Memorandum 11
Submission from the Copyright Licensing
Agency
THE WORK AND OPERATION OF THE COPYRIGHT TRIBUNAL
1. EXECUTIVE
SUMMARY
1.1 The Copyright Tribunal should provide
a simple and inexpensive solution to disputes between owners and
users of copyright. In reality, Copyright Tribunal proceedings
are lengthy and complex and its role in providing a remedy for
users only has lead to a perception that it is more sympathetic
to users than to copyright owners. The need for it to be seen
as impartial was recently recognised in the IPO's own review of
the Copyright Tribunal.
1.2 CLA made a submission to the IPO review
of the Copyright Tribunal and responded to the published results
of that review [; these documents are attached for convenience].
CLA agreed with many of the findings of the review and believes
that it is important that the IPO are given the authority and
resources necessary to proceed to implement the recommendations.
1.3 The main areas of concern are:
1.3.1 the role and purpose of the Tribunal—the
perception of unfairness to rightsholders and the erroneous belief
that collecting societies are powerful monopolistic bodies against
whom users need protecting, which is often at odds with reality
of the situation;
1.3.2 that only users, and not rightsholders
or their agents the collecting societies, have the right to seek
a remedy from the Copyright Tribunal;
1.3.3 the fact that claimants can—and
do—launch cases without being required at least to consider
mediation;
1.3.4 the selection and composition of the
Tribunal—the lack of transparency in the way lay members
of the Tribunal are selected and the lack of any published criteria
of the experience and skills that they are supposed to possess
to enable them to discharge their role effectively and fairly;
1.3.5 the process and procedure of the Copyright
Tribunal—the Copyright Tribunal rules of procedure differ
from the normal rules for civil litigation. They often work to
increase the length and complexity—and hence costs—of
claims and unfairly prejudice collecting societies in contesting
the case without a full understanding of the nature of the complaint
at the outset;
1.3.6 the basis on which decisions are made—the
Tribunal should have greater regard to agreements freely negotiated
between the parties and not upset these lightly as being the best
evidence of an appropriate rate. It is inherently unfair that
a large and well resourced representative body can negotiate at
length for the best possible deal—which the collecting society
is contractually obliged to respect—and then seek review
of that by the Tribunal.
1.4 Each of these points will be discussed
briefly in the remainder of this submission with references to,
and commentary upon, the IPO Review as appropriate.
2. CLA AND ITS
ROLE
2.1 The Copyright Licensing Agency Ltd ("CLA")
is a not-for-profit company limited by guarantee. Its owners are
the Authors' Licensing and Collecting Society Ltd (ALCS) and the
Publishers Licensing Society Ltd (PLS), through whom it deals
with authors and publishers respectively. It represents the interests
of visual artists through an association agreement with the Design
and Artists' Copyright Society (DACS). CLA is a member of the
British Copyright Council and has had the benefit of reading their
submission to which it has also contributed.
2.2 Overseas, there are similar organisations
to CLA typically known as Reprographic Rights Organisations (or
"RROs"). CLA is a leading member of IFRRO, the International
Non-Governmental Organisation for RROs, and CLA's International
Director is currently President of IFRRO.
2.3 CLA issues licences authorising a limited
amount of copying in consideration of licence fees on behalf of
the authors, artists, and publishers who create the works and
who own the copyright in the works. The licence fees collected
by CLA are distributed (after deduction of CLA's operating expenses)
to those rightsholders.
2.4 CLA was founded in 1982 and launched
its first licence to schools and thereafter licensed universities,
colleges and the rest of the education sector. Nowadays, in addition
to the original education licensing sector, CLA licenses a wide
range of businesses and other organisations, government department
and other public administration bodies. Its licences originally
covered photocopying (paper to paper), but now also include scanning
(converting paper to digital format) and is on the verge of issuing
its first truly digital licences (digital to digital).
