Czech Republic: Digitalization and its reflection on IP and digital law

Amendment to the Czech Copyright Cct and the Civil Code: New obligations for digital service providers and new statutory licenses

When searching for an article from electronic periodicals on Google in the Czech web-space you will most likely no longer find displays of extracts from the content of the article. Instead, you will mostly only find the title along with limited information on the author. This is due to the most recent amendment to the Czech Copyright Act (Act No. 121/2000 Sb.), effective as of 5. January 2023, implementing two European Directives (EU Directive 2019/789 on the exercise of copyright and related rights applicable to certain online transmissions of broadcas­ting organizations and retransmissions of television and radio programs and EU Directive 2019/790 on copy­right and related rights in the Digital Single Market). Indeed, search engines and other large digital service providers (such as Google and Facebook) are no longer allowed to exploit the copyrighted content of publishers of electronic publications, by displaying previews of the protected article and at the same time profiting from attached advertisement or records of user behavior. From now on, service providers will need to agree the conditions (based on an equal fair and non-discriminatory approach) for previewing protected content with the copyright holders or relevant collective administrators.
 
A further significant change regards the tightening of the rules on the sharing of protected content online by certain service providers (platforms such as YouTube and ulož.to and others falling within the statutory defini­tion of information society service provider), leading to potential liability for unlawful dissemination and com­mu­nication of protected work to the public. Such platforms must make “best efforts” to obtain a license from the author and, if they fail to do so, should prevent the publication of infringing content (typically by technology that searches for content identical or equivalent to the author's work). However, when notified by the author, the platform must always disable access to the infringing content or delete it and attempt to prevent its re-upload. The extent of these conditions also depends on the turnover or number of visitors.
 
Also new statutory licenses are now available for the reproduction of copyrighted work for the purpose auto­mated text or data analysis in digital form (data mining), for the use of work not available to the public, for digi­tal learning and for pastiche.
 
Substantial changes have also been made to the royalty arrangements in the Czech Civil Code (Act No. 89/2012 Sb.). The rules for the remuneration of licenses can now be agreed as a fixed amount only in limited justified cases, provided that the specificities of individual sectors are taken into account. On the contrary, as a rule, the purposes and the scope of the license, the manner and the circumstances for the use of the work will need to be considered when arranging the remuneration.
 
Finally, a brand new obligation for the licensee to regularly inform the author (at least once a year), by providing up-to-date, relevant and complete information about the use of the author's work, the license and the subli­cence, has been introduced by the amendment.
 
The highlighted changes to the Czech copyright law offer new opportunities, but also represent a new challenge for service operators, authors and publishers.

The “button amendment” (“tlačítková novela”)

The recent amendment to the Czech Civil Code (Act No. 89/2012 Sb.) and to the Czech Consumer Protection Act (Act No. 634/1992 Sb.), known as the “button amendment” and which came into force on 6 January 2023, will undoubtedly have a significant impact on the activities of entrepreneurs who operate e-shops for consu­mers as well as those who regularly enter into purchase agreements with consumers in ordinary shops. Howev­er, also B2B relationships can be affected. The overall rationale is to increase transparency of contractual rela­tionships concluded via electronic means and strengthen the protection of consumers.
 
Entrepreneurs will need to adapt their processes, check their terms and conditions and to adjust their e-shops to the updated requirements. First of all, businesses will need to fulfill additional information obligation by in­for­ming their costumers transparently concerning discounts, avoiding misleading information and artificial price increases and communicating the lowest prince of the relevant product in the 30 days preceding the offer for discount. Moreover, if the negotiation leads to the conclusion of a contract, the seller will need to provide a relevant email address and telephone number as well as terms and conditions in .pdf format to the consumer’s email. The seller is also obliged to inform whether and how he verifies the origin of published reviews of the goods offered in the e-shop.
 
The amendment also introduced an obligation for e-shop holders, selling goods by electronic means, to intro­duce a button at the completion of the ordering process. This button should read “order binding payment” or similar wording clearly obliging the customer to pay.
 
In case of abusive or misleading commercial practices, consumers will be able to withdraw from the relative contract within 90 days.
 
The amendment further introduces specific changes strengthening consumer protection in precontractual ne­go­tiation, or in case of contracts concluded by telephone. The amendment also completely changes the statu­tory conditions for complaints and guarantees.
 
We can also find a brand new type of contract in the Civil Code, i.e. a contract for the provision of digital con­tent (such as e-books, SaaS, digital applications etc.). It comprises new definitions, conditions for provision of the services, withdrawal from the contract, rules for complaints, updates and changes to digital content and services, and many more. This new regulation strongly impacts B2C and B2B relationships in this field.