House of Commons - Innovation, Universities and Skills

Select Committee on Innovation, Universities and Skills Second Report

3 Operation of the Copyright Tribunal

Complaints about the operation of the Copyright Tribunal

22. T-Mobile submitted evidence to us as an intervening party in a Copyright Tribunal reference concerning the downloading of music to its customers over its mobile phone network. It commented that "the proceedings were akin to High Court proceedings in terms of formal procedure, cross examination of witnesses, tactics, time spent (including at the oral hearing) and, crucially, costs involved".[51] It said that "15 parties were involved in this reference, which led directly to an increased burden on the parties, the schedule and the members of the Tribunal themselves" and "this reference lasted for 20 days and involved five expert witnesses".[52]

23. These criticisms are not new. In 1988 the Monopolies and Mergers Commission recommended that the Copyright Tribunal should be strengthened and changes made to its procedures "in order to expedite its decisions".[53] Again in 1996 the Commission commented:

We were most concerned […] to hear that those who use the [Copyright] Tribunal felt that it provided neither a quick, cheap nor easy means of settling disputes. In the light of this, we took oral evidence from Mr Michael Bowers, the Chairman of the Tribunal, given to us in a personal capacity. He explained to us a number of the procedures which the Tribunal has adopted in order to simplify and speed up hearings. […][54]

We believe the staff resources and financial resources with which the Copyright Tribunal is currently required to operate may be inadequate. We are concerned by the number of important issues which may shortly be added to its jurisdiction, once the relevant statutory instruments have been made to implement the existing three EC Directives on Rental, Cable and Satellite and Duration of Copyright […] We were told that additional funds might be made available should the workload require it.[55]

24. British Music Rights told us that experience of the operation of the Copyright Tribunal since its inception had been that cases referred to it have turned out to be "unduly lengthy and costly, involving complex and legalistic procedures, with the result that their members are invariably prejudiced, regardless of the final decision".[56] The 2007 IPO Review of the Copyright Tribunal found that previous reviews' recommendations about how to improve the workings of the Copyright Tribunal, including those made by the Monopolies and Mergers Commission and a chairman of the Performing Right Tribunal, had never been acted upon. The 2007 IPO Review recorded the previous criticisms of the Copyright Tribunal as falling in four main areas:

a) delay and expense;

b) lack of resources;

c) its membership; and

d) its relationship with the Intellectual Property Office.[57]

25. We are concerned that complaints about delays and costs at the Copyright Tribunal going back 20 years were not resolved by the Patent Office. We hold it (now operating as the Intellectual Property Office) responsible for this unacceptable failure.

Intellectual Property Office Review of the Copyright Tribunal

26. The 2007 IPO Review of the Copyright Tribunal made 30 recommendations, which, if implemented, will require extensive changes to the existing system. As the authors of the Review noted, their conclusions are very similar to those in the two Monopolies and Mergers Commission reports in 1988 and 1996. The main thrust of the recommendations in the 2007 IPO Review would:

replace the Copyright Tribunal Rules 1989 with the Civil Procedure Rules and practice directions;[58]
abolish lay members of the Copyright Tribunal;[59]
make the position of Chairman, renamed the President of the Copyright Tribunal, salaried;[60]
require licences and tariffs to be supported with hard facts and figures and methodologies which were available to licensees; similar requirements would apply to those challenging licences; the Copyright Tribunal's staff would assist in the drawing up of schemes;[61]
require the Copyright Tribunal to take an active part in formulating methodologies for the conditions of a licensing scheme or licence;[62]
significantly streamline the administrative procedures of the Copyright Tribunal to ensure cases were dealt with quickly to a timetable; the Copyright Tribunal would be set a target for completion of cases;[63] and
increase the Copyright Tribunal's administrative resources and staff knowledge (to 2 staff), who would be based in London and who would report directly to the Chairman/President of the Tribunal.[64]

