The Hargreaves Review of Intellectual Propert: Where next? - Business, Innovation and Skills Committee Contents


2  Copyright

Concepts

13.  Copyright is a property right, created by statute. It gives to the authors of various types of work—including literary, musical and artistic works—the exclusive right to their exploitation. Broadly speaking the term of copyright runs for the life of the author plus a further 70 years. To qualify for copyright, a work must be original. Furthermore, copyright does not protect ideas, but only their particular expression. Thus, a modern-day John Bunyan writing the story of a pilgrim's progress for the first time would have exclusive rights in the text of the story and be able to prevent copying of anything more than an insubstantial extract, but he would not be able to prevent someone writing a different version of a story about a pilgrim's spiritual journey. There would, however, certainly be a point at which a somewhat different but too similar version would infringe copyright in the original tale.

14.  Likewise, copyright does not protect facts, even if they are newly discovered. The data in a scientific article is therefore not protected by copyright, although the way in which it is presented and edited will prevent copying of the article itself.[14]

15.  The Berne Convention of 1886 introduced substantial uniformity to the international copyright system, providing for reciprocal recognition of copyright between signatory countries. Notably, it required copyright to arise automatically, without the need for registration, although when the United States joined the Convention in 1988 the US retained the right to restrict damages and attorney fees to parties who had registered their copyright; a noteworthy precedent for incentives toward registration in the form of differing remedies, and one which will be relevant to the discussion of the proposed Digital Copyright Exchange.

16.  The Berne Convention contains the so-called 'Three-Step Test' for defining permissible copyright exceptions:

It shall be a matter for legislation in the countries of the Union to permit the reproduction of such works in certain special cases, provided that such reproduction does not conflict with a normal exploitation of the work and does not unreasonably prejudice the legitimate interests of the author.

17.  The three tests are therefore: (i) that exceptions should be special; (ii) that reproduction does not conflict with a normal exploitation of the work; and (iii) that it does not unreasonably prejudice the legitimate interests of the author.

18.  The current principal UK copyright statute is the Copyright, Designs and Patents Act 1988, which replaced the Copyright Act 1956. This Act has been amended substantively on at least three occasions.[15] It was amended in 2003[16] to cover the so-called Infosoc Directive, an EU directive which came into force in 2001 and was designed to update copyright for the digital era.[17] Notably, the Infosoc Directive allows for copyright exceptions covering parody, certain temporary electronic copies, and (with certain provisos) private use format shifting (such as copying from CD to PC).[18] Whether and how to introduce these exceptions into UK law was a major part of Professor Hargreaves' deliberations, which we consider in the following sections.

19.  Moral rights are a form of right broadly related to copyright and introduced into UK law for the first time in the 1988 Act. They include the right to be identified as an author, unless that right is waived, and the right to object to derogatory treatment of a work.

20.  A feature of intellectual property is that the creation of a new work, while it may well give rise to an independent new IP right, does not negate the rights in any work from which the new work draws inspiration. Where there is a very long gap between original work and secondary work, that is not necessarily a problem. On the other hand, works drawing heavily albeit with fresh creative input on several layers of copyright material can require multiple consents for that material's use.

21.  Finally, the US concept of 'fair use' of copyright allows for use of works without permission of the author depending on various factors, broadly including: the nature and character of the use including whether it is commercial; the nature of the work; the proportion of the copied material to the whole; and the effect of use on the potential market for and value of the work. Examples of fair use include commentary, criticism, news reporting, research, teaching, library archiving and scholarship. The exception was previously one of US common law but became statutory with the US Copyright Act of 1976. Somewhat similar if narrower UK copyright law exceptions exist,[19] but they are essentially limited to the exact terms of the exception rather than being capable of judicial development.

Proposals for new copyright exceptions following Hargreaves

Format shifting

22.  Format shifting is about transferring copyright works between different media, such as from a CD to a personal computer, from a PC to an mp3 player, or from a DVD to a tablet device. Currently, such transfers generally infringe copyright through the making of copies without authorisation. Deletion of the original copy is not a defence.

