Innovation Policy Post

As CCIA has repeatedly reported, Germany was the first country in the European Union to have passed a law, called the Leistungsschutzrecht, that extends copyright protection to text excerpts, like snippets, generated by search engines and online aggregators. Even though the legislature has in the end somehow tried to minimize the impact on online businesses, by excluding ‘smallest text excerpts’ from the scope of the law, the impact of the law remains uncertain and we expect years of litigation so clarify the law.

We have criticized the German ancillary copyright initiative on multiple grounds and remain concerned about the law as well as about other, similar legislative proposals across Europe. The passing of this law, however, has put another issue to the fore that could increasingly become a problem for cross-border e-commerce services across the EU -- Member States’ blatant non-consideration of their duty to notify draft laws that have an impact on information society services.

Given that the EU is a patchwork of 27 Member States with distinct laws, a key objective of European integration has always been to set up a common market to ensure cross-border economic activity. Despite huge successes, this objective is far from complete and arguably, the Internet has made the completion of a common economic area across the EU even more pressing given its trade-facilitating nature. This was rightly recognized by the EU legislator in passing the ‘Transparency Directive’ that lays down a mandatory procedure for the provision of information about Member States’ rules on information society services.

According to this procedure, Member States must notify draft laws and rules on information society services in order to allow the Commission, Member States, and the private sector to comment and raise concerns about potential barriers to intra-EU trade. The importance of this mechanism must be stressed: it provides public and private players with the chance to raise potential concerns before they mature, making sure that online businesses don’t have to adapt their services for each EU country. This essentially ensures the free movement of online services across the EU.

Against this background it is regrettable and worrisome that an important EU founding State has decided to simply ignore the rules. In the Commission’s Staff Working Document accompanying last year’s Communication on a digital single market of e-commerce and other online services, this problem of non-notification of draft laws was rightly addressed. We will continue to urge the Commission to be vigilant over this issue as online services need an adequate level of legal certainty to operate across the EU. And also, it cannot be in the interest of Member States to face the risk of infringement proceedings for breaching their EU obligations.