27. We found that there was a broad welcome for the recommendations in the 2007 IPO Review,[65] albeit with reservations about some recommendations, and a desire to see the recommendations "implemented promptly, efficiently and fully".[66] There were dissenting voices. Universities UK considered that:

the problems for the [Copyright Tribunal] are caused by the UK statutory framework for licensing, which leaves the conclusion and administration of licences to bilateral negotiations between organisations representing users and rights-owners. This creates an adversarial context, and places the burden on the [Copyright Tribunal] of resolving conflicts. However, the [Copyright Tribunal]'s procedures are quasi-judicial and therefore also essentially adversarial, which makes it very difficult for it to provide a quick and cost-effective service. The Recommendations in the IPO's Report would certainly go some way to improving matters, but in our view the fundamental problems would remain the same.[67]

UUK's view chimed with PPL's analysis that the Copyright Tribunal operated as an adversarial system rather than a tribunal, and that the 2007 IPO Review "looked at it in the same way and came up with a number of recommendations to turn it into a proper court like function that can resolve commercial disputes when they arise".[68] This also resonated with what the IPO itself told us that:

It is easy to get lost in the legal and technical stuff and forget that what we are talking about is an economic question. In economics, as in so many walks of life, there is often no right answer. The adversarial system gives you a way of getting to some balance but one of the dangers of approaching it from the other angle is that you end up with people thinking that they know what the right answer is. In any market it is very difficult for the expert or the bureaucrat to know what the price ought to be. Often what tribunals are being asked to do is adjudicate on where the balance of pricing ought to lay between two parties of quite different economic size.[69]

28. From the evidence we received it is clear that proceedings before the Copyright Tribunal are carried out in an adversarial manner and that it has at least some of the attributes of a commercial court. To assist all those with an interest in the operation of the Copyright Tribunal, we recommend that the Intellectual Property Office set out how it expects the Copyright Tribunal to function, in particular whether it is expected to function as an adversarial, commercial court. Once that is established, its role and operation can be more easily defined.

PROCEDURAL RULES

29. The 2007 IPO Review described the Copyright Tribunal's Rules as "pernickety, repetitious, at times otiose and restrictive".[70] Judge Fysh disagreed with the description. He explained that the rules had evolved over the years to meet the needs of the Copyright Tribunal and had been revised by his predecessors and by him.[71] Mr Layton from the Intellectual Property Office, on the other hand, was more equivocal and told us that the rules

have not prevented the operation of the Tribunal but, as with all legislation, it is a good idea to subject them to regular review to ensure that they remain fit for purpose. I think a number of areas were identified during the review where the rules perhaps were not fit for purpose and could be tidied up. We would support a review of the rules.[72]

30. PPL went further and said that the rules the Copyright Tribunal followed had fallen "behind modern standards of case management set by the Civil Procedure Rules".[73] It considered that the introduction of Civil Procedure Rules would "streamline a lot of the cases and bring in active case management".[74] It envisaged that case management "would get rid of frivolous claims at an early stage and would also ensure that there was a speedier process to resolution with all parties providing relevant information rather than just everything just in case it came up in the hearing".[75]

31. While we acknowledge the work that Judge Fysh and his predecessors have undertaken to update the Copyright Tribunal's rules, the evidence we received showed that more work is needed. We recommend that the rules under which the Copyright Tribunal operates be reviewed.

CHAIRMAN OF THE COPYRIGHT TRIBUNAL

32. Judge Fysh explained that the work he did for the Copyright Tribunal was done for "free"[76] and mostly in his spare time.[77] The 2007 IPO Review concluded that the duties of the Chairman of the Copyright Tribunal should increase because he or she would have new responsibilities—for example, for staff and would be "driving forward the changes in culture and practice" in the Tribunal it recommended.[78] The 2007 IPO Review recommended making the Chairman, renamed the President, of the Copyright Tribunal a salaried position.[79] We support the 2007 IPO Review's recommendation but, even without the changes in the responsibilities recommended by the 2007 IPO Review, we consider that, given the volume and importance of the work carried out by the Copyright Tribunal, there is a strong case for making the post of Chairman salaried. We recommend that the post of Chairman of the Copyright Tribunal be a salaried post.

