Clifford Chance

On 22 May 2020, the US Copyright Office released its much-anticipated report (the "Section 512 Report") on the so-called "safe harbours" for online service providers under s.512 of the US Copyright Act, as enacted by the 1998 Digital Millennium Copyright Act (the DMCA). The Section 512 Report comes amidst significant pressure from rights holders for reform of the DMCA framework.

Background:

As with the safe harbour provisions in the 2000 EU E-Commerce Directive which followed it, the s.512 safe harbour provisions in the 1998 DMCA aimed to strike a balance between promoting the growth of online services through shielding service providers from liability for content their users uploaded, while also protecting the interests of rights owners.

The s.512 provisions under the DMCA particularly focus on liability for copyright infringement, and have become known as the "notice and take down regime". Under this regime, online service providers falling within one of the four "safe harbours" described under the DMCA are not liable for the copyright breaches of their users if they establish sufficient procedures to, on receiving a section 512 notice of breach, promptly take down that rights-infringing content.

Pressure from rights holders for reform has grown over the 22 years since the enactment of the DMCA as the internet has become an increasingly central feature of economic activity, dominated by a number of large, powerful companies, and sophisticated filtering technologies have become available to detect copyrighted content.

Findings of the Section 512 Report:

The Section 512 Report set out to establish whether the DCMA had achieved the appropriate balance between online service providers and rights holders which Congress envisaged when the legislation was drafted. The US Copyright Office invited public comment and received more than 92,000 written responses.

In the Section 512 Report, the Copyright Office notes a large number of complaints by rightsholders concerning high levels of piracy, and a "value gap" between the value that some user upload services extract from creative content and the revenue they return to creators. By contrast, online service providers gave evidence that they were largely happy with the existing regime.

Following investigations, the Section 512 Report describes "the scale of online copyright infringement and the lack of effectiveness of section 512 notices to address that situation" as "significant problems". The report concludes that the framework of safe harbours should remain, but that "the operation of the section 512 safe harbor system today is unbalanced" and requires changes to rebuild the original balance between online service providers and rights holders as envisaged by Congress.

Areas in the DCMA which the report highlights for re-consideration include:

• eligibility qualifications for safe harbours (i.e. what sorts of online businesses should be eligible to benefit from the safe harbours); 
• repeat infringer policies; 
• knowledge requirement standards (i.e. at what point should online service providers be deemed to know of a copyright breach and obliged to take down the offending material); and 
• specificity within takedown notices (i.e. how specific do rights holders need to be in describing the violating content they notify).

Analysis:

In the EU, the 2019 Digital Single Market Copyright Directive (the EU Copyright Directive) has already reformed the EU safe harbour regime by distinguishing "Online Content Sharing Providers" (i.e. content hosting platforms like YouTube or Facebook) from other online service providers, removing them from the ambit of the online hosting safe harbour, and establishing new obligations to use "best efforts" to obtain prior authorisation for content and to ensure the unavailability of copyrighted works on their platforms.

However, reforming safe harbour rules is difficult and can attract controversy - the EU Copyright Directive (which is due to come into force in 2021) has even entered the public consciousness as "the meme killer" copyright law (despite in reality including carve outs for quotation, caricature and pastiche).

Eventual legislation will require a delicate balancing between the interests of different groups, and careful drafting to avoid unintended consequences. For instance, both the Section 512 Report and the EU Copyright Directive recognise the need to continue to protect small online service providers which may lack the ability to screen copyrighted content themselves.

The Section 512 Study notes that requiring all online service providers to “develop and deploy expensive, Content ID-like systems” would erect a barrier for new players to enter the market, an issue the Copyright Directive attempts to mitigate through a proportionality test and an exclusion for "new service providers". Difficulties such as these may make new US legislation slow to arrive following the report.

Nevertheless, together with the EU Copyright Directive (and the forthcoming EU Digital Services Act, which promises a much more comprehensive approach to the policing of online content), the publication of the US Section 512 Report highlights a clear trend toward making platforms more responsible for the content they host.

In the US, stakeholders will now look to Congress for legislation to enact the findings of the Section 512 Report. In the UK, the government (which has said it will not implement the EU Copyright Directive), will have to consider whether it wishes to join the world's two major economies in re-considering the balance between online service providers and rights holders in its legislation.