23.  The old practice of transferring vinyl recordings to cassette tape was another form of format shifting but it was limited by the need to create a physical copy. There was much talk in the 70s and 80s of imposing a levy on either cassette recorders or cassette tapes to compensate for such copying, but the House of Lords case of CBS v Amstrad[20] established that the sale of a cassette recorder did not of itself constitute infringement even when the recorder was designed to record a playing cassette onto a blank cassette, and levies were never imposed.

24.  Technology has clearly advanced considerably since the era when making a home-use copy involved an hour of time spent with a turntable and a cassette recorder. Digital copying can now be accomplished at very high speed and multiple copies can be created and transmitted almost instantaneously. There is a widespread perception that purchase of a recording should at least carry the right to use that recording in typical environments and through commonly used outlets such as in family cars, on personal music players and computers, and through different media around the home. This may partly be a reflection of the fact that many consumers invested considerable amounts in re-establishing their music collections in CD form when CD replaced vinyl. The music publishing industry benefited substantially from that, and customers obtained the benefit of a much more durable format. However, customers do not necessarily feel that they should have to pay again so soon, particularly given the pricing of CDs at the time when collections were being replaced. In any event, according to the Consultation on Copyright:

A recent Consumer Focus survey found only 15% of consumers knew that copying a CD that they had bought onto their mp3 player was illegal, and only 9% thought it should be.[21]

25.  The Hargreaves Review reasoned thus on why an exception should be created:

Digital technology has enabled use and reuse of material by private individuals in ways that they do not feel are wrong—such as sharing music tracks with immediate family members, or transferring a track from a CD to play in the car. It is difficult for anyone to understand why it is legal to lend a friend a book, but not a digital music file. The picture is confused by the way some online content is now sold with permissions to format shift (iTunes tracks) or to "lend" files (Amazon ebooks) at no extra cost. This puts the law into confusion and disrepute. It is not a tenable state of affairs.[22]

26.  We accept the main thrust of this argument although we disagree with Professor Hargreaves on the distinction between lending of books and music. We suspect most people do grasp the difference between the lending of a book, with its intrinsically limited capacity for being circulated and copied, and the lending of a music file which can be copied to hundreds of people within seconds. In oral evidence to us, Sir Robin Jacob agreed, saying that there was "a huge difference between the two."[23]

THE LEGAL POSITION ON A COPYRIGHT EXCEPTION FOR FORMAT SHIFTING

27.  The Infosoc Directive permits copyright exceptions for format shifting, but provides that where an exception is created, rightsholders should receive fair compensation, depending on the circumstances of the individual case.[24] According to judicial interpretation of the Directive, however, compensation should be assessed on the basis of whether there has been actual harm, rather than, for instance, a lost opportunity for further revenue. This permits the argument that private copying, while it might in theory undermine the opportunity for a further sale, does not merit compensation, because no such actual further sale would have been made in the majority of cases, and/or because the pricing of the content already builds in the expectation of a certain amount of copying. The 'no additional sale' argument applies most strongly to copying for personal use. It applies progressively less strongly to copying within the private sphere and unrestricted private copying.

28.  Nevertheless, it is true that the majority of EU countries impose some kind of levy with the intention of compensating for such copying. One problem with these levies, however, is that there is no consensus on the appropriate levy rate, so levies are inconsistent between member states, leading to a risk of skewed markets.

EVIDENCE FROM THE MUSIC INDUSTRY AND OPEN RIGHTS GROUPS

29.  Nevertheless, Pete Wishart MP, who gave evidence to us in his capacity as a former professional musician and as Vice-Chair of the All Party Group on IP, was strongly of the view that an exception should give rise to levies:

In 22 out of 27 European states we do have an exception for format shifting, often a levy on the hardware, for the musicians. Again, it is the musicians that this levy goes to. What is going to happen when this exception goes through is there may be the arrival of all these new hardware devices, which are going to be playing this music, which are going to be playing this content. What would be wrong, if there is going to be a growth in this type of equipment, with some of that money going back to musicians?[25]

