Examination of Witnesses (Questions 1-19)
MR DOMINIC
MCGONIGAL,
MR RICHARD
COMBES, MR
NIGEL WARBURTON
AND MR
TIM PADFIELD
28 JANUARY 2008
Chairman: Thank you very much for coming
to this Select Committee hearing. You will know the procedures,
that we cross-question you, it is all recorded and everybody reads
it. I think this is rather unique in a sense that you have never
really been in front of a select committee that I am aware of
in terms of the Copyright Tribunal. I may be wrong, but this is
a good chance I think for you to put over some of your ideas when
we question you. Before we start on questions we need to declare
any interests. I chair the All Party Writers Group in the House.
Mr Boswell: I am Vice Chairman of the
BBC Group and I am also involved with the Friends of the National
Libraries.
Mr Cawsey: I am an officer of the All
Party Music Group.
Q1 Chairman: Perhaps our witnesses
would now introduce themselves.
Mr McGonigal: I am Dominic McGonigal;
I am from PPL which is the licensing body for the record companies
and artists.
Mr Combes: I am Richard Combes
from ALCS which is the collecting society for writers.
Mr Warburton: I am Nigel Warburton,
I am writer and I have also served on the board of ALCS and am
currently on the board of CLA.
Mr Padfield: I am Tim Padfield.
I am rather different from these gentlemen. My day job is at the
National Archives where I advise on copyright but for this purpose
I am the Chair of the Libraries and Archives Copyright Alliance
which represents various bodies in the libraries and archives
communities who deal with copyright.
Chairman: Thank you very much for coming
here. Ian Cawsey will open up.
Q2 Mr Cawsey: Good afternoon gentlemen.
I will start with a nice general question to open up with. Is
the Copyright Tribunal operating in an effective manner? Is it
ensuring that disputes are resolved quickly? If there are shortcomings
in the system how serious are they?
Mr McGonigal: I am very happy
to kick off if that is okay with my colleagues. I think there
is a general recognition that the Copyright Tribunal was set up
some time ago and actually things have changed in the intervening
decades. As you will know the IP Office commissioned their own
review of the Copyright Tribunal in response to a number of concerns
from all sorts of stakeholders in the Tribunal and the reality
now is that the copyright business, the creative economy, is a
huge part of UK plc and is a major economic driver. The issues
that the Copyright Tribunal are looking at have huge significance.
What was set up several decades ago is generally recognised not
to be necessarily right for today where there are significant
commercial interests at stake. The way we view it is very much
a party versus party arbitration system rather than a tribunal
and indeed the IP Office 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.
Mr Combes: I think that Dominic
has already explained that it is providing a different function
than that originally envisaged when it was first conceived. In
terms of the question as to whether it is operating effectively,
the test for a body such as this which has to intervene and arbitrate
in disputed matters is: is it operating fairly? I think a lot
of the recommendations in the Intellectual Property Office report
were certainly aimed at rebalancing the function provided by the
Tribunal. In particular a recommendation that we would raise in
that regard is the recommendation that licensing bodies themselves,
in the introduction of new licences or new schemes, would have
the opportunity to approach the Tribunal themselves rather than
being solely a right for the user. I think that speaks very much
to the first recommendation from the report which spoke of the
need to give balance to the way the Tribunal approaches disputes
and also to give each party an even hand and even and fair chance
in the process of those disputes.
Mr Warburton: As a writer my main
concern is that fair payment for use and anything which is expensive
and time consuming within the process could potentially affect
the fairness of that payment when it comes through to a writer.
I thoroughly support the recommendations from the IPO Review which
seems to be moving in the direction of streamlining the operations
of the Tribunal.
Mr Padfield: I suppose, not surprisingly,
I have to differ from my colleagues to a certain extent. I have
to agree that a body to which one side can appeal but not the
other does seem unfair, but on the other hand I am not at all
convinced about the idea of making it seem more and more like
a court. We already have quite a lot of courts dealing with copyright
issues. I would be much happier to see less formality rather than
more. As it is the Copyright Tribunal is expensive. The Universities
UK case cost the university side, as I understand it, something
like £800,000 and that seems to be a lot of money for something
which has not even gone to court. It also took 10 days of hearing
so quite a lot of time as well. I am not sure that more formality
is required; on the whole I would prefer to see less.
