On June 8, 2017, The European Council adopted the Regulation on cross-border portability of online content services. The regulation will allow consumers who have paid for online content services in their home country to access those services when visiting another country within the EU. Alongside the ‘Roam like at home’ rules which came into force yesterday, the regulation forms part of the European Digital Single market strategy. The regulation will come into effect in the first quarter of 2018.

Deemed place of performance of otherwise restricted acts

Content is traditionally distributed and exploited on a territorial basis, underpinned by territorial copyright and related rights. To maximise value, rights are often licensed on an exclusive territorial basis, and licences will often contain terms requiring licensees to implement technical measures (such as geo-blocking) to prevent their customers from accessing licensed content outside the licensed territory.

In order to allow cross-border portability without changing existing content licences (or requiring mass rights infringement), the regulation introduces:

the legal mechanism of deeming that the the provision of, access to and use of online content services occurs in the subscriber’s Member State of residence, rather than the state in which they are temporarily present.”

Or, as explained in the preamble: ‘For the licensing of copyright or related rights, the legal mechanism laid down in this Regulation means that relevant acts of reproduction, communication to the public and making available of works and other protected subject-matter, as well as the acts of extraction or re-utilization in relation to databases protected by sui generis rights, which occur when the service is provided to subscribers when they are temporarily present in a Member State other than their Member State of residence, should be deemed to occur in the subscribers’ Member State of residence. Providers of online content services covered by this Regulation, therefore, should be deemed to carry out such acts on the basis of the respective authorisations from the rightholders concerned for the Member State of residence of their subscribers. Whenever providers have the right to carry out acts of communication to the public or reproduction in their subscribers’ Member State of residence on the basis of an authorisation from the rightholders concerned, subscribers who are temporarily present in a Member State other than their Member State of residence should be able to access and use the service and where necessary carry out any relevant acts of reproduction, such as downloading, which they would be entitled to do in their Member State of residence. The provision of an online content service by providers to subscribers temporarily present in a Member State other than their Member State of residence and the access to and use of the service by such subscribers in accordance with this Regulation should not constitute a breach of copyright or related rights or any other rights relevant for the provision of, access to and use of the online content service.’

Impact on rights licences 

The preamble to the regulation goes on to explain the impact on contractual rights:

Providers of online content services covered by this Regulation should not be liable for the breach of any contractual provisions that are contrary to the obligation to enable their subscribers to use such services in the Member State in which they are temporarily present. Therefore, clauses in contracts designed to prohibit or limit the cross-border portability of such online content services should be unenforceable. The providers and holders of rights relevant for the provision of online content services should not be allowed to circumvent the application of this Regulation by choosing the law of a third country as the law applicable to contracts between them. The same should apply to contracts concluded between providers and subscribers.’

Applicability

The regulation applies to audiovisual media services and other linear and on-demand content services.  The regulation is mandatory for paid-for services, but optional for free services – i.e. free broadcasters can take advantage of the ‘deemed place’ mechanism, provided that they verify their user’s home Member States, but are not obliged to make their services portable cross-border.

Proof of residence and temporarily present

The regulation requires providers to effectively verify their subscribers’ country of residence, but requires those checks to be reasonable and proportionate. Content can only be accessed across European borders by those subscribers  when those subscribers are temporarily present in another Member State ‘for a limited period of time’. This last provision will no doubt be subject be clarified by further guidance and/or cases as service providers and customer test the limit of this provision.