COMPOSITION OF THE COPYRIGHT TRIBUNAL

33. Judge Fysh explained that he now has only a single deputy, who was by the tradition of the Copyright Tribunal "a senior silk at the Patent Bar […] or a senior solicitor in a firm that has done intellectual property work" and who currently charged at £316 per day.[80] On the lay members of the Tribunal, Judge Fysh said:

I currently only have two lay members left; there was a time when there were more. I have a rear-admiral and a colonel from an artillery regiment. They are what I would call good chaps; they are splendid people, they say things like "I don't trust that witness". Otherwise it is all the Chairman.[81]

34. The 2007 IPO Review recommended abolishing the lay members of the Copyright Tribunal.[82] Mr Fletcher from the Intellectual Property Office explained the broader picture and the Office's current approach to lay members:

The current rules of the Tribunal require us to have lay members so my first question is that if we are going to have lay members how are we going to have ones which are going to make a genuine and valid contribution to the workings of the Tribunal? That in turn leads us to think along the lines of what kind of background and expertise and qualifications might be helpful to Judge Fysh and to the deputy chairman of the Tribunal to discharge the Tribunal's functions in the most expeditious way. […] I think it is really a question that if we are going to have lay members how can they make the best contribution through having a technical background or qualifications which will assist the Tribunal in getting through the case work that it has got.[83]

Judge Fysh cautioned against members from the industry and suggested accountants would be more useful.[84]

35. The arrangements for appointing members of the Copyright Tribunal were criticised as "less than transparent" by the British Music Rights, whose members' experience was that "the expertise and relevant experience of many of the lay members has all too often been hard to discern". It also pointed out that the 2007 IPO Review had established that lay members appear not to have been chosen for their expertise.[85] Both Judge Fysh and the Intellectual Property Office favoured transparent appointments on the basis of expertise.[86]

36. The IPO claimed that the 2007 IPO Review has opened up "a pretty vigorous debate" about the lay members of the Copyright Tribunal.[87] In our view that is not the whole story. The Monopolies and Mergers Commission back in 1988 recommended that the lay members be chosen on the basis of specific expertise that was relevant to the Copyright Tribunal.[88] Again, no action appears to have been taken. We find it hard to understand why no action was taken on the Monopolies and Mergers Commission's 1988 recommendation that the lay members of the Copyright Tribunal be chosen on the basis of specific expertise.

37. We cast no aspersion on the integrity or behaviour of the current lay members of the Copyright Tribunal, but from Judge Fysh's unfortunate description it appears that they may have neither legal or accounting training nor experience in intellectual property. We question what function they perform other than to meet the minimum statutory requirement to have two lay members. This state of affairs is regrettable, even reprehensible given the recommendation of the Monopolies and Mergers Commission's report going back to 1988. We recommend that lay members continue to be appointed to the Copyright Tribunal, but that future appointments be open, transparent and based on expertise that is relevant to the work of the Copyright Tribunal.

ADMINISTRATIVE SUPPORT

38. The Intellectual Property Office provides the Secretariat, and financial resources, for the Tribunal. This support was currently provided by a part time Secretary to the Tribunal based in Newport, South Wales, and, along with the other support Intellectual Property Office provided—for example the expenses of the lay members—the Copyright Tribunal cost around £20,000 per year, although this varied considerably with the volume of cases.[89]

39. The British Beer and Pub Association, which is currently involved in a reference to the Copyright Tribunal, considered that the "low level of administrative support for the Copyright Tribunal as a whole, and the Chairman in particular, is unacceptable".[90] It reported that correspondence sent to the Intellectual Property Office in Newport had not reached the Tribunal and that the Chairman had requested assistance in the past from one of the parties in the case to arrange Tribunal files since he did not have the necessary support.[91] The inadequacy of the Copyright Tribunal administrative support is not disputed by the Government. Mr Fletcher from the Intellectual Property Office was "absolutely clear that the amount of resource that the Intellectual Property Office puts into it needs to be beefed up. We are looking now to see if we can measure how much, at what level and so on we need to put in."[92]

40. We conclude that the administrative support and resources that the Intellectual Property Office currently provides to the Copyright Tribunal are wholly inadequate. We recommend that level of support and resources be reviewed as a matter of urgency.