Q3 Mr Cawsey: Do you mean something
of a mediation type?
Mr Padfield: Something of that
sort or, interestingly, the possibility perhaps of an ombudsman
to deal with questions between parties or complaints by one party
or the other. That might be a more attractive solution.
Q4 Mr Cawsey: Is there any other
support for the idea of a mediation or ombudsman type service?
Mr Combes: I think as a cost cutting
exercise and a process-simplifying measure, arbitration and mediation
available at a reasonable level before the final recourse to a
full tribunal hearing is certainly something that has merit in
terms of streamlining the process before the referral itself.
Mr McGonigal: One of the important
recommendations from the IP Office Report was the introduction
of civil procedure rules and that, I think, would streamline a
lot of the cases and bring in active case management. Dealing
with some of the points from Tim Padfield, active case management
would get rid of any 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 everything
just in case it comes up in the hearing.
Q5 Mr Cawsey: Can you give us an
example of how the shortcomings of the Copyright Tribunal are
affecting creative artists in this country?
Mr Combes: A lot of the recommendations
on streamlining the current process of how the Tribunal work to
a certain extent speaks to how the organisations that represent
individual creators are placed to represent the interests of their
members—be it writers, composers, artists—at the Tribunal
itself. It is clearly a very costly process, a heavy legalistic
mechanism. To a certain extent it is almost impossible for an
individual creator to use that facility and are therefore reliant
on their representative bodies, be it collecting societies who
are representing them through licensing. Even then those bodies
are generally not for profit organisations run for the purpose
of their individual members and are not necessarily in the best
position to benefit from an overly costly process. Certainly in
the more recent referrals that we have seen the parties who have
brought references to the Tribunal are large international media
organisations who are obviously well placed to use the process
as it currently stands. A lot of the measures in the IPO Report
aimed at simplifying and reducing costs and reducing process would
indirectly benefit the individual creator through the greater
abilities that it gives their representative bodies.
Q6 Mr Cawsey: Tim, you did not seem
to be agreeing with that.
Mr Padfield: I entirely agree
with the thrust. The intention is to reduce the costs and to make
it simpler but I cannot see how making it more like a court will
do that. I would say that the courts are even more expensive and
take longer. Certainly going to court is not a pleasant process
and I would say that people would be less inclined to go if it
looks more and more like a court.
Q7 Chairman: Richard, in passing
you raised the idea of the ombudsman. In fact it was SCONUL who
also supported very strongly the idea of an ombudsman. Do you
think putting that process in so that there is step before getting
to the Tribunal, would in fact speed up the process and give justice,
particularly to what I would call the individual performer who
seems to be totally left out in this unless they are part of a
larger collecting society?
Mr Combes: I think the Intellectual
Property Office Mediation Service is aimed at that second tier
down from the full tribunal level. I think that is probably a
question of resource and experience. My understanding to date
is that that has been largely concerned with other intellectual
property matters such as patent and trademark disputes. If it
is actually to fulfil a function in a tier below the Tribunal
perhaps that needs greater resource to be able to take on that
work that is currently addressed by the tribunal process.
Q8 Mr Boswell: Just a simple point
to clarify in my own mind—you will appreciate we are lay
people in this—the Tribunal issues are about the fair licensing
of rights rather than are there evidential issues about the existence
or otherwise of rights and their attribution to particular persons.
When we discuss ombudsmen or mediation or whatever, there is a
sort of intermediate tier which says, "This is a pragmatic
solution; it would be sensible for all parties and reasonably
fair to adopt it", which might not have too much relevance
to the law and might not even require legal intervention. If you
are in a head-to-head about who is entitled to what and/or whether
the terms of a particular licence are reasonable, it does tend
to end up with lawyers and I presume that nearly all the work
in the Tribunal is actually conducted by lawyers rather than intelligent
lay people other than the lay members of the Tribunal.
Mr McGonigal: I think that is
a very important question because the reality is that the Tribunal
is absolutely dealing with those commercial disputes. The Tribunal
gets involved when the two parties cannot agree, for whatever
reason, on what the price is, what the terms of the licence are,
how much you will be paid for music or for photocopying or whatever
it is. Dealing very quickly with the mediation ombudsman point,
you cannot usually isolate a particular case so if, for instance,
one hairdresser or a pub has a problem with PPL and says, "We
do not want to pay the £52.50 a year to play music"
it comes to PPL. Fine, that is a dispute between that hairdresser
or that pub and the PPL. If a mediation service intervenes in
that and comes to a decision, that would affect every other pub
in the country. Although you might be thinking that you are dealing
with an issue that is £100 actually it is about the entire
sector and it is several hundreds of thousands or millions of
pounds.
Q9 Mr Boswell: You do need lawyers
for that.
Mr McGonigal: Yes, that is what
happens.
Q10 Mr Cawsey: Nigel, do you have
an example of how creative artists in the country may be adversely
affected by the system?
Mr Warburton: Clearly any delay
in the process and mounting costs are effectively taking money
which might otherwise go to creative artists, as we have already
seen in lawyers' fees and increased use of executive time on the
licensing organisation's managerial side. I do not have a specific
example but generically there is a problem whenever there is a
delay in payment made.
Q11 Mr Cawsey: Dominic, in the evidence
from PPL you seem to cast some doubt on the fairness of the Copyright
Tribunal, implying that copyright users are given the benefit
of the doubt. Is that a fair understanding of what you were saying?
Are Tribunal hearings fair?
Mr McGonigal: I think it goes
back to when the Tribunal was set up. The mere fact that it is
called a Tribunal implies there was a feeling that collecting
societies were monopolies, they needed to be controlled in some
way and the poor little user needed somebody to look after them.
In fact the cases that come before the Tribunal are between large
parties, between a licensing society like PPL or CLA and a big
organisation be it a broadcaster or the British Beer and Pubs
Association or BEDA representing the entire nightclub industry.
They are major parties that are in a commercial dispute. It is
no longer the situation where one party needs to be controlled
because it has a negotiating advantage, it has a balance of power
in the bargaining situation. That is why, to us, it is a straightforward
commercial dispute. It is about two parties that have not been
able to agree and you need some kind of a court process to work
out what is a fair price for that use of copyright material.
Mr Padfield: I would say that
that is actually true, that the Tribunal does tend to hear the
big cases, which is unfortunate because it means the small cases
tend not to be heard; people are put off bringing the small cases
because they do not feel they can afford or they do not dare.
Q12 Chairman: What happens to them?
Do they just disappear into the ether?
Mr Padfield: That is right. I
might mention a specific example. Recently there was a significant
dispute—the rights and wrongs of which I will not go into—between
the CLA and NHS over whether the NHS should have a licence and
a licence was eventually taken out. The CLA seemed to my members
to be putting forward a view of copyright law which was its own
interpretation of the law but which was not necessarily what the
law said. I am not saying it was not correct but it was its own
interpretation of the law and there was no means of someone else
saying what their interpretation was. They were simply writing
to librarians in this case saying, "This is the law; this
is what research means in law" and it was simply their interpretation
of what research means. There is no means of challenging that.
Q13 Mr Cawsey: Between you you have
all articulated a lot of problems that have grown up over the
years with this system. Why do you think it has proved so difficult
in the last 20 years to actually effect a reform of the Copyright
Tribunal?
Mr Padfield: I do not think anybody
has tried.
Q14 Mr Cawsey: You think it has just
gone on for no better reason than that?
Mr Padfield: I think so.
Mr McGonigal: I think that 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 this is
really the first time that has been done.
Q15 Chairman: From a lot of the evidence
we have actually received in this inquiry—I confess to being
a novice in this particular area so forgive me if I ask a rather
naive question—it does look like the collecting societies
hold a monopoly in this area. They are the people who really have
the power and that is what needs to be challenged. You seem to
be rather worried about that challenge. Is that right?
Mr McGonigal: I am not worried
about any challenges. You are absolutely right, we have a monopoly
and there is a very good reason for that. It is because both the
users and the rightsholders want us to have a monopoly. We are
a straightforward service organisation aggregating the rights
so that any music user can get a single licence covering the entire
repertoire. In our case the entire repertoire is sound recordings.
The pub we referred to earlier has to get one licence to play
music for the entire year and that is the entire catalogue, rather
than three and a half thousand licences from three and half thousand
record companies.
Q16 Chairman: Once you have agreed
that in fact you are a powerful monopoly and that is your specific
role—I understand that; it is not a criticism, it is just
a statement of fact which you have agreed with—it is very
difficult to know how in fact you move this on. My second question
is really about the move over the last 20 years but particularly
over the last five years into a totally different digital world
that we are now operating in. All these regulations were set up
in a by-gone age and you seem to be defending the past rather
than in fact creating a platform for the future. There seem to
be two distinct positions, one that we extend the copyright arrangements
even more draconically into the whole business of digital media
in its broadest sense, or we actually now have a terrific change,
we take the print's view of saying "Let us do something totally
different in terms of actually creating one of the most hugely
creative and liberating frameworks". Where do you all stand
on that digital divide?
Mr McGonigal: Can I take one step
back on that? If you start from the basis that actually musicians
or authors or actors or anyone else should be paid for what they
are doing, you are absolutely right that in the digital age that
presents us with a real challenge. There is no longer live performance
where the performer turns up and gets paid for that performance.
They make a recording, that recording gets used throughout the
world by all sorts of people that that performer has never seen
and never will see. If you start from the basis that those performers
should be paid then you need some kind of mechanism for doing
that. I think actually the role of the collective licensing bodies
is going to become more important in the digital age. Let me give
one specific example within the PPL arena. Within our environment
we used to have two performer distribution societies called PAMRA
and AURA and that was complicating things. It was making it difficult
for the performers, et cetera, et cetera. We decided to merge
those with the agreement of all the performers and indeed the
record companies. It was decided that this was the way forward,
bring them all together, create a single body within PPL for all
47,000 performers and all the record companies. We did that: we
went to the Office of Fair Trading and told them about this, put
it forward as a merger, they did a few months of investigation
when they actually talked to all sorts of people (we kept getting
phone calls saying they had been in touch) and they gave a complete
green light, no conditions whatsoever, to effectively the creation
of a bigger monopoly because it has all the economic advantages
and efficiencies both for the rightsholders and for the users.
Mr Warburton: From the point of
view of creators I do not think most of us are concerned about
what is in the black box as long as it delivers adequate incentive
for us to carry on creating. It is important that a system which
works and which could be transferred to the digital age as we
now see it is not abandoned for the sake of an idea which may
not be as effective as that in terms of delivering incentives
to creators. My concern, particularly in a fast changing environment
where almost monthly some new device or new potential evolves
for communicating written, spoken, visual images and so on, would
be that we do not abandon a system that seems to be working, that
actually does deliver incentives to creative artists for the sake
of the hope that we can come up with a modern solution which may
be past its sell by date within months.
Q17 Chairman: When artists like Lily
Allen start recording in a basement flat and putting their stuff
out on the net, they were doing it as creative performers. It
is only afterwards that the business takes over. The issue I am
interested in is how in fact do we maintain this high level of
creativity within a system which seems to be quite frankly going
in the opposite direction?
Mr Warburton: ALCS did commission
some research on incomes of writers and in the 24 to 35 year old
age group the typical earnings of a writer was £5000 a year
which is, by any standards, inadequate. This means that any loss
of earnings or any expectations that they could work for less
than that could actually undermine the drive to creativity. Because
some people can afford to produce highly creative work in a new
medium does not mean that everybody should be obliged to do that.
If you were to have a vibrant creative community of writers there
needs to be some possibility of earning money from writing directly.
Mr Padfield: I have a lot of sympathy
for the need to provide some recompense to writers; they are entitled
to it, they have created these works. There are a lot of difficulties,
though. Certainly in the library community we find that collecting
societies in general, if I may put it in that way, have been reluctant
or perhaps their members have been reluctant to allow digital
licensing because they are nervous, as we understand it, they
are scared of what the consequences are. However, so far as we
can see it it is inevitable that we are going to be moving in
that direction.
Q18 Mr Boswell: Am I not right in
saying that there is a problem about the licensing of digital
rights in relation, for example, to a conversion for people with
visual impairment. Is that now resolved?
Mr Padfield: There is now a special
exception for visually impaired.
Q19 Mr Boswell: That rings a bell
but it had to be negotiated and eventually legislated for.
Mr Padfield: That is right.
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