In Germany, the ancillary copyright for press publishers came into force on 1 August 2013. Today, after just over six years, the European Court of Justice (ECJ) has declared it inapplicable with retroactive effect. The reason is an error in the legislative process that was widely known.

Background of the ECJ Ruling

The ancillary copyright was supposed to give press publishers the opportunity to demand providers of search engines and news aggregators to pay licence fees when they display press articles. There was controversy over the extent to which mere text snippets and thumbnails are subject to licensing. The reason for the dispute is an exception in the law for "single words or smallest text excerpts". Up until today, nobody can say with certainty what this means.

Google, in any case, did not see itself obliged to pay. The collecting society VG Media, which exercises the press publishers' ancillary copyright, had a different view. They fought their dispute in several (court) proceedings, some of which were conducted in parallel, including before the Berlin Regional Court (LG Berlin).

There, the question to be decided was actually whether Google had to pay for displaying snippets. For the LG, however, this question was only of secondary significance because it saw a very fundamental problem.

Failure to Comply with Duty of Notification

The EU Directive 98/48/EC stipulates (in simplified terms) that new laws of the Member States containing "technical regulations" aimed at online services must be notified to the EU Commission before they are adopted. If this is not done, the laws are not applicable, there is a risk of infringement proceedings against the member state and legislative proposals may have to be repeated. One could say that if a law subject to notification is not notified, the law in fact does not exist.

The Berlin Regional Court considered this to be the case for the ancillary copyright law. However, it did not want to make the decision itself, but left it to the ECJ in May 2017 for final clarification. After more than two years, the ECJ has now confirmed the opinion of the LG: The German ancillary copyright for press publishers should have been submitted to the EU Commission before it came into force. This had not happened.

That is why the ECJ ruled today:

A German provision prohibiting internet search engines from using newspaper or magazine snippets without the publisher’s authorisation must be disregarded in the absence of its prior notification to the Commission.

The law introducing the ancillary copyright is a "technical regulation" subject to notification because:

That provision specifically targets the services in question since it appears that its main aim and object was to protect publishers of newspapers and magazines against copyright infringements by online search engines. In that context, protection appears to have been considered necessary only for systematic infringements of works of online publishers by information society service providers.

No Surprise

Predicting ECJ rulings is not an easy task. Nevertheless, this ruling was by no means surprising. During the legislative process, Prof. Dr. Thomas Hoeren of the University of Münster, for example, had stated in an expert opinion that the duty of notification applies. He was not alone in his opinion.

Internal Ministry mails prove that further legal opinions came to the same result. In addition, it is revealed that the EU Commission had expressly pointed out a possible notification obligation to the competent Federal Ministry of Justice (BMJ). The Federal Ministry of Economics wanted to fulfil this obligation but had no power of decision. This was the responsibility of the BMJ which ultimately refrained from a notification in order to pass the law before the upcoming federal elections.

This brings the ancillary copyright full circle: a poorly written and harmful law is now inapplicable due to a deliberately accepted error in the legislative procedure that could have easily been avoided.

The Consequences of the Ruling

The ancillary copyright for press publishers is not applicable. This has retroactive effect to the date of its entry into force on 1 August 2013 not only for the proceedings before the LG Berlin but altogether. It therefore no longer exists in practice.

Press publishers or the VG Media will therefore no longer assert any claims under this ancillary copyright. Otherwise, the providers of search engines and news aggregators could react with a simple reference to the inapplicability. If they have already made payments, they can now reclaim them.

The press publishers have not only not generated any income with their ancillary copyright, they are paying extra. Apart from expenses for years of lobbying, they have to bear all their legal costs. In the case of the VG Media, this means a minimum of ten million Euros. On top of this are the lawyer's fees Google has incurred.

The law was supposed to be a gift to the German publishing houses. This gift has now turned out to be a Trojan horse. But it is possible that the last word has not yet been spoken. Maybe the publishers will try to make the legislator responsible for the costs incurred and claim them back as damages. Then the taxpayers would ultimately pay the price for all this madness although it was the publishers themselves who lobbied massively for the ancillary copyright and could not get it fast enough.

For many small providers of search engines and news aggregators the verdict comes much too late. Since they were unable to pay the demanded licensing fees and a lawsuit would have been too costly for them, they had either limited their services or cancelled them completely. This was eventually at the expense of small publishers. They heavily rely on readers being redirected to their online services.

Looking into the Future

The ECJ has exclusively addressed formal aspects of the ancillary copyright for press publishers. It did not comment on any substantive issues. Thus, the decision does not affect the ancillary copyright for press publishers as provided in the adopted Copyright Directive.

Therefore, at the end of the day, the ruling is cold comfort. The German legislator has to implement the Directive and will introduce a new law that contains an ancillary copyright for press publishers – with all the negative effects that countless experts have predicted and which we have been able to observe for years in the "German test laboratory".

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