30.  Jim Killock of Open Rights Group put the counter-argument that:

Of course they are getting something back in the payment for the original music.[26]

31.  Mr Wishart has a valid argument; notwithstanding CBS v Amstrad, it would be disingenuous to suggest that mp3 players (and indeed cassette players before them) have not been used frequently as a means of copying copyrighted content. On the other hand, it is probably a fair point that pricing of content now includes an expectation of personal use extending beyond the original medium, for very practical reasons. Robert Ashcroft of PRS for Music pointed out one such reason, namely that without format shifting it is becoming impossible to play certain content at least through certain (portable) media:

You can barely go into an electronics shop and buy a portable CD player these days. You cannot make it illegal for people to go and buy a CD and then get it on to the only device that they have that plays music. Where you draw the line is the question.[27]

OPTIONS PROPOSED BY THE INTELLECTUAL PROPERTY OFFICE

32.  In the Consultation on Copyright the IPO is proposing a number of options for changing the law to provide for a copyright exception. These are:

i.  unrestricted private copying, covering copying of loaned works (this occurs in a number of European states although accompanied by a levy; it is not the Department's proposed choice);

ii.  copying within the private sphere (including the family and social circle);

iii.  copying for personal use (covering individual personal use only);

iv.  copying only when the harm caused is minimal.[28]

33.  The Department's preferred option is the narrow one of personal use, but it is also examining the evidence on whether creative content is, or could be, priced to take account of use in a wider sphere and has solicited views on this option in the Consultation on Copyright. The consultation also invited views on the fourth option although, as it conceded, the difficulty with that option is in defining 'minimal'. To be workable, this option would need to be applicable by a simple test that users could apply themselves.

34.  One way of embodying the 'private sphere' option in a workable form would be to put a numerical limit on the permitted number of copies, to reflect typical shared family use. Apple Corporation already permits use of apps on up to five devices, and an exception that mirrors commercial practice and accords with the reality of actual usage of would appear sensible.

CONCLUSION

35.  We have previously expressed our support for the creative industries in our reports Rebalancing the Economy: Trade and Investment[29] and Government Assistance to Industry.[30] If the recent consultation produces real evidence of actual lost sales then policy should be determined accordingly. However, there needs to be pragmatism about both the pricing of content and the reality of expectations of personal use. On balance, we believe that the options of permitting personal use or use within the personal sphere are the most realistic.

36.  We endorse the approach taken in the Consultation on Copyright to the issue of format shifting. We expect this issue to be an early opportunity for a greater degree of evidence-based policy-making in the intellectual property area. Without wishing to anticipate the outcome of that process, we suspect that a copyright exception based on personal use or use within the private sphere might prove most practicable and justifiable.

Parody

37.  The introductory section of this report referred to the US doctrine of fair use of copyright. One area in which this concept has produced divergence between UK and US copyright law is with works which are 'transformative' of earlier works—examples of which include numerous episodes of 'The Simpsons' such as those which parodied 'Citizen Kane', 'Psycho' and 'The Longest Day'. An entirely different type of transformative work is David Hockney's re-rendering in modern form of Claude Lorrain's 'Sermon on the Mount', (although in that case, since the original work was created in the mid-17th century, any copyright in the painting itself is long expired). A blog with the title 'Remake/Submissions' features similar sometimes tongue-in-cheek reworkings of artworks such as, for example, a Mondrian reinterpreted as the contents of a suitcase in primary colours.[31] This illustrates the depth and extent to which those in the creative sector are constantly borrowing from and reusing works that already exist; a process that is a vital element in creativity and not necessarily harmful to the overall cultural landscape. As a Guardian piece on the 'Remake/Submissions' blog observed:

Artists have played this game for centuries because it is one of the most intimate relationships you can have with a work of art. That was why again and again Picasso travestied Manet's Déjeuner sur l'herbe, which is itself a playful, mocking restaging of Titian's (or maybe Giorgione's) Concert champêtre.[32]

38.  Fair use takes a liberal view of on how copyright applies to such works, whereas UK law would often require the user to obtain a licence from the owner of any extant copyright. This carries with it transaction costs, and probably inhibits a certain amount of creative activity.

