Switzerland set to pass a revision of its federal copyright act

Driven by an expressed need to adjust Swiss copyright to the realities of the new digital age, the revised Swiss Federal Act on Copyright and Neighbouring Rights of October 9, 1992 (NFACN) is now ready for the 2019 parliamentary summer session. If differences between the two parliamentary chambers can be resolved and a final vote in both houses goes forward, the NFACN could come into force at the beginning of 2020.

Background

The revision of the Swiss federal copyright act is not only inspired by the challenges of the new digital age, but is part of a global trend that is also evident in EU legislation. In 2012, the Swiss copyright task force AGUR was established to analyse modernisation needs in today's copyright act. In 2015, the Swiss Federal Council sent the first draft bill to stakeholders for consultation. In November 2017, the Swiss Federal Council published a second bill and handed it over to the Swiss parliament for final debate.

The latest revisions to the act include provisions highly relevant to online media-providers that are accessible in Switzerland and deal with copyrighted content.

The purpose of the revision

A strong focus of the NFACN is to improve anti-piracy measures available to copyright owners. The Swiss Federal Council had previously expressed its intention to strengthen the rights and interests of creative artists and the cultural industries by taking a more resolute approach to copyright-infringing online content. At the same time, the NFACN aims to remain sufficiently flexible to facilitate the use of content among researchers and libraries and provide a more efficient management of video-on-demand rights. In particular, new rules on collective copyright management have been introduced to facilitate the exchange of digital content. In essence, the NFACN is an attempt to strengthen copyright-holder enforcement in the digital arena without excessively constricting user rights or stifling the digital economy. The following is a short summary of the latest version of the NFACN and related Swiss case law.

Summary of the NFACN's new features

"Stay-down" obligation for internet hosting providers.

The NFACN imposes a "stay down" obligation for internet hosting providers. Hosting providers must ensure that copyright-infringing content, once taken down from their platform, remains off their servers (article 39d, para. 1, NFACN). The "stay down" obligation has been introduced since experience has shown that a "take-down" obligation alone (as ordered by a court or carried out under self-regulated notice-take-down-procedures) is not efficient, if such infringements occur repeatedly (e.g. if infringing content is re-uploaded). However, the "stay-down" obligation proposed is not absolute. Hosting providers must only take measures reasonably required from a technical and economic viewpoint while considering the potential risk of infringements (article 39d, para. 2, NFACN).

The NFACN has dropped content-blocking obligations applicable to access providers because this is considered an unnecessary restriction to digital trade, presenting impediments that access providers cannot reasonably bear. This new condition is also in line with a recent landmark ruling. On 8 February 2019, the Federal Supreme Court (FSC) held that internet access provider Swisscom cannot be obliged to block copyright infringing content (via IP blocking, DNS blocking or URL blocking) unlawfully uploaded by third parties on online portals (FSCD 4A_433/2018). In its decision, the FSC made it clear that the existence of a technical infrastructure, which makes access to the World Wide Web possible at all and is the core function of access providers, cannot be deemed an adequate causal contributor to copyright infringements over a particular hosted online-platform. Furthermore, the claimants could not argue that alleged third-party infringers are customers of Swisscom and benefit from Swisscom's specific access-provider services. As a consequence, access providers cannot be held jointly liable for copyright breaches committed by third parties over the internet.

The legal basis for processing personal data in cases of infringements.

The NFACN states that the processing of personal data for criminal prosecution of copyright infringements conducted over the internet and the enforcement of civil damage claims within such criminal proceeding are permissible (article 77i, paragraph 1, NFACN). This includes the right to store the data and its submission to the prosecuting authorities. However, rights holders must disclose the planned purpose and method of processing (article 77i, paragraph 2, NFACN) and are not allowed to link the personal data collected with data collected for other purposes (article 77i, paragraph 3, NFACN).

