How to Overcome the Normal Exploitation Obstacle: Opt-Out Formalities, Embargo Periods and the International Three-Step Test

Abstract

The three-step test in international copyright law regulates the adoption of copyright limitations and exceptions at the national level. It permits the introduction of use privileges in certain special cases which do not conflict with a work’s normal exploitation and do not unreasonably prejudice legitimate interests of authors and right holders. Given the present need for new limitations and exceptions – for instance, in the area of search engine services, user-generated content, cloud computing and data mining – it is important to have clarity about the room available under the three-step test. An overly restrictive approach, such as the interpretation developed in the WTO panel decision on Section 110(5) of the US Copyright Act, can easily become an obstacle to ongoing innovation in the creation and dissemination of copyrighted works. It will deprive national lawmakers of the breathing space necessary to reconcile copyright protection with freedom of expression and freedom of competition. Against this background, the present article discusses the potential role of opt-out formalities and embargo periods in the enhancement of flexibility under the international three-step test. The traditional focus on the payment of equitable remuneration as a flexibility tool will be explained (section 1) before turning to the problem of remuneration not being taken into account in the normal exploitation analysis (section 2). Given this weakness of the traditional approach, opt-out formalities and embargo periods can serve as important alternative mechanisms to avoid conflicts with a normal exploitation (section 3). The combination of both mechanisms may even allow national policy makers to phase out exclusive rights and replace them with remuneration rights (concluding section 4).