39.  There is value in encouraging creativity drawing inspiration from the world's cultural heritage,[33] but three questions arise: to what extent the resulting works may harm the reputation of or cause offence to the original owner, whether the copyright owner should retain an ultimate right of objection to subsidiary use, and whether money should change hands. Of relevance to the latter issue is that derivative or transformative works may in certain cases result in increased revenue for the owner of the original copyright, such as when a music sample used in a remix revives interest in the original track.

COMPARISON WITH SAMPLING

40.  A solution to these questions has evolved with music sampling (that is, the use of small fragments of existing music in a new track). It involves payment of royalties for use of samples through collecting societies, a situation which came about largely because of a shift in the US law of fair use in 1991, when Bridgeport Music Inc v Dimension decided that samples rising to a level of "legally cognizable appropriation" needed to be licensed, although de minimis sampling remained within fair use. There are arguments, however, that this decision closed down the level of creativity in, for instance, the hip-hop genre after the early 90s.

HARGREAVES ON PARODY

41.  The Hargreaves Review has been criticised for lack of robust economic analysis on the advantages and disadvantages of creating an exception in this area. The Review acknowledged that certain issues such as parody as a satirical instrument were outside its terms of reference, but nevertheless recommended an exception, as permitted by the Infosoc Directive, on the basis of the potential economic benefits. However, both UK Music and the Authors' Licensing and Collecting Society were among those pointing to lack of precision in the impact assessment.[34]

42.  Given the consensus that policy in the area of intellectual property should move forward on the basis of a better evidence base, we believe that before proceeding with a potential policy exception for parody there should be a closer examination of certain economic issues including, possibly: (i) the actual transactional costs involved in negotiating licences; (ii) the comparison between those costs and the anticipated benefits; (iii) how much creative activity is actually stifled by the current legal situation; and (iv) what proportion of parody cases might lead to an allegation of moral rights infraction, and what the costs of resulting disputes would be.

43.  In its review of responses to the Consultation on Copyright, we recommend that the Government give due weight to economic data on the potential benefits and disadvantages of implementing a parody exception and take such data into account in its eventual decision.

RELEVANCE OF MORAL RIGHTS AND REPUTATION

44.  Creation of an exception for parody would remove the right of authors to refuse licence permission but need not leave copyright owners entirely unprotected with respect to reputational damage. Moral rights exist precisely to afford protection in this area; as the Consultation states, "Moral rights therefore clearly place limits on the extent of any parody exception."[35] However, the relevant right—the integrity right—allows objection only to treatment which "amounts to distortion or mutilation or is otherwise prejudicial to the honour or reputation of the author".[36] There is a high threshold for meeting this test, as demonstrated in the case of Confetti Records v Warner Music UK Ltd, [37] which failed to find infraction of the integrity right even though the original version of a music track had been overlain with rap words containing repeated references to violence and drugs. Furthermore, we would be concerned if a change in the law merely shifted the focus of dispute from one potentially expensive IP issue (infringement) to another (infraction of moral rights).

FREE SPEECH ARGUMENTS

45.  Those favouring a parody exception cite its important role in supporting free speech, and the potential reluctance of copyright owners to give permission to satirists. Citing the case of campaigning action groups, Jim Killock argued that effective deployment of free speech sometimes necessitates the use of copyright content:

That is what they [parodists] do: they parody [corporations] in order to show the brand up for not living up to the values it espouses. In doing that, they are going to breach the copyright ownerships of those corporations and that puts them in legal jeopardy. The result is that lots of these campaign organisations have to take legal risks in order to challenge those brands, and that is a serious impediment, to my mind, to their freedom of expression and on political dialogue. That is ultimately why the parody exception is extremely important.[38]

INTELLECTUAL PROPERTY OFFICE PROPOSALS

46.  The Consultation on Copyright observes that UK law previously "provided greater flexibility for works of this nature" but that "by the 1980s this parody defence had been extinguished."[39] The Government has indicated that its preferred route forwards is to implement a "fair dealing" exception to cover parody, meaning that "commercially competing uses of copyright material (those capable of substituting for the original) are not allowed." The Consultation clarified this:

The use of the parody exception to make a straightforward cover version would be ruled out. A parody that is likely to unfairly damage the reputation of a creator would also be ruled out by a fair dealing exception."[40]

CONCLUSION ON PARODY

47.  On a possible exemption for parody, we are inclined to agree with the Government's proposal for a fair dealing exception, but with disapplication of the exception where there is reputational damage and subject to a robust assessment of the economic benefits. We recommend that the definition of unfair reputational damage should make provision to protect (within the exemption) genuine political and satirical comment supportive of free speech.

Content mining

WHAT IS CONTENT MINING?

48.  The Consultation on Copyright defined content mining as:

Automated analytical techniques such as text and data mining work by copying existing electronic information, for instance articles in scientific journals and other works, and analysing the data they contain for patterns, trends and other useful information.[41]

49.  By facilitating the very rapid automated trawling and cross-referencing of scientific papers, content mining has already led to successful advances in areas such as Alzheimer 's disease research.

THE LEGAL ISSUE

50.  Because such techniques involve the making of electronic copies—even though such copies may on occasion be temporary—under the current law they infringe the copyright in the trawled articles including the publishers' copyright deriving from their editorial input into the publication process.

51.  The Berne Convention permits copyright exceptions consistent with the three-step test and, pursuant to that, the Infosoc Directive authorises Member States to legislate for exceptions to permit non-commercial, scientific research.[42] The Hargreaves Review recommended implementing such permission but went further, recommending extension to commercial use:

We therefore recommend […] that the Government should press at EU level for the introduction of an exception allowing uses of a work enabled by technology which do not directly trade on the underlying creative and expressive purpose of the work (this has been referred to as "non-consumptive" use).[43]

THE PROPOSALS

52.  The Consultation proposes introduction of an exception applying "only to uses of technology that do not unduly prejudice the primary market for or value of the copyright works being copied."[44] Given the constraints of the Infosoc Directive, it would apply initially only to non-commercial use, but negotiations at EU level to permit extension into commercial use is contemplated—indeed, active.

THE ARGUMENTS FOR AND AGAINST

53.  One argument in favour of less restricted content mining is the "non-consumptive use" argument, which is that automated copying does no more than could be done lawfully by an army of readers working on individual papers. As Professor Hargreaves put it:

The idea is to encompass the uses of copyright works where copying is really only carried out as part of the way the technology works. For instance, in data mining or search engine indexing, copies need to be created for the computer to be able to analyse; the technology provides a substitute for someone reading all the documents. This is not about overriding the aim of copyright - these uses do not compete with the normal exploitation of the work itself - indeed, they may facilitate it. Nor is copyright intended to restrict use of facts.[45]

54.  This is an enticing approach, although it is arguable that if content mining is to become a widespread tool for research, it will become a form of normal exploitation in itself, and hence protected by the Berne Convention. Furthermore, the assertion that copyright does not restrict the use of facts overlooks the point that scientific papers are not merely presentations of fact; they are interpretations of fact which have typically been peer reviewed and edited, with a substantial contribution to the editing process usually deriving from publishers. On the other hand, content mining at least at present appears to search within the factual realm of publications rather than in their expressive realm and to that extent appears concerned more with the researchers' original work rather than the publishers edited version.

55.  Other areas of argument include the scope of existing licences and the technical demands imposed by unrestricted content mining. Thus, universities and libraries argue that they already have licences to read scientific papers. However, historically such licences have assumed human readership. Publishers have a legitimate argument that a licence for human readership is a different legal and technical animal from one that permits wholesale computerised reading, not least because a degree of investment may be needed to support the data-feed for computerised trawling or the extra downloading demand. Richard Mollet of the Publishers Association summed up the publishers' overall position, beginning by stating that the publishing industry recognises the value of content mining:

Content mining is something that publishers wholeheartedly and fully support, and indeed we are fundamental to the development of the technology. It is still a very nascent technology, and 88% of large publishers across Europe take only about 10 mining requests a year. This is still something that is in its infancy. What is vital to acknowledge here is the investment that goes on from publishers in the development of infrastructure and ongoing support to allow mining to happen. It is not just the case of having the data out there and letting a crawler go and look at it; it has to be prepared in a way that crawling tools can understand.[46]

56.  He pointed to the risks associated with unrestricted access. We set out his arguments at some length because, while complex, they were well expressed:

There are a number of risks if one were to take away the management of that access, as Hargreaves suggests, and say, "Well, let us just have an exception." […] One is the technical risk that such untrammelled mining would, to the publishers' platforms, look like a denial­of­service attack. All of the technologists who work in the publishing companies will tell you their systems would fall over; they just would not be able to cope, rather like a broadband connection being overwhelmed or the degradation of use by overuse. There is a technical risk, which means that access needs to be managed, but there is a commercial risk too. Publishers have to know that the person who says they want to come mining are who they say they are, and that they are going to use it for non­competing use. Of course, there is no way of managing that if you have taken away any need for managing access.

Finally, there is a competitive risk to the UK because if, as Hargreaves suggests, we were the only country in Europe and, indeed, the world that did not have any management of access, you are basically saying to anybody, "Come on in and get our data. Get our text. You can do what you want," there will be no revenues going to anybody at all. Of course, in every other country in the world there will be. If you are a publisher, why would you want to come to a country where you are exposing yourself to technical and commercial risks; you would go to a country that did not have an exception. That is why we support mining but think that access needs to be managed.[47]

57.  Ed Quilty of the IPO acknowledged that this commercial risk could be a problem if access became a free-for-all:

We have heard people say that the opening up of their databases to the access required to do data and text mining will overload the servers and make it impossible to operate. At the moment I do not know how far that is true or not, but it does suggest that there may be costs associated with opening a service. That is something we need to look at.

There is certainly also this question about abuse: how do you arrange things so that the copies in question that are made do not find their way into other areas. That is something that we would have to consult people on and I think the publishers have views on that, and we will have to take their views in designing a system.[48]

58.  Reed Elseveier's evidence picked up on the point that publishers' servers cannot currently handle uncontrolled data trawling, and explained that the current solution is to permit wholesale temporary downloads of data to licensed users.[49] However, this highlights the risk that might apply in the event of unrestricted downloading; unscrupulous downloaders might find means to override usage restrictions and obtain permanent access to the data, or use it for onward transmission to third parties. If such third parties were situated outside of UK jurisdiction there could be significant problems in enforcing copyright.

POSSIBLE SOLUTIONS

59.  We believe that the solution on costs should take account of the publishers' contribution and increased burden of technical support while recognising also that the core creative content in scientific publications derives from academic and other researchers whose principal form of recompense is recognition. Such a solution should probably therefore be based on reasonable recompense for investment either by way of negotiated licence fees or fees set by an external body such as the Copyright Tribunal.

60.  The licence option is the one currently being developed by publishers. The Association of Learned and Professional Society Publishers and Reed Elseveier made this point, the latter referring to its substantial ongoing investment in developing new systems.[50] The Publishers Association pointed also to current developments in creating model licences.[51] This suggests that the market might not yet be considered as having entirely failed.

61.  Publishers have argued that they can play a crucial facilitative "maitre d'" role in the content mining process.[52] On the other hand, there was anecdotal evidence that publishers struggle to handle the volume of requests for conventional access let alone for data mining, which raises the question whether they have, or will have, adequate resources to cope with a further influx of requests. The Consultation on Copyright referred to the potential difficulties of handling large volumes of such requests.[53] If publishers want to be able to claim to offer the sophisticated, facilitative "maitre d'" service to which they referred,[54] they will need to divert adequate resources from revenue to support that service. Any extra licence fee payable for content mining needs to be seen to have a tangible benefit in facilitating access. The alternative would be a royalty rate set by the Copyright Tribunal.

