Martin Kretschmer, Professor of Intellectual Property Law (CREATe Centre, University of Glasgow)

The UK’s departure from the European Union has resulted in the first instance of regulatory divergence. As the UK exits the single market, existing regulations are starting to show cracks.

In response to a question from MP Jo Stevens, former Intellectual Property Minister Chris Skidmore indicated the UK would not implement the latest EU Copyright Directive, despite the UK’s prior support for it in the EU Council. This decision is significant, as the Directive passed with a narrow margin and might not have succeeded without the UK’s backing.

While public discourse has centered on regulations concerning labor, environment, and taxes, Brexit proponents have consistently argued that the UK’s exit hinges on its ability to become a more appealing hub for businesses. This entails engaging in regulatory competition with its closest trading partner, the EU. Therefore, observing the UK’s approach to this negotiation is crucial, with copyright law presenting the initial area of divergence.

To illustrate, a parliamentary exchange on January 16, 2020, saw Jo Stevens inquire about the government’s plans for implementing the EU Copyright Directive into UK law. Chris Skidmore, the minister responsible for intellectual property, responded on January 21, 2020, stating that the UK, having exited the EU on January 31, 2020, and with no intention to extend the implementation period ending December 31, 2020, was not obligated to implement the Directive and had no plans to do so. He added that any future modifications to the UK’s copyright framework would be considered through standard domestic policy processes.

So, what future domestic policies might stray from the Directive’s objectives? The Directive on Copyright in the Digital Single Market encompasses three key areas.

Firstly, it standardizes several copyright exceptions pertaining to cross-border use, simplifies the utilization of out-of-commerce works, and ensures works of visual art in the public domain remain accessible. These provisions moderately benefit cultural institutions, education, and research.

Secondly, the Directive aims to bolster the contractual standing of authors and performers. It establishes a fair remuneration principle, promotes transparency in royalty statements, and grants creators the right to revoke licenses or transfers of rights in cases of inadequate exploitation. These regulations, though potentially conflicting with freedom of contract principles, lack strong enforcement mechanisms. While welcomed by creators, their implementation remains unclear, with no obvious alternative policy direction.

The third and most contentious group of measures, presented as “Measures to achieve a well-functioning marketplace for copyright,” focuses on the liability of platforms hosting user-generated content. Article 17 removes the “safe harbor” protection of the e-Commerce Directive for certain “online content sharing service providers.” This means platforms are no longer exempt from liability for illegal content if not removed “expeditiously” after notification.

The debate surrounding Article 17 was highly polarized. Proponents, particularly the music industry, saw it as a way to improve licensing agreements and revenue sharing with platforms like YouTube, effectively closing the “value gap” between European creators and US tech giants. Conversely, opponents criticized it as a “censorship law,” arguing it would lead to excessive use of upload filters and stifle creativity due to its impact on “memes” that repurpose copyrighted material.

This debate played out publicly in the Financial Times, with figures like Julia Reda and Michael Grade representing opposing viewpoints. Even Boris Johnson, then out of government, weighed in, criticizing the Directive on Twitter and calling it a move to benefit the powerful at the expense of the internet.

Based on independent analyses, the Prime Minister’s assessment appears accurate. The Directive’s industrial policy measures risk unintended consequences beyond the music industry, potentially hindering market entry and user-driven innovation.

This raises the question of whether the UK has had a change of heart and now prioritizes evidence-based policymaking for its creative industries.

One possibility is that the UK acted strategically, supporting the Directive to potentially harm the EU’s digital single market. This suspicion stems from the strong criticism directed at the UK’s policy reversal. More likely, however, is that UK officials took a passive approach during copyright negotiations to avoid attention during a sensitive period surrounding the Withdrawal Agreement.

However, this stance is unsustainable in the long term. Post-Brexit, the UK’s copyright regulations will be influenced by its new trade agreements, particularly with the EU and the US. Maintaining a safe harbor for content-sharing platforms could attract tech companies, but this might clash with the government’s existing agenda targeting major digital platforms, as seen in initiatives like the “duty of care” liability and the Digital Services Tax.

Past US trade agreements suggest a pattern of aggressive intellectual property stances, potentially impacting the UK’s freedom to regulate platforms independently. Therefore, as the UK navigates its post-Brexit future, evidence-based assessments of platform regulation will be crucial for fostering a thriving cultural and creative industry landscape. The AHRC-funded Creative Industries Policy & Evidence Centre (PEC) is already investigating the UK’s international competitiveness, with ongoing research mapping the regulatory environment for online platforms.

In conclusion, the UK government’s legitimacy hinges on transparency and accountability. As it diverges from EU copyright law, it must clearly articulate the basis, goals, and intended outcomes of its regulatory decisions regarding platforms. This transparency is vital before the UK commits to trade agreements that will shape its “domestic choices.”