The new provision is considered peculiar since from a systematic point of view, data protection matters are to be governed in the Swiss Federal Act on Data Protection of June 19, 1992 (FADP) and not in a copyright act. The provision is closely linked to an old decision of the Swiss Federal Supreme Court regarding the company "Logistep", which had offered copyright holders software-based features to seek the data of potential infringers (e.g. IP addresses collected in peer-to-peer-networks) for criminal prosecution purposes. The court held that such data processing was illegal since it was not transparently disclosed to data subjects, and that the private interest of copyright holders to enforce their rights did not outweigh this point (decision of September 8, 2010, FSC 136 II 508). The decision was harshly criticised for shielding copyright offenders on the anonymous web instead of supporting copyright owners in the pursuit of their rightful claims. Provisions in the NFACN are an attempt to correct this decision with a more specific provision (lex specialis). Nevertheless, the provisions still refer to "personal data". Therefore, the definition of personal data under the FADP (i.e. data belonging to an identifiable natural person or legal entity) should remain a prerequisite for data protection applicability. In our view, processing non-personal data should remain as freely permissible in the future as it is under today's FADP and under the NFACN. Regarding the duty to "transparently disclose data processing" (see article 77i, paragraph 2, NFACN), the accompanying message to the bill emphasises that notifications of this type can be generally provided over a website, even if not contained in the general terms and conditions, or data privacy notices.

Directory privilege.

The NFACN aims to encourage and facilitate the use of information inventories (memory institutions) such as public libraries, educational institutions, museums, collections and archives. To enable these institutions to present their stored content to the public in a contemporary form, not only the author, title and the number of holdings may be visible from online searches, but also the cover page, index or – in the case of scientific work – a summary. To that end, memory institutions are granted permission to reproduce short extracts of works or copies of works in their directories for cataloguing and communicating inventories, provided that copyrights are not infringed (article 24e, NFACN).

Scientific exceptions to copyright.

To facilitate research and strengthen Switzerland as a research location, copyright holders should in future no longer be able to prohibit copies that are generated by technical means for scientific purposes. The NFACN stipulates that copies can be made free of charge if they are made and stored mainly for the purpose of scientific research, if they are the result of a technical process and if access to the works to be reproduced is lawful (article 24d, paragraph 1 and 2, NFACN). However, this exception is not applicable to computer programmes (article 24d, paragraph 3, NFACN). Moreover, the new provision does not differentiate between commercial and non-commercial research.

Exception to copyright for the use of orphaned works.

Works are considered orphaned if their right holder is unknown or untraceable. Despite public interest, such works currently cannot be legally used due to the missing consent of the right holder. The NFACN attempts to solve this issue by allowing the use of orphaned works if they are available in the inventories of memory institutions (e.g. libraries) and are manufactured and reproduced or made accessible in Switzerland. Collective societies are to administer royalties for orphaned works to ensure that right holders receive a royalty once they are identified (article 22b, NFACN). If they are not identified after ten years, the collective society may transfer the collected funds to a social charity or cultural funding institutions (article 22b, para. 6 NFACN).

Extended duration periods for performer rights.

The duration of protection for performances under "neighbouring rights" (a separate category of protection for performers, producers and broadcasters which does not amount to full-fledged copyright) is to be extended for performers and producers from 50 to 70 years (article 39, paragraph 1, NFACN). This extension is intended to reduce the imbalance between the rising online use of works and stagnating revenues for performers. According to the Swiss Federal Council, the extension is required since performers frequently start their careers at relatively young ages and their performances are often no longer protected late in their lives under the current duration of 50 years. For some performers, this may cause an income gap at the end of their lives. Furthermore, the extension of the duration would give producers of sound carriers more time to amortise their investments.

Extended protection for photographs.

Current regulations only protect photography if it is deemed an artistic intellectual creation with an individual character. The NFACN expands this notion and includes "photographic reproductions and reproductions of three-dimensional objects produced similarly to photography, but which do not necessarily have an individual character" (article 2, paragraph 3bis, NFACN). As a result, all kinds of photographs are to be protected under the NFACN, provided that they depict physically existing three-dimensional objects. Works without an individual character will be protected for 50 years after their publication or production where no publication took place (article 29, para. 2, lit. abis, NFACN). Photographic reproductions and three-dimensional images with an individual character remain protected for 70 years (as under the old FACN).

Royalties for video-on-demand.