2.5 CLA licences are typically limited to
the copying of an extract of the original work so as not to prejudice
the primary sale of that work. This enables educational establishments,
businesses and other organisations to conduct their activities
under the cover of a "blanket" licence whereby for a
modest annual payment they are authorised to copy such extracts
from a wide range of books, learned journals and consumer and
trade magazines published in the UK (other than from relatively
small list of works specifically excluded by the copyright owner).
The licence also includes works published abroad where CLA has
entered into a repertoire exchange agreement with the relevant
RRO. These include, for example, the USA, Canada, Australia and
most of mainland Europe.
2.6 The benefits of a voluntary collective
licensing approach are recognised by government, echoed in copyright
legislation and have been acknowledged by the Competition Authorities.
CLA's licensees are saved the inconvenience, difficulty and expense
of obtaining consent on each occasion they need to copy, failing
which they could not undertake the copying lawfully. Rightsholders
also benefit from a collective licence scheme as it would be difficult
or impossible for them to license every use of their works and
to enforce their rights on an individual basis.
2.7 In the financial year ended 31 March
2007, CLA collected £49 million on behalf of its member organisations
and rightsholders and the accumulated figure for the five years
to 31 March 2007 was £214 million of which £32 million
was from overseas. CLA therefore plays a significant role in supporting
the creative and publishing industries whose worth to the UK economy
was estimated at £60 billion (Source: DCMS Creative Industries
Economic Estimates Statistical Bulletin, October 2007).
2.8 CLA is a "licensing body"
and the operator of "licensing schemes" for the purposes
of the Copyright, Design and Patents Act 1988 ("CDPA"),
the primary legislation governing copyright and it is subject
to the jurisdiction of the Copyright Tribunal. CLA has been engaged
in one Copyright Tribunal case (Universities UK vs CLA 2001).
3. THE "NEED"
FOR USERS
TO BE
DEFENDED AGAINST
COLLECTING SOCIETIES
3.1 The perception that collecting societies
are more powerful than their users is in many cases misplaced.
CLA's resources, both in terms of manpower and money, are considerably
more limited than those available to many of its licensees. In
the recent Music Online case the claimants included Yahoo, AOL,
Napster, Sony iTunes, O2, T-mobile, Vodaphone and Orange. These
vast multinational organisations are considerably larger than
the collecting societies from whim they supposedly need protection.
3.2 The original thinking behind the right
for users to seek a ruling from the Tribunal presumably was that
they were thought to be unable to negotiate licence terms on an
equal footing. This is simply untrue in many cases. Large and
well funded licensees are quite capable of negotiating on an equal
basis—indeed in many cases it is the licensee who holds
the greater degree of negotiating power given the difficulties
that rightsholders sometimes have to prove cases of copyright
infringement and to obtain appropriate payment through licence
fees.
3.3 There is often a perception that it
is the licensing body against whom the user is litigating rather
than against the rightsholders it represents. This may falsely
reinforce the notion that the defenceless" user needs protection
against a powerful and monopolistic licensing body. But as a non
profit making body CLA's revenues (after deduction of running
expenses) are passed on to the individual authors, artists and
other visual creators who create the work as well as to the publishers
who make it available to the public. It is these rightsholders
who are most affected by the decisions handed down by the Tribunal.
They often are unable to enforce their rights individually for
reasons of practicality or cost and perforce must rely on their
collecting society to do so on their behalf.
4. COMPOSITION
OF THE
TRIBUNAL
4.1 The Monopolies and Mergers Commission
in its inquiry on collective licensing recommended that the Chairman
of the Tribunal should be either a retired High Court judge or
other person of similar standing with experience in the law of
intellectual property and available to serve at short notice.
The IPO review did not go this far but suggested that the appointment
should be a salaried post at a judicial level carrying the title
of President. The key is that the President should have appropriate
legal qualifications and experience. The same would apply to the
Deputy Chairmen.