PUBLIC ACCESS TO PUBLICLY FUNDED RESEARCH

62.  In May 2012, the Minister of State for Universities and Science[55] highlighted the success of the UK scientific publishing industry which publishes 5,000 of the world's 23,000 peer-reviewed journals, and set out the Coalition's commitment to public access to publicly funded research:

The evidence underpinning our ambition for public access is compelling. For example, publicly funded and freely available information from the Human Genome Project led to greater take up of knowledge and commercialisation than from earlier protected data. To date, in fact, every dollar of federal investment in the Human Genome Project has helped generate $141 for the US economy.[56]

63.  The Minister challenged the industry to adopt new models:

I realise this move to open access presents a challenge and opportunity for your industry, as you have historically received funding by charging for access to a publication. Nevertheless that funding model is surely going to have to change even beyond the positive transition to open access and hybrid journals that's already underway. To try to preserve the old model is the wrong battle to fight. Look at how the music industry lost out by trying to criminalise a generation of young people for file sharing. It was companies outside the music business such as Spotify and Apple, with iTunes, that worked out a viable business model for access to music over the web. None of us want to see that fate overtake the publishing industry.

CONCLUSION

64.  It seems to us that the Minister was making a valid argument. Content mining is essentially about a desirable widening of access to the factual element of scientific literature rather than the edited contribution, although publishers have an important potential role to play in enhancing the search process. There are issues around technical feasibility and security which need to be resolved, but we believe that content mining should be opened up by way of managed but nevertheless readily accessible licensing processes.

65.  We believe that policy on content mining should have regard to potential risks. Revenue might not provide the necessary investment to support data access and the successful UK scientific publishing business might be disadvantaged. However, policy should also recognise the potential benefits of content mining, the core contribution of researchers and the need for ready access. We believe that publishers should seek rapidly to offer models in which licences are readily available at realistic rates to all bona fide licensees and we encourage the Department to promote early development of such models.

Orphan works

BACKGROUND

66.  Orphan works can be defined as works in which copyright subsists but which do not have an identified author or creator. Unlike familial orphans, however, they can reacquire a parent if their creator is identified, such works being described as 'revenant works'. A large quantity of orphan works exists for which the prospects of reidentification are slim, however, and the Hargreaves Review pointed to the creative opportunities that would arise were such works to become available for use. Current copyright law prevents their exploitation because of the lack of legal sanction for their use from an identified or identifiable rights holder.[57] Archives can therefore be required to preserve works which they cannot actually use to recoup the costs of preservation. 20 to 30% of material in archives is estimated to be orphan material.[58] In evidence, the British Library went further, claiming that some "43% of books from 1870 to 2010 were orphan works" and arguing that the "economic benefits of mass digitisation are enormous."[59]

67.  Bodies representing rights holders, however, particularly those in the photographic sector such as Stop43, have argued vociferously against wide-ranging orphan works provisions on the basis that they would not comply with the three-step test, and in particular step three—unreasonable prejudice to the legitimate interests of the rights holder.[60]

68.  There were some radically different perspectives on how to resolve the tension between the rights of revenant orphan works owners and those wishing to exploit the relevant works. Arguing from a pragmatic approach to the scope of the legal remedies that should apply, Sir Robin Jacob told us:

I think we do need a reasonably good orphan work provision that says something along the lines of, "All right, you didn't look after it. You can't expect an injunction now and all you can have is reasonable compensation, and since you have basically abandoned it we are not going to give you a lot.[61]

69.  Not surprisingly, Stop 43 disagreed, arguing:

Most orphans are the result of illegal digital copies or scans of prints and postcards. [...] I think you will find that most rights holders have a pretty clear idea of where their property is; they do not know that illegal copies have been made. That is where I would dispute Sir Robin's opinion of what orphans are.[62]

We suspect that Stop43 has a point in terms of the underlying position on awareness and custodianship, in particular where photographs are concerned. Equally, we agree with Sir Robin's pragmatic approach to the application of legal remedies where there is proof that an owner failed to prevent loss of their work and/or that they would suffer no real harm in the absence of an injunction.