PROVISION OF EVIDENCE TO THE COPYRIGHT TRIBUNAL

41. The 2007 IPO's Review recommended that the reasoning behind licences and tariffs should be clearly shown and "this must be based on hard facts and figures, actuarial calculations and projections".[93] Judge Fysh dissented: "I think at the moment that the Tribunal and the UK IPO should not really get involved in this part of the business at all; let the protagonists do this and we judge".[94]

42. The Intellectual Property Office explained the background to the recommendation. It stemmed from a "reasonable view" from one of the reviewers that most issues brought before the Tribunal related to the tariff charge for a licence and that the parties before the Tribunal ought to come with a great deal of evidence to back up their claims or views. The Intellectual Property Office said that reaction to the recommendation had been "mixed".[95] British Sky Broadcasting, submitting written evidence to us as a user, said that it might not be able to provide actuarial figures and projections.[96] It pointed out that tariffs and sampling systems were generally proposed by the collecting society and there had often been limited scope for the licensee to propose an alternative scheme. In these circumstances placing such a significant burden on the licensee did not seem appropriate.[97]

43. We share the concerns of those who have argued that placing a requirement on users to produce their own actuarial calculations and sampling figure risks adding to the burdens on users and also that it may add to the complexity to the proceedings in the Copyright Tribunal. We recommend that the IPO reconsider whether it is reasonable to impose such a requirement on users.

ADVICE ON DRAWING UP LICENSING SCHEMES

44. The 2007 IPO Review recommended that the Copyright Tribunal, with the benefit of extra resources, should become active in "formulating methodologies for the objectification of the criteria for the conditions of a licensing scheme or licence".[98] PPL agreed with this recommendation but with the qualification that the Tribunal should look at those factors that were relevant in a particular case. PPL did not consider it was appropriate—or a good use of public money—for the Tribunal reference to look at every single licensing scheme that came up. It pointed out that it was licensing several hundred thousand sites across a whole range of different tariffs for different types of businesses using music in a difference context and it had a team of rights negotiators who worked constantly and most of them never went anywhere near the Copyright Tribunal. PPL considered that it was "really only in those cases where there is a Tribunal in the offing that it would it be useful for the Tribunal to say those kinds of factors they were looking at for a valuation".[99] The British Copyright Council believed it would be "dangerous to load more work and responsibilities on the Tribunal at this time".[100]

45. Judge Fysh was concerned to safeguard his impartiality. When asked whether he could incorporate the collecting societies deeper into the Copyright Tribunal, he put the issue succinctly: "No. I stay clear of them because I have to adjudicate them".[101]

46. We conclude that the 2007 IPO Review's recommendation that the Copyright Tribunal become active in formulating methodologies is problematic. The 2007 IPO Review failed to spell out what this work would entail, the degree of expertise and resources required or to consider whether such work would prejudice the Copyright Tribunal. We do not deny that the assistance proposed by the 2007 IPO Review may be valuable and we therefore recommend that the Intellectual Property Office consider an alternative to the Copyright Tribunal to provide the assistance.

Case management

Delay

47. We asked how long adjudications took. Judge Fysh said that he was adjudicating one case that had started a year and a half to two years ago. He added that there were a couple on his desk that were at the evidence stage and "they are moving along, albeit somewhat slowly".[102] He said that there were "no quick fixes" and explained that:

it takes a long time but you must appreciate […] that we are seeing here the combination of the British common law legal process coupling […] with this discipline of copyright IP adjudication. I have to abide by the common law system. If I make an order that evidence has to be delivered within six weeks and the parties agree that they cannot in due course possibly meet this and they want six months—which has happened—then that is the way it is. The evidence in my [recent] Downloading Case was over three metres high; this is an enormous amount of work. I certainly push them on. We have case management conferences, as we do in the court; I push people on, I try to put limits down. They miss the limits, we come back again.[103]

He added that in a recent case he had discovered the costs to the parties had exceeded £12 million.[104]

48. The Intellectual Property Office considered that the Copyright Tribunal had "ended up the victim of the cases which have been brought to it which have been big gun cases and, as a result of their complications and expense, they have given it an unfair perception that it was unwieldy and hard to get access to".[105] From the evidence we received during the course of the inquiry we consider that the perception, far from being unfair, accords with reality. We found the information that Judge Fysh told us about the timescale for adjudicating cases and their costs disappointing but understandable. The Copyright Tribunal is the forum at which the important cases will be adjudicated. The cases that the Copyright Tribunal considers are large and complex. While we expect that the streamlining and case management procedures that the 2007 IPO Review has recommended will achieve some improvement in the throughput of adjudications by the Copyright Tribunal, we recommend that the Intellectual Property Office and the Government examine other measures to increase the capacity of the Copyright Tribunal to handle a greater volume of references.

