Civil liberty and digital rights groups welcomed the decision after warning the proposals would lead to online censorship, while a number of bodies representing rights holders, including publishers and authors, expressed disappointment that the plans would not be moving forward until at least September when the European Parliament is next set to consider proposals for copyright reform.
Dublin-based Karen Gallagher of Pinsent Masons, the law firm behind Out-Law.com, said the latest developments would be welcomed by service providers who had "strongly opposed" some of the reforms.
Among the most controversial elements of the proposals are those contained under Article 13 of the draft new copyright directive.
Under those proposals, rights holders would gain new rights to prevent online content sharing service providers from facilitating the public's access to their material, or force the platforms to conclude fair and appropriate licensing agreements with them where they do agree to the platforms communicating their works to the public.
"In the absence of licensing agreements with rightholders online content sharing service providers shall take, in cooperation with rightholders, appropriate and proportionate measures leading to the non-availability on those services of works or other subject matter infringing copyright or related-rights, while non-infringing works and other subject matter shall remain available," according to the proposals.
The proposals would provide users with an opportunity to dispute the removal of content taken that represent "misuses or limitations in the exercise of exceptions and limitations to copyright" via "effective and expeditious complaints and redress mechanisms". Complaints raised would need to be "processed without undue delay".
Campaigners against the plans had warned that the proposals would result in the automated filtering of copyrighted content online, with the risk that some content permitted under copyright rules – such as that used in works of parody or under 'fair use' exemptions – being removed from platforms, including memes and remixes.
Jim Killock, of the Open Rights Group in the UK, said MEPs had "recognised that machine censorship of copyright material is not an easy and simple fix" by forcing reconsideration of the proposals.
Gallagher said: "Under the proposals, service providers could be held liable for copyright infringement if they failed to observe the new rules. Service providers objected to this on the basis that it introduced a requirement to screen all content uploaded to their site which could only be done by the use of expensive and unreliable automated systems. They were also concerned about how the proposals would be implemented in practice, as exceptions might be interpreted differently in different EU member states."
Gallagher said members from the European Parliament's Legal Affairs committee (the JURI committee), which stood behind the proposals under consideration earlier this week, had attempted to address some of the arguments raised by opponents at a press conference on Wednesday.
"They said that it should be remembered that Article 13 was limited in scope to commercial platforms, who should be required to take more responsibility for the content posted on their websites, and who could afford to put the appropriate measures in place to do so," Gallagher said. "They stressed that the objective of the proposals was simply to ensure that the same copyright rules that apply in the real world also apply on the internet. However, when it came to the vote, the views of the opponents of the proposals won out for the majority of MEPs, who were concerned about how the proposals as drafted would affect the growth of the digital economy."
Other proposals that have come in for criticism under the draft copyright directive are plans to give new rights to press publishers over the digital use of their content.
Under the Article 11 proposals, press publishers would gain new rights to obtain fair and proportionate remuneration for the digital use of their press publications by 'information society service providers', which includes social media platforms and websites. Those rights would cover the reproduction of their content or the making available of their content online and would apply for a period of five years from the beginning of the year that follows publication of the material.
The new rights would, however, not prevent "legitimate private and non-commercial use of press publications by individual users", and would also not "extend to acts of hyperlinking".
In a joint statement, European Magazine Media Association, European Newspaper Publishers’ Association, European Publishers Council and News Media Europe said "misleading scare tactics and exaggerated false claims" had been used to "interfere with the democratic process".
"Four European Parliament committees have scrutinised, clarified, amended and approved the EU copyright reform over the past two years and, today, those efforts to create a fairer, more sustainable digital ecosystem for the benefit of creators, distributors and consumers have been jeopardised," the statement said.
"Ardent copyright campaigners and those who benefit from free-riding on publishers’ and other creators’ content will no doubt be lobbying for the total deletion of the proposed publisher’s neighbouring right (Article 11). MEPs asked to reconsider the proposal need to think about the impact their next decision will have on our free press and on the future of professional journalism - and what message they want to communicate to the world about democracy and fairness in Europe," they said.
A vote on revised proposals is now expected to take place between 11 and 13 September, during the next plenary session at the European Parliament, a spokesperson for the Parliament told Out-Law.com.
If the reforms are backed in the vote then it will provide MEPs leading on the issue with a mandate to open negotiations on the final wording of the proposed new directive with representatives from the Council of Ministers, the EU's other law-making body. The Council of Ministers agreed its negotiating position on the planned reforms in May. The original proposals for reform had been tabled by the European Commission in 2016.
"It is unclear whether we will see radically different versions of Article 11 and 13, or if they will be removed when the directive is looked at again in September," Gallagher said.