Hargreaves Review of Intellectual Property

Written evidence submitted by the Internet Services Providers Association (ISPA) UK

About ISPA

1. The Internet Services Providers’ Association (ISPA) UK is the trade association for companies involved in the provision of Internet Services in the UK. ISPA was founded in 1995, and seeks to actively represent and promote the interests of businesses involved in all aspects of the UK Internet industry.

2. ISPA’s membership includes small, medium and large Internet Service Providers (ISPs), cable companies, content providers, web design and hosting companies and a variety of other organisations. ISPA currently has over 200 members, representing more than 95% of the UK Internet access market by volume. ISPA was a founding member of EuroISPA, the European Internet Services Providers Association based in Brussels, which is the largest umbrella organisation of ISPs globally.

Introduction

3. ISPA supports the findings of the Hargreaves Review and we are pleased that the Government generally welcomed the recommendations that were made in the final Hargreaves report. We encourage the Committee to do to same and to ensure that, unlike the approach taken with prior reports on intellectual property such as the Gowers Review, Government stays on track and actually implements the recommendations. Below we highlight areas of the Hargreaves report and the Government’s response that are of particular importance to our members. [1]

The Internet – The building block of a digital economy

4. The Boston Consulting Group estimated that the Internet contributed £100 billion or 7.2% of GDP to the UK economy in 2009 and in addition offered a number of intangible benefits to consumers and business, such as productivity impacts through lower transaction costs or economic impacts through e-Commerce. The Internet further offers the creative industries an excellent opportunity to develop new business models and reach broader audiences with little associated costs. ISPA is concerned that the current regulatory framework for the digital economy does not sufficiently take account of these benefits and instead prioritises enforcement as an alternative to digital licensing and modernised copyright law.

5. The digital age offers both challenges and opportunities for the content industry but we feel that recent legislation – such as the Digital Economy Act - failed to strike the right balance between enforcing copyright, educating users about legal alternatives and encouraging services and formats that are demanded by the consumer. In addition, focus on enforcement diverts resources away from the rollout of superfast broadband, one of our members’ biggest priorities, as ISPs will have to cover 25% of the costs associated with running the DEA copyright infringement notification system. Whilst we recognise the need to protect copyright online and do not condone copyright infringement, its existence is largely due to the lack of fully-licensed services offering consumers what they expect and demand.

6. We believe that only a balanced approach that is driven as far as possible by objective evidence will ensure that both businesses and consumers can fully benefit from the opportunities that are offered by the digital age. ISPA accepts that ISPs are a stakeholder in this issue, but our members neither benefit from, nor encourage, users to infringe copyright law online and as such should not be financially liable for the cost of enforcing the copyright of another industry.

The Hargreaves Report and the Government’s response

7. Hargreaves recommended that ‘Government should ensure that development of the IP System is driven as far as possible by objective evidence.’ [2]

8. We are encouraged by the commitment that ‘Government will give limited weight in IP policy-making to evidence that is not sufficiently open and transparent in its approach and methodology.’ [3] However, we query the Government’s statement that the ‘Review’s suggestion that "the cost of IPR infringement is neither negligible nor overwhelming in economic scale’ [4] , while plausible, is therefore itself open to challenge.’ This statement seems to suggest that Government is not fully committed to evidence-based policy making. We hope that proposals such as the IPO’s revamped research programme and Ofcom’s work establishing benchmarks and data on trends in online infringement of copyright will go some way towards alleviating our concerns.

9. Hargreaves recommended that ‘Government should pursue an integrated approach based upon enforcement, education and, crucially, measures to strengthen and grow legitimate markets in copyright and other IP protected fields.’ [5]

10. Alongside its response to the Hargreaves Review, Government published a statement setting out how it plans to move forward with implementation of the Digital Economy Act. While we welcome the Government’s decision to not bring forward site blocking measures under the DEA and to remove some of the costs that ISPs have to share, we still feel that the current regime relies too much on enforcement and neglects Hargreaves’ recommendation that ‘ policy should balance measurable economic objectives against social goals and potential benefits for rights holders against impacts o n consumers and other interests. ’ [6] ISPs will still have to share 25% of the costs associated with running the DEA copyright infringement notification system which, as admitted by Ed Vaizey, the Minister for Culture, Communications and Creative Industries, will reduce the demand for broadband connections by up to 40,000. [7] Moreover, Government decided to introduce a £20 fee for subscribers to appeal against DEA copyright infringement notice s. This seems disproportionate and fundamentally unfair as notices under the DEA do not establish guilt but simply state that an Internet account was allegedly used for copyright infringing activities.

11. Overall we believe that more can be done to rebalance the UK’s IP enforcement policy. More should be done to encourage the creative industries to streamline the licensing of their content, embrace the opportunities of moving their business online and develop the products and services that meet consumers’ expectations. Whilst this is primarily a market issue, there is a role for Government to play in encouraging more innovative licensing to ensure the services that customers are demanding are available. The creation of a Digital Copyright Exchange (which needs to provide effective incentives), better cross-border licensing and effective voluntary codes (plus backstop powers) governing the behaviour of collecting are promising proposals, but Government needs to make sure that these measures are implemented in an effective way.

Conclusion

12. Overall, we want to see a rebalancing of the situation, so that ISPs can concentrate on what they do best: investing in infrastructure to provide superfast broadband for the benefit of society and the economy. It is for these reasons that we welcome Hargreaves’ recommendations and hope that Government and Parliament are committed to their implementation.

9 September 2011

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[1] Our initial response to the Hargreaves Review was not published on the IPO’s website and can be found here: http://www.ispa.org.uk/files/exaxlncqxz.pdf .

[2] Hargeaves , Ian. 2011. Digital Opportunity A Review of Intellectual Property and Growth. Retrieved from: http://www.ipo.gov.uk/ipreview - finalreport.pdf , p.8.

[3] HM Government. 2011. The Government Response to the Hargreaves Review of Intellectual Property and Growth. Retrieved from: http://www.bis.gov.uk/assets/biscore/innovation/docs/g/11-1199-government-response-to-hargreaves-review , p. 3.

[4] HM Government. 2011, p. 10.

[5] Hargreaves. 2011. p 9.

[6] Hargreaves. 2011. p. 8.

[7] HC Deb, 16 February 2011, c799W.