SINGLE EXPERTS

49. The 2007 IPO Review recommended that expert evidence should only be allowed if strictly necessary and that, if there was expert evidence, it should be by a single, joint expert.[106] PPL considered that it was desirable to have a single expert witness but added a qualification "in the case of a specific point".[107] The Libraries and Archives Copyright Alliance told us that it would be difficult to find one expert who was able and willing to be expert for both sides.[108]

50. We conclude that, while the 2007 IPO Review's recommendation that there should be a single, joint expert witness is superficially attractive, it may not work in practice. We invite the Intellectual Property Office in responding to this Report to explain how it will work.

Departmental responsibility for the Copyright Tribunal

51. The 2007 IPO Review considered whether departmental responsibility for the Copyright Tribunal should be transferred from the Intellectual Property Office to what is now the Ministry of Justice. The Report was "agnostic" but identified as key issues that the [Copyright Tribunal] "has the resources and structure to do its job efficiently; that is the proof of the pudding".[109]

52. PPL pressed for a move as "a matter of propriety" to separate the policy making functions of the Intellectual Property Office from the court function of the Copyright Tribunal.[110] Judge Fysh saw "no immediate difficulty" with a transfer but pointed out that "historically this Tribunal has always been different. We have always been with the Patent Office for historical reasons and I think frankly that is the way we would like to stay".[111] The Intellectual Property Office said that the position of the Copyright Tribunal was examined as:

part of the package of reforms or the package of work that led up to the tribunal reforms in 2003 and it was seen as a tribunal in those days which dealt with a specialist jurisdiction and it dealt with cases […] where the parties were generally representative bodies with UK-wide coverage and a good level of representation. [R]esources were provided by the Patent Office, as then was, and there was a sense that this was not a problem that needed to be fixed.[112]

53. In our view, having the Intellectual Property Office with responsibility for the Copyright Tribunal has not given, and does not appear to give, rise to conflicts of interest or propriety that require responsibility to be transferred to the Ministry of Justice. During the course of our deliberations management, rather than propriety, of the Copyright Tribunal came to the fore. The question which we kept coming back to was why it had not been reformed in the past 20 years. The Libraries and Archives Copyright Alliance thought no one had tried.[113] Mr McGonigal from PPL supported this view: "until last year nobody really looked at it and now the IP Office has done the report which is a very thorough report and went back through every single case that the Tribunal has ever looked at, all the evidence, all the judgments et cetera. I think that is really the first time that has been done".[114] At the end of the oral evidence session we asked Ian Fletcher, Chief Executive of the Intellectual Property Office, about his plans for the Copyright Tribunal over the next year. He hoped that at the end of a year the Tribunal would be taking on a wider range of cases as part of a process by Government to ensure that the whole copyright framework was "fit for purpose".[115]

54. In our view there is a compelling reason against transfer. As we explain in this Report, changes in the operation of the Copyright Tribunal are needed and the Intellectual Property Office, led by Mr Fletcher and his relatively new team, has shown a long overdue appreciation of the need to make changes. A transfer of responsibility is bound to set back the changes to the Tribunal which are clearly needed and which the Intellectual Property Office started in 2007. We recommend that responsibility for the Copyright Tribunal remain with the Intellectual Property Office.

51 Ev 40, para 3.2, Back

52 Ev 41, para 4 Back

53 Cm 530, para 1.5 Back

54 Cm 3147, para 2.92 Back

55 Cm 3147, para 2.132 Back

56 Ev 28, para 7 Back

57 2007 IPO Review, para 8.1 Back

58 2007 IPO Review, para 7.12 Back

59 2007 IPO Review, para 8.32 Back

60 2007 IPO Review, para 8.38 Back

61 2007 IPO Review, para 7.22 Back

62 2007 IPO Review, para 7.29 Back