Proposed EU Regulation on Cross-Border Access to Copyrighted Content (Guest Blog Post)

by Guest Blogger Marketa Trimble

When the European Commission issued its initial documents (here and here) in May 2015 regarding the Single Digital Market and geoblocking on the internet, the tone of the documents, and in particular their apparent vilification of geoblocking, suggested that the Commission was preparing for aggressive legislative action targeting geoblocking. But the initial legislative proposal, which the Commission produced on the subject, has little to do with geoblocking; as explained below, the proposal is more about regulating “permissible spillover” of content across national borders within the EU.

The legislative proposal – a proposal for an EU Regulation originally presented in December 2015 and currently in its latest publicly-available version of April 13, 2016 – concerns “cross-border portability,” a concept that is not completely new in the EU; the term had appeared (in the present context) earlier in a European Commission Communication from 2012. According to the proposed Regulation, “cross-border portability” should allow consumers who reside in an EU member state and are temporarily present in another EU member state to access “online content services to which [the] consumers have lawful access, or content that they purchased or rented online in their country of residence” (Explanatory Memorandum to the Regulation proposal and Article 3 of the proposal).

In practice, the Regulation should, for example, allow persons subscribing to Netflix in Estonia (the persons’ country of residence) to travel to, say, Belgium and enjoy their Estonian Netflix subscription while they are temporarily present in Belgium. Netflix subscribers have reported that they can already log into their Netflix accounts in countries other than their country of residence (or the country in which they subscribed to Netflix); but the content offered to them in the other countries is Netflix’s local content in those countries, rather than the content from the subscriber’s country of residence (or the country of their original subscription).

The Regulation should change this situation and mandate that providers such as Netflix provide subscriber access to content from the subscribers’ EU country of residence while the subscribers are temporarily present in other EU member states. To achieve this goal, the Regulation uses an automatic invalidation of territorial restrictions on contracts, such as territorial restrictions on copyright licenses (Article 5), and a particular method of localizing users’ acts on the internet (Article 4). The localization provision creates a fiction for purposes of cross-border portability, according to which a user who temporarily accesses content on the internet from another EU member state is still considered to be located within his country of residence.

Without legislated cross-border portability, some users have already created their own “cross-border portability” by using VPNs and other tools to circumvent geoblocking and access content to which access is limited based on the territory from which the users connect to the internet. Depending on their business model and their other interests, some service providers welcome (or at least tolerate) such “spillover”; these providers benefit from the increased traffic and may have little or no incentive to actively police the effectiveness of geoblocking on their sites. Other providers, employing a different business model and/or having different interests, might not tolerate spillover and either respond to user demand with new business models adjusted to take into account demand for cross-border access (such as the model that the BBC Global iPlayer used to represent), or try to stop users from circumventing geoblocking by pursuing legal action against providers of geoblocking circumvention tools (such as the action against Global Mode in New Zealand).

By mandating that users have cross-border access to their home content, the proposed EU Regulation would allow, but regulate, cross-border spillover. The proposed Regulation is silent on the legality of geoblocking or the circumvention of geoblocking (on that topic see, for example, here), but it sets parameters that limit the permissibility of cross-border access. For now, without legislated portability, cross-border access is achieved by users only through circumvention of geoblocking, with no parameters that would block the potentially resulting unlimited cross-border spillover. Cross-border spillover resulting from cross-border portability under the proposed Regulation would be limited by (1) the definition of “temporary presence” (Article 2(d)); and (2) effective verification by service providers of data concerning users’ identity, users’ current location, and users’ location history (Recitals 23 and 23a, and Article 3B of the latest publicly-available revised proposal). The ongoing discussions of the draft in the EU legislative process have been focused on setting these parameters.

Proper design of the parameters will be very important because effective parameters will prevent negligible spillover from becoming undesirable spillover. Content providers might have ignored the circumvention of geoblocking as long as the practice was limited to technologically savvy internet users, but now that circumvention has become widespread and adopted by ordinary internet users (on the “Territoriality Referendum” see here), content providers have become alarmed. It is not difficult to imagine that a lenient definition of “temporary presence,” and/or a low effectiveness of user data verification could result in the Regulation allowing spillover that would defeat any intended territorial restrictions and produce (de facto) a truly single European digital market.

The determining factor for the final legislation will be the motivations of the EU institutions (and of stakeholders influencing their decisions) in legalizing and regulating cross-border spillover. The European Commission has considered the possibility of a unitary European copyright law for some time, and uncontrollable cross-border spillover could be used as an argument to convince EU member states that a single copyright for the EU is inevitable. However, whether a single EU copyright would be desirable has been and continues to be vigorously debated.