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Spanish Snippet Tax Follows Trend of Targeting Internet Services

· April 24, 2014

The transformative and occasionally disruptive effect of the Internet on traditional news publishing has been widely discussed, and as DisCo has previously covered, some European states are reacting to these changes with a form of tax-and-subsidy system that would benefit domestic news publishers at the expense of mostly foreign Internet services.

France and Germany have both made efforts in this direction, and in February the Spanish government began considering a similar proposal.  A provision appearing late in the development of Spain’s ongoing reform of its IP laws would subject normal Internet snippets — i.e., quotations — to a special “ancillary” copyright.

The proposed statute appears to impose a compulsory license each time a website provides even a small snippet of a newspaper article.  Curiously, it also subjects the reuse of any photo to permission from the news publisher, whether the photo is protected by copyright or not, once the photo is posted to any “periodically updated” website.  Not only does this sound like an administrative nightmare, it also runs afoul of international copyright norms in several ways.  The long-standing Berne Convention (a) prohibits nations from restricting the right to quote, (b) limits IP protection to expression, not facts, and (c) states that copyrights do not extend to “news of the day.”

By restricting Internet services like search and social media from functioning as they do elsewhere in the world, this proposal also represents a new trade barrier, upending how both the Internet and copyright law ordinarily function.  An IP-based tax on quotations is therefore not only bad policy, but it also appears to violate the EU and Spain’s international free trade commitments.

The Feb. 21 proposal (link to original Spanish, page 8, article 32) is not a model of clarity, but it states that the “making available to the public by electronic service providers of non-significant fragments of aggregated content… shall not require authorization, without prejudice to [the right] to receive fair compensation.” (translation is mine).  In other words, you don’t have to ask, but you still have to pay.  Spain would, in a sense, levy a tax on repeating “non-significant fragments,” apparently including even headlines.  It is not yet determined who would be empowered to collect this tax; Spanish officials apparently expect that to be worked out after the fact.  It may well require a new collecting society, about which there are more than a few cautionary tales.

Media outlets quickly labeled the proposal the “Google tax,” [1] [2], although as drafted it would affect numerous search and social media providers.  Unsurprisingly, Spanish news publishers celebrated the prospect of levying fees on Internet services, and a Variety report in February stated that Spain’s cultural minister Jose Ignacio Wert dubbed Spain a “pioneer” for having done so (although “outlier” might have been a better word).  In fact, proposals of this nature, targeting mostly foreign Internet enterprises, seem to be a contagion in Europe.   Multiple European legislatures have now sought to manufacture new IP-like entitlements in quotations, which are assigned to domestic constituencies who can then levy penalties against non-domestic Internet services.

These initiatives are remarkably poorly timed, coming just as Europe and the United States are considering a trans-Atlantic free trade deal.  Even more awkward is Spanish officials’ overt applause of the proposal’s discriminatory impact.  The proposal is expected to received consideration over the summer; it remains to be seen whether Spain’s international copyright and trade commitments are taken into account when the time comes.

Update:  Over at Chillin’ Competition, Pablo Ibañez Colomo offered an interesting competition law perspective on the Spanish proposal.

Update 2:  I have uploaded my informal Spanish-to-English translation of Art. 32.2 of the proposal here.

Intellectual Property

The Internet enables the free exchange of ideas and content that, in turn, promote creativity, commerce, and innovation. However, a balanced approach to copyright, trademarks, and patents is critical to this creative and entrepreneurial spirit the Internet has fostered. Consequently, it is our belief that the intellectual property system should encourage innovation, while not impeding new business models and open-source developments.