In recent years, the rental of movies and TV-episodes on videotape or DVD has drastically declined. The majority of today's consumers prefer to access content in digital form over internet platforms (e.g. video-on-demand or so called "streaming"). Copyright holders have the exclusive right to make their works and performances available online. In recent years, collective societies have established a practice of collecting royalties directly from the operators of video-on-demand platforms even though they are not subject to a mandatory collective licensing scheme under the current rules. Copyright owners and performers are in favour of this practice since it is deemed efficient and preferable to negotiating with multiple online-users. Experience has shown that large international operators of online platforms are not always familiar with this practice. This is why the Swiss practice will now be enshrined in the new legislation and applied to the rights of performers, such as actors and performing musicians (article 13a, NFACN and article 35a, NFACN). But there will be exceptions to royalties for video-on-demand (article 13a, paragraph 2, NFACN and article 35a, paragraph 2, NFACN). The right to royalties is to be excluded if right holders or performers exploit their work personally (e.g. market it themselves on YouTube) instead of having their rights assigned by contract to a producer, as is frequently the case in the creative industries.

Extended collective licenses.

The NFACN provides for extended collective licences (ECL). Collective societies may enter into license agreements with users relating to the mass use of published copyrighted works that are not subject to mandatory collective licensing schemes (article 43a, paragraph 1, NFACN). Right holders who do not wish to be bound under such a collective license scheme may request an exemption of their rights from being administered under such a scheme (opt-out-principle; see article 43a, paragraph 4, NFACN). In order to enable right holders to exercise their opt-out right, collective societies should notify them (e.g. over a web site) of the extended collective licenses before they come into force (article 43a, paragraph 3, NFACN).

Electronic usage notifications.

Anyone who performs or has performed works protected by copyright (such as a concert organiser, a radio station or even a coffee shop playing music as background entertainment) must provide the responsible collecting society with relevant usage data. The NFACN now stipulates that such information must be provided "electronically" (i.e., in a state-of–the-art form that permits automatic data processing, see article 51, paragraph 1, NFACN). In addition, collective societies are entitled to share such data with each another (e.g. a collective society for musical works can send data to a collective society for visual works, see article 51, paragraph 1bis, NFACN). In this way, the users of copyrighted work will have to provide information to only one collective society once.

Two new international treaties.

The NFACN supports the Beijing and Marrakesh Treaties of the World Intellectual Property Organization (WIPO). The Beijing Treaty on Audiovisual Performances attempts to improve the protection of actors at an international level. The Marrakech Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired or Otherwise Print Disabled attempts to improve the situation of people with disabilities. Both Treaties are already recognised under the current Swiss legal system. Switzerland is now formally becoming a signatory of these two treaties.

Outlook for the future

The NFACN is an attempt to modernize and adapt copyright to the realities of the digital age and to strike a balance between – on the one hand – enhanced copyright enforcement on the web, and – on the other hand – enhanced user accessibility with the help of collective licensing schemes and electronic data exchange mechanisms, which could also help close the value gap that many copyright holders complain about. The NFACN is now ready for the parliamentary summer session of 2019. If differences between the two parliamentary chambers can be resolved and a final vote reached, the NFACN should come into force by the beginning of 2020.

Unlike in the EU where comprehensive copyright reform is also topical at the moment, Switzerland has not made it mandatory for online-platform providers to pre-examine uploaded content and seek permission from copyright holders before they have content uploaded (possibly with the help of "upload filters") or provide a special remuneration right to journalists and publishers when displaying titles or small fragments of press wordings ("snippets"). On 26 March 2019, the newly revised European Copyright Directive came into force, which in article 13 introduced a special remuneration right for journalists and publishers that does not amount to full copyright, but protects them against the use of their published news, irrespective of its "copyright ability" (in German: Leistungsschutzrecht). Furthermore, in article 17, the directive states that platform operators must conduct a pre-examination of content before sharing any uploaded material.

The revision of the European Copyright Directive has triggered huge protests worldwide and remains controversial today. It is uncertain to which extent Switzerland will be affected by the directive. Indeed, Switzerland-based online operators could come into conflict with foreign-based publishers over the provisions of the European Copyright Directive. It is uncertain at this point if the directive could have an impact on the final wording of the NFACN. In the end of April 2019, the commission of the second chamber of Swiss parliament has communicated that it does not intend introducing a special remuneration right for journalists as it deems it not useful and rather counterproductive for the copyright industry. Pursuant to the commission, an implementation of EU-copyright legislation in general may occur later, but only after a thorough and critical examination in Switzerland.

For more information on the NFACN and copyright regulations in Switzerland, feel free to contact one of the following local CMS experts: