Government response
Introduction
The Government welcomes the interest that the Innovation,
Universities, Science and Skills Select Committee has shown in
the operation of the Copyright Tribunal. The Tribunal provides
an important means by which disputes between collecting or licensing
societies (for example the Phonographic Performance Limited) and
users (for example the BBC), on the terms and conditions of licenses,
or on the refusal by licensing societies to provide licenses,
can be resolved. In future we may need it to perform a broader
role. Given the contribution made by the creative industries to
the UK economy and to the richness of UK culture, it is essential
that the Tribunal operates effectively now and in future.
We are not starting from a poor position: there is
much that is good about the Tribunal, and a number of incremental
improvements have been made to it by the current Chair, the His
Honour Judge Fysh. We do not accept that the Tribunal has been
fundamentally flawed for 20 years. However, as the Committee's
Inquiry makes clear, there are undoubtedly more radical improvements
that could be made to its operation by the independent Chair in
conjunction with the UK Intellectual Property Office (IPO) and
the Ministry of Justice. Most significantly, and as the IPO said
in its written evidence to the Committee, the Government "would
like to encourage a wider range of cases to be put before the
Tribunal, demonstrating how it can operate efficiently and economically
as a matter of course, rather than being a matter of last resort."
It was to achieve in part this vision that the IPO
arranged for two of its experienced Trade Marks Tribunal Hearing
Officers to review the operation of the Copyright Tribunal and
make recommendations for improvement. The report of this review
was published in May 2007, and made 30 recommendations. These
focussed on improving the efficiency of the tribunal through practice
changes, regulatory changes and an increase in the resources provided
to it. The IPO consulted publicly on the recommendations. It did
not, however, immediately seek the agreement of Judge Fysh to
implement the recommendations on which there was broad agreement
because there were other developments in intellectual property
(such as the formation of our strategic response to the Gowers
Report), and some other issues involving copyright specifically,
which suggested that there were broader questions to be answered
about the role and scope of the Tribunal, that went very much
beyond the scope of the 2007 Review. We are now further forward
in working on these issues, and along with Rt Hon Judge Fysh,
are able to decide what recommendations of the 2007 Review are
worth pursuing in this broader context. The IPO is publishing
its response to the public consultation.
But that will mark only the start of a process. In
addition to these largely procedural changes to the running of
the Tribunal, we recognize that a more extensive programme of
reform is needed if we are to achieve a Tribunal that is more
accessible, quicker, and therefore more routinely used, and is
able to potentially perform other roles being considered. The
detailed response (below) to the Committee's recommendations provides
some further information on what that reform may entail. But there
are some fundamental issues on which we need to await developments
in other work streams (such as that on dealing with orphan works)
and consult more widely upon before deciding with the Chair what
action to take. We expect the action we ultimately decide upon
will go a long way towards delivering the sort of Tribunal, we
the Committee, and users envisage.
We are mindful of the Committee's concern that development
of the Tribunal is now urgently needed, and will therefore ensure
that the process of consultation and development of this strategy
is as swift as it can be.
We would welcome the Committee's continuing interest
and support in this area.
Detailed Response
1. Given the value of the creative industries
and the importance of intellectual property to the UK, we welcome
the setting up of the Strategic Advisory Board for Intellectual
Property and of an economics and evaluation unit within the Intellectual
Property Office. (Paragraph 12)
We are glad that the Committee has welcomed the setting
up of the Strategic Advisory Board for Intellectual Property.
This is an important evolutionary step in ensuring that we are
able to think more strategically about the way in which intellectual
property practice and policy impacts on, and can best support
other areas, such as, trade, health and broader innovation policy.
The Government is pleased to report to the Committee
that following an open competition, Joly Dixon, CMG has been appointed
as the inaugural Chairman of SABIP. Upon appointment, Joly joined
the selection panel to appoint the remaining members of SABIP.
The Government has recently announced these appointments and the
inception of SABIP is on 2nd June.
The Committee also welcomed the construction of an
economic research and evaluation unit in the IPO. We see this
as an essential contribution to our being better able to understand
the economic advantage that exploitation of intellectual property
rights conveys, and in providing us with the information we need
to ensure that UK companies and individuals make the most of their
intellectual property assets.
2. The 2007 IPO Review of the Copyright Tribunal
recommended that collecting societies as well as users have the
right to make reference. We support this recommendation. In addition,
we recommend that the Government implement this recommendation
ahead of the others in the 2007 IPO Review. (Paragraph 21)
The Government considers that this issue merits further
exploration. There may be a case for allowing collecting societies
as well as licensees to have the right to make a reference in
certain circumstances. This would require legislative change.
Work to effect this change will be considered as part of the wider
package of reform spoken of in the introduction, and upon which
we expect to undertake a public consultation
3. 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. (Paragraph 25)
As has been noted previously, we do not accept that
the Tribunal has been fundamentally flawed for 20 years. The Tribunal
is an independent body under the responsibility of its Chair and
deputies. Much has been done by current and previous Chairs to
try to ensure that the Tribunal operated effectively. But we recognize
that there is now a need for more extensive reform, and we are
getting on with it.
4. 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. (Paragraph 28)
The Government believes that different users of the
Tribunal have a requirement for it to operate in different ways.
While some may desire the Tribunal to continue to operate in a
court-like manner, others may have a need for simple advice or
mediation. We suspect that there is a need to provide any increased
pool of potential users (that we want the Tribunal to attract)
with a wider range of practical and functional services than currently
exists. The "function" of the Tribunal is therefore
one of the fundamentals on which further consultation is needed,
and it would be wrong to pre-empt that work now by opting (without
clear evidence of need) for a Tribunal operating in a certain
way.
What we are clear about at this stage though, is
that the Copyright Tribunal (as a body empowered to establish
at the request of an interested party, the royalties to be paid
for the use of copyrighted works) will in future be a place where
users should be able to present their own cases effectively, assisted
by good quality, imaginatively presented information, and by expert
procedural help from tribunal staff. We are taking immediate steps
to ensure that users have access to improved advice and guidance.
This will be provided by a newly established office of support,
the Copyright Tribunal Registry, which will include for
the first time additional professional legal staff (see the response
to recommendation 9 below) able to dispense advice that is not
currently provided. We are also in the process of improving the
written guidance available to users.
Once we decide the scope and function of the Tribunal
we will need to match services offered by providing advice and
guidance to new users.
5. We recommend that the rules under which
the Copyright Tribunal operates be reviewed. (Paragraph 31)
The Government agrees with the Committee. With the
agreement of the Ministry of Justice, the IPO is taking forward
this recommendation. Given that any new Rules will need to take
full account of any changes that stem from consultation on other
aspects of Copyright Tribunal reform, the work will not be completed
however until we have publicly consulted and decided on action.
We expect a small team co-chaired by the IPO, and His Honour Judge
Fysh, to review the Copyright Tribunal Rules 1989.
6. We recommend that the post of Chairman
of the Copyright Tribunal be a salaried post. (Paragraph 32)
Responsibility for the appointment, employment and
remuneration of the Chairman of the Copyright Tribunal lies with
the Ministry of Justice. It is a general principle that Crown
servants already in receipt of a public salary (as the current
Chairman is) do not normally receive additional remuneration for
any further public offices held concurrently on a fee-paid basis.
The current Chairman's arrangements as a judicial office holder
allow for 25 days per annum (that would otherwise be spent on
his other judicial duties) to be spent on activities relating
to the Tribunal.
7. 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. (Paragraph 36)
8. 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. (Paragraph 37)
Taking recommendations 7 and 8 together, the Government
agrees with the Committee that lay members should continue to
be appointed to the Copyright Tribunal, and that they should be
chosen on the basis of specific, relevant expertise. Given that
the current term of office for the remaining lay members expires
in September 2009, work has begun to recruit a new panel.
Discussion to determine the parameters of the "relevant
experience" and agree appropriate selection criteria has
begun between the current Chairman of the Copyright Tribunal,
the MoJ and the IPO. Early consensus suggests that candidates
drawn from the fields of specialist solicitors in commercial law,
forensic accountants and librarians are most likely to provide
the necessary breadth of specialist expertise required.
A recruitment exercise, conducted in accordance with
OCPA guidelines, will commence in July.
9. 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. (Paragraph 40)
The Government agrees with the Committee that some
change is needed. The IPO has discussed the level of support and
resources with the current Chairman of the Copyright Tribunal
and agreed to a new office of support, the Copyright Tribunal
Registry being established in London at the IPO premises.
A recruitment exercise to provide increased, dedicated administrative
support for the Copyright Tribunal is underway. Furthermore, we
also intend that new additional professional legal support to
assist the Chairman in the progress of cases will be provided
and in place very shortly.
But we believe it essential to keep the resources
available to the Tribunal under review. We are aware that similar
Tribunals overseas (but often with wider remits) have a much higher
level of resources allocated to them. If the UK Tribunal radically
alters, and provides the same or new services to a larger number
of users, then we would expect to have to increase the resources
available to it.
10. 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. (Paragraph 43)
Given that disputes currently brought to the Tribunal
often entail considerable cost and have far reaching implications,
it is not unreasonable to hope that the positions taken and proposals
made by the parties should be well conceived. This is not always
the case. The IPO Review therefore recommended that the "reasoning
behind licensing schemes and tariffs should be clearly shown".
However, discussion with Tribunal members, and public consultation
have shown that attempting to be prescriptive in this area may
cause more problems than it solves. Potentially, as the Committee
notes, it may add to the complexity and cost of bringing disputes
before the Tribunal, and could therefore run counter to our aim
of encouraging more routine use of it. We have therefore concluded
that this recommendation of the 2007 IPO Review should not be
pursued.
11. 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. (Paragraph
46)
It is probably unwise, in terms of propriety, for
the Tribunal Chair or deputies to attempt to formulate or propose
methodologies once disputes have reached an advanced stage. Indeed,
the Chair's unequivocal advice to the Committee was that he should
not get involved in this. However, there is a need to look at
whether a mediation service can be offered in the context of copyright
disputes, and at whether it could identify common methodologies
or specimen agreements that might be used by parties to amicably
settle their differences. We are considering this.
12. 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. (Paragraph 48)
The current Chair of the Tribunal is considering
a number of ways be which the processes of the Tribunal might
be streamlined. He is, for example, considering the need for a
revised Practice Notice to guide those currently appearing before
him.
However, the need for the Tribunal to handle a step-change
in the number of references made to it turns on the implementation
of our plans for more extensive reform. We definitely do want
it to deal with a greater volume of references, and as we agree
actions that will result in this, we will have regard to the capacity
of the Tribunal to deliver them. That may well require further
change to processes and structure.
13. 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. (Paragraph 50)
The IPO has reconsidered the recommendation that
there should be a single, joint expert witness. Following further
discussion with the Chair of the Copyright Tribunal, and in light
of comments received in response to the public consultation exercise,
it has concluded that the recommendation should not be pursued.
14. We recommend that responsibility for the
Copyright Tribunal remain with the Intellectual Property Office.
(Paragraph 54)
The Government agrees with the Committee that responsibility
for the Copyright Tribunal remain with the IPO, we believe this
is the best home for it.
15. We conclude that the current arrangements
unfairly exclude individuals and small businesses and institutions.
We recommend the Government rectify this serious deficiency when
it responds to the 2007 IPO Review of the Copyright Tribunal.
Failure to provide access for individuals and small businesses
and institutions casts doubt over the fairness of the operation
of the licensing societies' monopoly. (Paragraph 58)
16. We recommend that the Intellectual Property
Office evaluate the options to provide access for small business
and institutions and individuals that we describe in paragraphs
60 to 64 of our Report. We conclude that one of the tests against
which any changes will be measured is whether the individual or
the small business or The work and operation of the Copyright
Tribunal institution can challenge and change charges for using
copyright-protected material without costly litigation but also
without incurring major consequences for people not a party to
a particular action. (Paragraph 66)
Taking recommendations 15 and 16 together, and recognising
their links with earlier recommendations 2 and 12, the Government
agrees with the Committee that the current arrangements unfairly
exclude a number of potential users from bringing licensing disputes
before the Copyright Tribunal.
As has been stated earlier in this response, we are
embarking on a programme of extensive reform that will deliver
a tribunal that meets the needs of all potential users, and might
be markedly different from the Tribunal operating today. Our aim
in doing so is to establish a reformed Copyright Tribunal which
provides the optimum flexibility for interested parties to resolve
any differences and achieve an appropriate licensing arrangement.
17. We recommend that in its response to this
Report the Intellectual Property Office set out its policy on
the treatment of orphan works and that, in particular, it explain
whether it supports licensing of or exemptions for orphan works.
We further recommend that, to give certainty to those to whom
orphan works have caused difficulties, the Intellectual Property
Office consider an interim solution based on the exception approach,
pending the outcome of the EU's deliberations. (Paragraph 71)
The Government is keen to find a solution to the
orphan works issue. It would favour solutions which allowed orphan
works to be used by third parties ("would be users"),
provided there were appropriate searches for rights holders to
be made in advance, and that any solution prescribed adequate
standards of due diligence for those searches.
The Committee should be aware generally that copyright
law in the UK has to be consistent with our international obligations
both at the EU level and in terms of the Berne Convention, to
which we are a signatory Any solutions we create should respect
those obligations.
The Committee asks whether the UK Government would
support the concept of licensing or an exception.
On exceptions, currently there are no exceptions
available, either under UK law or at EU level, permitting the
use of orphan works. This means that the general copyright law
applies. The use of the whole or a substantial part of an orphan
work still in copyright without consent, and which consent could
not be obtained in the absence of the owner or exclusive licensee,
would represent an infringement of copyright if no exception applies.
If the original owner or exclusive licensee were to reappear,
he or she could have an action against any users of that work.
In order to create an orphan works exception under
UK law which respects our international obligations, there would
need to be an amendment of EU law. This was why the Gowers review
proposed in recommendation 13 that the UK Government should propose
a provision for orphan works to the Commission amending the relevant
Directive (29/2001/EC).
On solutions involving licensing, the Government
believes that the term "licensing" in the context of
orphan works is not really appropriate, as there is no readily-identifiable
copyright owner or exclusive licensee who can grant such a licence.
Any licensing would need to be directed at creating an indemnity
to guard against the reappearance of the true rights holder or
exclusive licensee.
The Government has been engaging informally with
UK parties interested in orphan works, and meetings and discussions
are taking place about the way ahead. A number of bodies in the
copyright field in the UK have been looking at creating voluntary
solutions, whereby an organisation or organisations such as a
collecting societies would take fee income from the user of an
orphan work, subject to the society being satisfied that an appropriately
diligent search had been made, and offer an indemnity in the event
that copyright was enforced at a later date. Government is keen
to determine how such voluntary solutions might work in practice
and to what extent they might represent alternatives to legislation-driven
solutions.
At the same time the European Commission has been
consulting national level experts from industry, academic and
cultural backgrounds across Europe to discuss orphan works, and
is expected to produce guidelines in the summer which Member states
could use as a framework from which to implement their own solutions.
The dialogue with UK stakeholders referred to earlier has enabled
the Government to keep a watching brief on how this work is developing.
The Government wants to see the outcome of the Commission's
process before it moves to put in place any solutions in the UK.
This is because it believes that, rather than focusing the energy
and effort of stakeholders on interim and hence temporary solutions,
the interests of rights holders, would-be users and the general
public would be better served by working up a durable, sustainable
and permanent solution which can take account of our the current
state of all our international obligations in this area, and which
is genuinely capable of resolving this problem once and for all.
18. We are surprised that a tribunal headed
by a judge, who does the work unpaid and in his spare time, assisted
by a barrister paid £316 a day and two lay assessors with
no relevant technical expertise, functions to the level that it
does. Changes to the operation of the Copyright Tribunal should
have been made in the 1980s and it is to no one's credit that
nothing has been done for 20 years, particularly the Patent Office/
Intellectual Property Office. We have now reached the point where
reform is long overdue and needs to be made expeditiously to meet
the challenge of digital technology. We have high expectations
of the Intellectual Property Office to implement a programme of
major changes in the operation of the Copyright Tribunal. (Paragraph
72)
We are embarking on a programme of reform that fully
recognises the Committee's commentary and recommendations; the
recommendations of the earlier IPO review and the responses made
following the public consultation; takes proper account of wider
developments in Copyright; and that will benchmark the service
offered in the UK with that offered in other countries.
19. The 2007 IPO Review of the Copyright Tribunal
set out a list of changes, most of which have support from both
users and rightsholders. The recommendations in the Review that
give us most concern are those that add to the Copyright Tribunal's
workload or could be perceived to compromise its impartiality.
These need to be reexamined. The Government now not only needs
to publish its response to the Review but also to set out clearly
how it expects the system to operate, the volume of cases it expects
the Copyright Tribunal to handle and the average time that a dissatisfied
user or rightsholder can expect a case to take. It also needs
to develop as a matter of urgency an affordable, alternative service
that individuals and small businesses and institutions can use
as well as a policy on orphan works. Given the increasing importance
of intellectual property in the economy and the new challenges
stacking up in this area, it is essential that serious attention
be now paid to this rather neglected area of policy. (Paragraph
73)
The Government notes this recommendation. The perception
given in the report that the tribunal is expensive, slow and of
limited access is something that the IPO aspires to break. Its
intention has always been to look at amending the Tribunal's remit
to respond to current Copyright challenges. As stated in its evidence
to the Committee, it would like to encourage a wider range of
cases to be put before the Tribunal, demonstrating how it can
operate efficiently and economically as a matter of course, rather
than being a matter of last resort.
We will be making a detailed formal response, setting
out what aspects of the 2007 IPO review of the Copyright Tribunal,
might be taken forward ahead of our more fundamental reforms later
this month.
May 2008
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