Hargreaves Review of Intellectual Property

Written evidence submitted by Directors UK

Directors UK is the professional association for film and television directors in the UK. The organisation is both a collecting society for the distribution of secondary rights payments to directors, and the professional guild providing services and support to members, and seeking to protect and enhance the creative, economic and contractual rights of directors in the UK.  

We welcomed the Hargreaves Review and we are generally supportive of most of its recommendations. During its writing Directors UK contributed our own paper on the key issues and necessary measures. As the committee has stated it will be examining these documents, we will not repeat the bulk of the arguments or evidence here.

The Committee’s inquiry does allow the opportunity to give the unique perspective of UK film and TV directors at what we believe is a crucial moment for the future prospects of the UK’s creative industries.

There are two areas we would like to comment on in particular that were addressed by the Hargreaves Review and in the Government’s response – IP protection enforcement and the proposed Digital Copyright Exchange (DCE). We have sought to be concise in this submission, but are more than happy to appear before the committee to expand upon this evidence if asked to do so.

The role of film and TV Directors

The process of making film and TV is one in which the director plays a central and crucial part – along with production companies, directors are ‘joint authors’ of an audio-visual work, in recognition of the fact that the director plays a highly significant part in defining and shaping the final content.

However in the UK directors’ intellectual property rights are undervalued. In the case of film, directors frequently receive no compensation for the surrender of their copyright nor any meaningful reward for the success of their film. This has caused some of our leading talent to leave the industry or move overseas to make content where the cultural and economic benefit accrues to non-UK enterprises.

There is a real missed opportunity here: Directors UK believes that if directors (and indeed other creators) were fairly incentivised on the success of their works, there would be an energising effect on the growth of the film industry in much the same way that UK television exports were hugely boosted by the incentivising impact on producers of the terms of trade created under the 2003 Communications Act.

For this reason Directors UK is keen to ensure that not just IP protection, but the extension of IP rights to its members, is part of any new distribution and rights payments system.

Copyright Enforcement

It is crucial to our creative industries that action needs to be taken consistently to close down the sources of pirated content. Those suffering are not only large media conglomerates, but individual content creators and small businesses. IP theft damages the ability for the industry to grow and maintain a skills base.

The Digital Economy Act introduced some key methods of ensuring such enforcement and the Government should continue to pursue that agenda as a priority.

With legitimate methods of obtaining content now becoming more widespread and adapting to consumer demand, it is crucial that people are educated as to why illegal file-sharing is not acceptable.

Digital Copyright Exchange

Directors UK supported the recommendation by Professor Hargreaves that work should be done to create a Digital Copyright Exchange (DCE). He is correct to say that: "We have found that the UK’s intellectual property framework, especially with regard to copyright, is falling behind what is needed". It is vital to ensure that legitimate models of digital distribution are made as user-friendly as possible, whilst ensuring that fair rights payments go to the creators of the content.

This is a key step in ensuring that the alternatives to pirated content are as accessible as possible. Getting the system right will create opportunities for revenue and greater rights protection. As Hargreaves puts it: "The prize is to build on the UK’s current competitive advantage in creative content to become a leader in providing the services global players use to license their content for world content markets".

Many existing distribution systems (and their associated rights management and payment systems) are poorly equipped to handle new digital distribution markets and business models. At the same time it is increasingly difficult for licensing to take place on an individual author basis where the costs of administering licences and payments is becoming a very high proportion of the revenue received. This points us to collective licensing models as the best way to meet the challenge.

The Government has announced its intention to encourage an industry-led approach to the creation of the DCE and Directors UK supports this. The creation of a comprehensive DCE, dealing in a standardised way with every type of audio and audiovisual content, depends on all the relevant industry players being willing to play their part. It may be hard to achieve this in one leap, but to begin with we think it would be worth exploring the concept of parts of the industry ‘piloting’ the DCE to deal with rights for certain types of content.

The creation of a DCE can also be an opportunity to redress the issue of rights payments to directors in the UK. Directors UK would like a key principle of the DCE to be that fair rights payments to copyright owners are a condition of its use.

It is worth noting that the EU is currently consulting on updating the online licensing regime, via its Green Paper on the online distribution of audiovisual works in the European Union. The UK can be engaging with this and even mark out a position of being a leader in terms of developing such a scheme, as a result of creating either a full or pilot Digital Copyright Exchange.

Format Shifting

The Hargreaves report has recommended that the UK government introduce a copyright exception to allow individuals to make copies of protected works for their own use and use by their immediate family on different media, with no condition that rights holders receive fair compensation. The Hargreaves report states that "rights holders will be free to pursue whatever compensation the market will provide by taking account of consumers’ freedom to act this way and by setting prices accordingly".

Our understanding is that in practice this could be problematic, due to the fact that failure to provide any conditions for rights holders for fair compensation would contradict EU Directive 2001/29/EC. This Directive stipulates that Member States may provide for format-shifting for private use, and for ends that are neither directly nor indirectly commercial, on condition that the rights’ holders receive fair compensation.

The UK government would like to use recital 35 of the EU Directive which states "In certain situations where the prejudice to the rightholder would be minimal, no obligation for payment may arise". Unlike the limited exception for recording for purposes of time-shifting (section 70 of the UK Copyright Act), this argument cannot apply to format-shifting as envisaged by the Government. Today, format-shifting is a major private copying component made possible by the proliferation of devices allowing the copying, storage, access and playback of protected music and audiovisual works. It is at the core of the 22 Member States’ private copying schemes developed for compensating rights holders. These schemes significantly benefit UK rights holders.

It logically follows from this that the only way for the UK government could allow UK citizens to fully benefit from all the possibilities of all these devices would be to provide for a specific condition of fair compensation to rights holders.

The European Union Court of Justice in the Padawan case gave some interesting arguments to help the UK government comply with the 2001 EU Directive:

· "The concept of ‘fair compensation’, within the meaning of Article 5(2)(b) of Directive 2001/29, is an autonomous concept of European Union law which must be interpreted uniformly in all the Member States that have introduced a private copying exception, irrespective of the power conferred on them to determine, within the limits imposed by European Union law and in particular by that directive, the form, detailed arrangements for financing and collection, and the level of that fair compensation" (Paragraph 37).

· "Copying by natural persons acting in a private capacity must be regarded as an act likely to cause harm to the author of the work concerned" (paragraph 44)

· "Given the practical difficulties in identifying private users and obliging them to compensate rightholders for the harm caused to them, and bearing in mind the fact that the harm which may arise from each private use, considered separately, may be minimal and therefore does not give rise to an obligation for payment, as stated in the last sentence of recital 35 in the preamble to Directive 2001/29, it is open to the Member States to establish a ‘private copying levy’ for the purposes of financing fair compensation chargeable not to the private persons concerned, but to those who have the digital reproduction equipment, devices and media and who, on that basis, in law or in fact, make that equipment available to private users or who provide copying services for them. Under such a system, it is the persons having that equipment who must discharge the private copying levy" (paragraph 46).

In short, if a private copying exception were to be introduced in UK legislation, we assume it would have to comply with EU legislation and ensure that it is not detrimental to the income of creators.

9 September 2011