exception e.g. schools, libraries in the case of teaching, with the means to do so. It will be up to Member States to ensure that such means exist.
However, as far as private copying is concerned, the quality and quantity of private copying and the growth of electronic commerce all mean that there should be greater protection for right holders in digital recording media (whereby unlimited numbers of perfect copies may be made rapidly). In certain limited cases, where right holders have made the means available, private copying may be carried out.
The Directive applies Community exhaustion and not international exhaustion for the distribution right. This is in line with previous Directives in the field of copyright. Therefore, once a copyright protected product such as a CD or CD-ROM is marketed in the Community by or with the consent of the right holder, the distribution right is said to be "exhausted," i.e. there is no right to restrict further distribution in the Community. Parallel imports throughout the Community will therefore be permitted but the right holder will retain protection against parallel imports from third countries.
Both the E-Commerce Directive and this Directive are important elements in meeting the EU objective to create a harmonised legal framework to encourage the development of the Information Society. They complement each other, as this Directive deals with aspects of copyright law whilst the E-Commerce Directive harmonises various legal issues relating to the functioning of the Internal Market. This Directive supplements the liability provisions of the E-Commerce Directive by confirming that injunctive relief i.e. the ability to stop infringing activity by court or other action must also be available to right holders against intermediaries when their services are used by third parties to infringe copyright or related rights.