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The German Justice Ministry has recently released draft legislation to implement Directive 2001/29/EC on the harmonization of certain aspects of copyright and related rights in the information society ("the Directive"). In light of the current controversy on copyright levies, the long and painful debate that took place when the European Community adopted the Directive is likely to come to life again as Germany faces the challenge of interpreting and implementing the requirements established by the Directive.

The following summarizes the salient points, focusing on the most controversial issues, namely the right of reproduction, the right of making available to the public, copyright exceptions, and the scope of legal protection against circumvention of technical protection measures.

Reproduction Right and Exception for Temporary Copies

The Directive establishes a very broad formulation of the reproduction right in Article 2, which includes per se any temporary copy within the right: "Member states shall provide the exclusive right to authorize or prohibit direct or indirect, temporary or permanent reproduction by any means and in any form, in whole or in part."

Unlike the Directive, existing German doctrine interprets the fixation requirement to exclude certain ephemeral copies from the scope of the reproduction right. In order to comply with the requirements of the Directive, the draft suggests extending the definition of the right of reproduction in Section 16 of the Copyright Act of September 9, 1965 ("the Act") so to explicitly include temporary copies.

The draft reproduces verbatim Article 5.1 of the Directive, exempting from the reproduction right certain temporary technical copies, including those made in networks and in the context of lawful uses of works. It therefore mirrors the fine political balance achieved in the Directive and ensures that certain temporary copies made both on- and off-line (e.g., by proxy caching) are exempted.

Rights of Communication, Making Available to the Public

Existing German law does not provide for an equivalent to the "making available" right prescribed in Article 3 of the Directive. Indeed, there has been much debate among academics as to whether the making available right is already included in the general right of communication for authors' works stipulated in Section 15 of the Act.

The draft introduces the exclusive right of making a copyright work available to the public as mandated by the Directive, and also amends the definition of "public". In the past, some German academics and courts have held that on-line demand services may fall outside the scope of the provision, as a "public" communication requires a "public audience", and scattered individual users who access content at different times and places would not be sufficient to create the relevant "public". The proposed amendment would ensure that such on-demand services fall within the scope of the "making available" right.

Exceptions for Private Copying, the Disabled

The Ministry clearly wanted to preserve the existing exemptions for private copying to the extent possible. Only minor clarifications were made to the private copying exception to ensure that reproduction is exempted only if made by a natural person and for neither directly nor indirectly commercial ends.

Previously, under German copyright law there was no exception for the disabled. The Ministry has taken the opportunity provided by Article 5.3(b) of the Directive and introduced for the first time an exception for the disabled.

Technological Measures

The broad protection of technical measures in Article 6 of the Directive has been implemented almost verbatim. As a result, circumvention for entirely legal purposes, as well as the manufacture and sale of a circumvention device that solely permits a lawful use, is prohibited in the draft's provision on technical measures. The commentary accompanying the draft notes that no further requirements were set forth to ensure harmonious interpretation in all the Member States of the European Community. Infringement of these previsions may be subject to civil, criminal, and administrative sanctions.

Technological Measures - Relationship to Computer Programs

The Ministry faithfully attempts to ensure that the exceptions for reverse engineering in Directive 91/250/EC of May 14, 1991, on the Legal Protection of Computer Programs ("Software Directive") are fully and effectively maintained. When copyright was extended to cover computer programs, an unyielding application of the reproduction right would have precluded common methods employed by software developers to analyze their competitors' computer programs and extract interface information. It therefore became necessary to adopt an exception permitting such activities, and Article 69e of the German Copyright Act implementing the Software Directive explicitly permits reverse engineering for purposes of ascertaining the interface specifications necessary to create interoperable computer products.

In addition, similar to Section 1201(f) of the U.S. Digital Millennium Copyright Act, the Software Directive purposefully condones circumvention of technical measures where necessary to facilitate lawful reverse engineering (Article 7, Software Directive). To prevent software vendors from using technical measures to block reverse engineering allowed by the Software Directive, and then relying on the broad prohibition of circumvention in Article 6 of the Directive, Article 1.2(a) and Recital 50 state that the Directive will not apply to technical measures used in connection with computer programs.

