Home / News & Blogs / Is ‘hyperlink tax’ really going to be a thing? An update on the new Copyright Directive (part 1)

Is ‘hyperlink tax’ really going to be a thing? An update on the new Copyright Directive (part 1)

| 14 November 2018

You may have heard about a proposal for a controversial new law which would impose a ‘tax’ on placing hyperlinks and require online platforms in the EU to actively monitor and filter all content shared by users, in order to prevent copyright infringement. Although the proposal was met by vehement criticism from civil rights organisations, acclaimed law professors and some of Internet history’s brightest stars (you may have heard of Sir Tim Berners-Lee?), it now appears likely that the proposal will actually make it. In response to the criticism, the European Parliament did adopt certain amendments. Can these amendments sufficiently alleviate the concerns?

This is a fairly complex topic, so in order to avoid tl;dr, we split this blog into two parts. This first part will provide general information about the proposal of the Copyright Directive and focus on article 11, the criticism it attracted (‘link tax’), and the amendments that were adopted by the European Parliament. Blog no. 2 provides a more in-depth analysis of article 13 (‘upload filter’). We hope that after reading both blogs you will have a general understanding of the current status of the Directive and how its most controversial provisions could affect you or your business.

Why was the Directive proposed?

The Directive is part of the Digital Single Market strategy of the European Union, which aims at stimulating digital growth in Europe. The main objective of the Directive is to update the current European copyright framework (Copyright Directive 2001/29/EC) to the modern digital age and to harmonise copyright practises across Member States. This update aims to balance the ‘value gap’: the difference between the remuneration for copyright holders and the profits made by online platforms when they make their works accessible. The main, or at least the most controversial instruments to achieve this are article 11 and article 13 of the Directive.

Will article 11 really instate a ‘hyperlink tax’?

No. Article 11 requires ‘information society service providers’ (EU legalese for providers of online services) to remunerate publishers of press publications if the online service uses more than ‘a mere hyperlink accompanied by individual words’ of the press publication. The clarification that “mere hyperlinks which are accompanied by individual words” are not subject to copyright and therefore will not trigger any obligation to remunerate, was contained in the amendments adopted by the European Parliament. This amendment appears to be aimed at the criticism that article 11 essentially proposed a tax on hyperlinking itself, which would threaten the Internet as we know it.

What are (publishers of) online press publications?

It is also important to understand that only publishers of ‘press publications’ are given the right to remuneration under the proposed Directive. Newspapers or news magazines are explicitly included in the definition of ‘press publication’, whereas scientific journals are explicitly excluded. (Although it should be noted that the exact wording of the definition is quite complicated and may provide lawyers on each side with plenty of ammunition for diverging interpretation in the interest of their respective clients.) 

What use of online press publications will be subject to remuneration?

Although in the Parliament’s version it is now explicitly clear that mere hyperlinks (accompanied by individual words) will not trigger any obligation to remunerate, it is far less clear how much more would exactly be required for this obligation to be triggered. For example, would a single complete sentence exceed the scope of ‘individual words’? Or some (individual?) words and a small (thumbnail) picture? Questions such as these cannot readily be answered from the wording and recitals of the proposal that was adopted by the European Parliament. As the proposal appears targeted primarily at news aggregator websites such as Google News, it seems reasonable to expect that the combination of a sentence and a thumbnail as provided there, could trigger article 11. (Whether this is reasonable or justified is another discussion entirely, which we will avoid for the moment.)

Another point that was clarified by the Parliament’s amendments, is that private use by individual users is explicitly excluded from the scope. If, for example, you share a news article through an app such as WhatsApp or Signal with a friend (including not just a hyperlink and some individual words but also a ‘snippet’ as is normally added automatically), you can now be certain that you will not have to pay for that.

What is ‘fair and proportionate remuneration’?

As stated, under the new article 11, publishers of ‘press publications’ (newspapers, e.g. Sunday Times, New York Times) can claim ‘fair and proportionate remuneration’ from ‘information society service providers’ (any website or online service), for the use of their press publications (in a manner that exceeds a mere hyperlink and some words). The precise meaning of ‘fair and proportionate remuneration’ will have to be found in practice, for example by collective bargaining/management agreements and statutory remuneration mechanisms.

How long does the protection for press publications apply?

The protection granted by article 11 is limited to 5 years from publication. No remuneration obligation will exist for using press publications older than 5 years. (Under the initial proposal, this term was 20 years.)

The protection will not apply retroactively, meaning that any use of press publications that was made prior to entry into force of the national law implementing the Directive, will not be subject to the obligation to pay.

Is the proposal now final and when will it become effective?

The vote in the European Parliament is an important milestone in the legislative process, but not the final step. The proposal will now move into the ‘trilogue’ negotiations between the EU Council, Parliament and Commission, who will need to work together to put their respective versions together in a final text. When exactly this process will be concluded is impossible to say now, but (early) 2019 appears to be a possibility. From then, the standard implementation term of 2 years will apply for the EU member states to implement the Directive into their national laws.

Regardless of your opinion on the matter, if you are a publisher of press publications or an online service who may use (or consider using) such publications, it will be important to follow the legislative process closely. We will keep you posted as new developments may occur.