Update on the Digital Content Directive for the European Market

By: Catherine Caspar

The European Commission has launched several initiatives for the definition of a legal framework for the implementation a single digital market in the European Union. In this context, the General Data Protection Regulation (EU Regulation 2016/679, hereafter the GDPR, full text available here), which will be applicable as of May 25, 2018, concerns the protection of natural persons with regard to the processing of personal data and the free movement of such data. This Regulation comprises principles and rules with regard to the right of natural persons to the protection of their personal data.

However there are still restrictions at national level and also legal uncertainty in EU legislation as to legal rules for the collection, processing, access, transfer, use, ownership or control of digital data, other than the so-called “personal” data. The growth of the digital market in Europe may for example be hindered by legal barriers that specify a particular, geographically defined, area where specific data needs to be collected, processed or stored.

Further, the current European law for consumers does not address some aspects of the business relationship between a consumer and digital service provider, especially regarding the access to the provided digital content in case of a malfunction of the service, the ownership and / or control of the digital data generated by the consumer by use of the service as well as the conditions for the termination of the contract between the consumer and the provider.

In this context, the European member states are working on a digital content directive (hereafter DCD) which specifically addresses this kind of relationship (full text available here).

The proposed DCD provides for example rules for enabling the consumer to exercise his right to terminate the contract in case of a failure to supply a digital content in conformity with the terms if the contract and to recover user-generated data after the termination of the contract.

The DCD is still under discussion and several updates have been issued (see for example here). The member states have also been invited to communicate in writing their position regarding at least Articles 3.6 and 16. The responses received by 11 April 2017 are available here.

According to Article 3.6, the DCD will not be applicable to obligations and remedies of the parties concerning the elements in addition to the supply of a digital content. Article 16 is related to the termination conditions of the contract and the obligation for the provider to provide the consumer with technical means to retrieve any content provided by the consumer and any other user generated data which has been retained by the supplier.

One difficulty here is that digital content services may be provided in the context of mixed telecom bundles including various services like internet, telephone, games, digital TV, video-on-demand services, cloud storage, etc. It would not be practically possible, or even technically challenging, to terminate the digital content part of the contract while maintaining the contract for the other services.

Conflicts with other European or national consumer laws applicable in the telecom field have also been identified by the Member States. Further, the European Data Protection Supervisor on data protection questions has identified possible conflicts with the GDPR and made some recommendations for clarifying the applicability field of the DCD (see his opinion dated 15 March 2017). The draft DCD is thus not perfect and there is still room for improvements and clarifications. But obviously, there is a need for a consistent and convenient legal framework with respect to the rights and obligations pertaining to the digital data.

This new legal framework appears to be an upper legal framework on top of, but tightly dependent on, the underlying existing legal framework concerning the software licensing and hardware delivery aspects of the digital services.

The DCD may virtually impact many services in the digital market, much beyond the internet and TV services. It will have a major impact on the development of new digital business models in Europe and on the growth of new services in the domain of the social networks, big data, cloud computing, cybersecurity, e-health, e-commerce, etc.

A fair balance will have to be found between a positive environment for the development of valuable digital services and privacy / security concerns for the consumers, especially as to the freedom to withdraw a consent given for the processing of personal data.