The German draft implements this clarification, and provides that the Copyright Act should be amended to render the provisions relating to the protection of technical-protection measures inapplicable to computer programs. The commentary explains that these changes are required in light of the problems related to the legal protection of technical-protection measures. In light of the considerable problems relating to decompilation and back-up copies, any further extension of the legal protection to technical measures employed in connection with software is not desirable.

Measures to Ensure Availability of Benefit of Certain Exceptions

Article 6.4 of the Directive provides a sort of "safety valve" for Member States to act to preserve the vitality of certain copyright exceptions, and requires Member States to adopt appropriate measures to ensure that rightholders make available to beneficiaries an exception or limitation. Otherwise, the private copy exception may de facto be eliminated by technical protection systems, thus depriving users of the benefit of copyright exceptions and thwarting the policy objectives for having the exceptions in the first place.

The overriding protection given to technical protection measures against circumvention, notwithstanding the fact that it might be lawful to make the copy, needed to be balanced by this provision. The Directive differentiates between reprography and audiovisual copies; with respect to reprography, Member States must ensure that users may benefit from the exception for private reproduction, and with respect to audiovisual copies Member States may do so. Protection is further mandated for reproduction made by libraries, educational establishments, museums, or social institutions, for certain archiving purposes and scientific research and for the benefit of the disabled or for public security purposes.

The draft addresses only the mandatory protection. It requires rightholders to provide "technical means" to allow beneficiaries of exceptions (e.g. the handicapped) to benefit from those exceptions. No specific means, e.g., the provision of keys to beneficiaries or voluntary agreements, are mentioned.

The commentary stresses that beneficiaries are not entitled to self help, but if the rightholders fail to provide the appropriate means voluntarily, the draft allows for civil actions including collective actions against any rightholder who fails to provide the necessary means. Failure to provide technical means may further be subject to fines up to EUR 250,000. Unfortunately, these enforcement actions will not become effective until April 1, 2003. The commentary suggests that this delay should allow sufficient time for rightholders to implement voluntary measures.

With respect to technical-protection measures that prevent or restrict reproduction for personal use (except for reprography), the Ministry apparently decided not to take measures allowed under Article 6.4 subparagraph 2 of the Directive.

Conclusion

It appears that in the interest of a timely implementation of the Directive, the German Ministry of Justice intended to preserve the status quo as far as possible. It faithfully implemented the right of reproduction and the right of public communication, but failed to address other critical issues.

First, the Ministry failed to regulate the controversial issue of private copying and its relationship to copyright levies. Mr. Jörg Reinbothe, the head of the copyright unit at the European Commission, recently stated that the current German levy scheme requiring payment of "equitable remuneration" ("angemessene Vergutung") is more favorable towards rightholders than the "fair compensation" ("gerechter Ausgleich") concept adopted by the Directive. It would have been appropriate to bring German law in line with the Directive, as there is no reason why German rightholders should be entitled to greater amounts of compensation.

Second, the Directive further obliges Member States to modify their statutory levy schemes to reduce or eliminate levy payments as technological systems are implemented. Levies and the amounts of levies should be objectively justified by the harm done to rightholders. Recital 35 of the Directive stipulates: "Where the rightholders have already received payment in some other form ... no specific or separate payment may be due."

The draft is defective insofar as it only suggests that when establishing the tariffs under the current regime, application of technical measures has "also" to be taken into account. There is no clear obligation to take the availability of technical-protection measures into account by not introducing levies at all when technical protection already is available, and by phasing them out when technical-protection measures are introduced in the future.

Third, the draft fails to implement appropriate means and processes in order to establish what constitutes "fair compensation" as required by the Directive. At present, the amounts charged by the collecting societies are set arbitrarily. The German Patent and Trademark Office (DPMA) seems unable to fulfill its statutory role as a supervision authority, and it has been suggested that the Federal cartel office (BKartA) would be better placed to assume responsibility over the operation of the collecting societies. Currently, there is no adequate judicial review of levies.

Finally, the draft refrains from adequately addressing the enforcement of the private-copy exception against technical-protection measures (Article 6.4, subparagraph of the Directive). The commentary only suggests that these questions require further examination and separate, intensive, and measured discussion with all parties involved, e.g., the federal states, academics, and legal practitioners.