The Netherlands - Meta must obtain a license for AI-organised copyrighted content

Claimants: Stichting Pictoright 

Defendant: Meta Platforms Ireland Ltd 

Pictoright is a Dutch copyright organisation, managing the rights of image creators affiliated with it, such as architects, visual artists, and photographers.

Meta operates social media platforms Facebook and Instagram.

This case concerns the question of whether Meta qualifies as an online content-sharing service under the DSM Directive and Dutch Copyright Act and whether Meta needs a license so that copyright holders receive appropriate compensation for the use of their work on online platforms.

Since 2021, the parties have been negotiating a collective licensing agreement, which has not yet been finalized. 

The court has determined that Meta does need a license and is seeking further clarification on Meta's valuation methods for the use of these works.

Pictoright

Pictoright c.s. demands, among other things, a declaratory judgment that Meta has infringed on the copyrights of the visual creators affiliated with Pictoright, thereby obliging Meta to compensate their damages. Pictoright asserts that Meta did not obtain permission from the copyright holders for the use of their work on Facebook and Instagram and that Meta did not make its best efforts to negotiate a licensing agreement with Pictoright on behalf of the rights holders. Meta's tools for identifying copyrighted works (data discovery) are furthermore unreliable. Pictoright proposed an alternative method for calculating the license fee based on the number of users or a percentage of Meta's revenue, which Meta rejected.

Meta

According to Meta, there is no infringement and it has made sufficient efforts to reach agreements, but it is due to Pictoright that no agreement has been reached. Pictoright's proposed method for calculating the license fee is unfounded and based on incorrect assumptions and its data discovery tool is reliable.

The court

The court affirmed that Meta, as the operator of Facebook and Instagram, qualifies as an online content-sharing service provider under Article 29c of the Dutch Copyright Act (Aw). Consequently, Meta must make best efforts to obtain permission from copyright holders for the use of their works, and is required to obtain licenses to ensure appropriate compensation for copyright holders whose works are used on its platforms, and that.

The court highlighted that the economic value of the use of copyrighted works should be the basis for determining licensing fees. Additionally, the court underscored the importance of transparency and reliability in the methods used to determine the extent of the use of copyrighted works. A valuation method must be verifiable and acceptable to both parties.

The court first seeks an explanation from Meta on the method it intends to use to calculate the economic value of the use of works by creators affiliated with Pictoright.  Additionally, the court plans to appoint one or more experts, on the basis of which report parties can further negotiate on a license.

Depending on how these negotiations proceed, the court may issue a final judgment  after an additional oral hearing.

The case illustrates the broader implications of the DSM Directive and Article 29c of the Dutch Copyright Act in ensuring fair compensation for creators in the digital marketplace, as Meta has been (expectedly) qualified as a provider of an online content-sharing service under Article 29c Dutch Copyright Act.

Following the receipt of expert reports, the court will, if necessary, issue a final judgment after an additional oral hearing, depending on the outcome of the negotiations between the parties regarding a license. The court's decision to seek further clarification on Meta's valuation methods and to potentially appoint experts to assist in the process underscores the importance of transparency and accuracy in determining the economic value of copyrighted works.