4.2 The criteria for selection of the lay
members of the panel are not currently disclosed and greater transparency
in the selection criteria and procedure would help address some
of the concerns of collecting societies. The lay members need
to have, and be seen to have, the appropriate experience to deal
with complicated cases of the evidence is produced in written
form in advance. CLA had submitted that lay members should be
balanced with one drawn from or representing users and one representing
copyright owners. The IPO review recommended the abolition of
the lay members completely, but this would impose an onerous burden
on the Chairman who has to decide on matters both of law and fact
from extensive and complicated evidence and whose decision, on
grounds of fact alone, cannot be appealed.
5. COPYRIGHT
TRIBUNAL PROCEEDING
5.1 Copyright Tribunal cases have all the
trappings of judicial proceedings, but without some of their rigour.
The collecting societies in particular are often presented with
the worst of both worlds in that they are forced to the trouble
and expense of dealing with potentially wide ranging pleadings,
but without the certainty that these will define completely the
cause of action. Broadly constructed pleadings may disguise what
is in fact the main complaint which may often only emerge much
later in the proceedings. CLA believes that a much more robust
approach ought to be taken by the Tribunal in striking out evidence
on matters not put in issue through pleadings.
5.2 Most Copyright Tribunal references turn
on the use by, and value to, the user of the relevant copyright
material. That data inevitably is in the hands of licensees. CLA
believes that time and money would be saved were the licensee
required to provide standard disclosure in accordance with the
Civil Procedure Rules, at least in relation to these elements,
prior to exchange of first round evidence. CLA believes this could
lead to major savings for both sides.
5.3 The IPO Review recommended replacing
the existing Copyright Tribunal Rules 1989 with the standard CPR
and Practice Directors applicable to normal civil litigation.
This would overcome many of the above problems.
6. MEDIATION
6.1 CLA believes that parties wishing to
launch a reference to the Tribunal should first seek to resolve
the dispute through mediation. Currently there is no cost sanction
against a claimant who shoots first and asks questions afterwards
as there is in the Commercial Court and in civil litigation generally
following the Woolf Reforms.
6.2 Currently claimants can launch a reference—without
any prior notice to the Respondent—as a negotiating ploy
to apply pressure and to improve their bargaining position. Indeed
this is specifically recognised in the Copyright Tribunal Rules
where it states that it is aware that references are sometimes
begun by parties simply to preserve their negotiating position.
Given that only the users can launch a reference, this is deeply
unfair and leads unnecessarily to the commencement of full scale
litigation proceedings. Once started, legal proceedings acquire
a momentum of their own which becomes increasingly difficult to
stop.
6.3 The Patent Office has established its
mediation service. Although this seems to have had mainly patent
and trademark disputes in mind, there is no reason why it could
not be extended to cover copyright disputes.
7. RIGHTS OF
LICENSING BODIES
7.1 Licensing bodies have no right to launch
a reference (other than where a Licence or Licensing Scheme has
already been the subject of a reference). This always places them
unfairly in the position of "defendant".
7.2 The IPO Review recognised that this
was unfair and recommended that collecting societies should be
able to launch a reference in appropriate circumstances. CLA agrees
and would welcome details of how this might be implemented.
8. FACTORS TO
BE CONSIDERED
IN A
REFERENCE
8.1 The Tribunal ought to have a greater
regard to existing agreements where freely entered into by the
parties. The Tribunal should be wary of imposing its own judgement
of what it considers to be reasonable in all the circumstances
where it differs from the position of the parties mutually agreed
after negotiation. This is particularly so given that only the
user can refer the contract to the Tribunal. In effect, it can
"tear up" the contract whereas the licensing body is
obliged to continue to honour it.
8.2 The exercise by the Tribunal of its
jurisdiction to review what was a binding contract diminishes
the incentive for the licensing body to enter into negotiations
and to try to reach a mutually acceptable agreement in the first
place. A licensing body ought not to be discouraged from granting
concessions in an attempt to reach a settlement because it fears
that this is but one step in a process which can then be litigated
before the Tribunal and lead to further claims for reduction.
January 2008
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