THE ISSUE OF MISIDENTIFYING WORKS AS "ORPHAN"

70.  The photographic industry has been particularly exercised about orphan works provisions for two reasons: first, the potential competition from a sudden release of previously unavailable photographic material; and secondly the ease with which ownership data (metadata) could be stripped away from a digital photograph to give it the appearance of being an orphan work, which could facilitate its illegitimate use.

71.  The Consultation on Copyright acknowledged the different circumstances that might apply to photographs:

The Government also recognises that photographs often lack any information about rights holders or about the photograph's age, original purpose, subject matter or country of origin.[63]

72.  However, Ed Quilty of the IPO explained how an orphan works registry could address concerns about works being wrongly designated as orphan:

Today, their photographs are often routinely infringed, metadata stripped off, etc and people sell them masquerading as orphan works on websites. There is very little they can do about it. At least if you had an orphan works registry, they would be able to go to the registry and if they could find a licence there for the use of the orphan works they could say to the person, "Why aren't you selling this in accordance with the regime we have devised?

One of the anxieties that I have heard expressed by photographers frequently seems to me to be based on the notion that as soon as we put this orphan works system in place there will be widespread and complete abuse and infringement of it. I do not think that is going to be the case. There will be some, but it should be controllable and we have to build the system to avoid it. [64]

73.  Ben White of the British Library told us why the material available in a registry need not itself present a threat:

You are not putting 50­megabyte images up on the web; you are putting up things that are a hundred times smaller, which pixelate if blown up.[65]

74.  The Government is proposing to define orphan works in a way that requires a diligent search to be conducted before a work is identified as 'orphan' and therefore available for use. The Consultation on Copyright set out various options on this,[66] and in evidence to us Ben White of the British Library neatly articulated a common-sense approach to defining due diligence:

I do not think there is a "one size fits all", but there is an understanding of what "diligent" and "reasonable" mean. What we are envisaging here is always third­party oversight of that process, whether that is by Government, of the library directly or, for example, the collecting society again being monitored by Government to see if they have actually done a diligent search.[67]

A NEW COPYRIGHT STATUTE

75.  It is important to note that it is already unlawful to remove metadata.[68] However, the fact that knowledge of removal and intention to make commercial gain are requirements to establish an offence might make prosecution difficult. Furthermore, the relevant statutory provisions are overlaid on a 24-year old Act of Parliament and demonstrate the lack of transparency consequent on a statute of that age that having been amended so significantly.[69] They do not lend themselves to ready application.

76.  The Hargreaves Review endorsed the submission made by the patent judges, which recommended a comprehensive review and redrafting of the Copyright Act 1988 on the basis that "it is not an overstatement to say that the period since [the 1988] Act has coincided with a revolution in the way that literary, artistic and musical and other works are created and exploited. Both technology and business models have changed radically during this period. It would therefore be surprising if the legislation was still framed in terms which are appropriate to this era. We do not think it is."[70]

77.  We did not hear any arguments in favour of retaining the UK's copyright statute in its current form. This legislation was enacted before computers became commonplace, and needs rewriting. We recommend that the Government put measures in place for bringing up to date and consolidating the UK's principal copyright statute and related legislation at the earliest opportunity notwithstanding the likely need for earlier measures to reflect the recommendations of the Hargreaves Review.

78.  The Enterprise and Regulatory Reform Bill paves the way for certain reforms to copyright including through secondary legislation. We understand that there is also a possibility of further measures requiring primary legislation being introduced in this parliamentary session, but that others might be delayed. We urge the Government to press ahead as soon as possible with measures to reform copyright where the case is made out for urgent change to support growth in the economy. We recommend that the Government set out a clear timetable for all such measures covering both primary and secondary legislation.

EU DRAFT DIRECTIVE

79.  Ed Quilty of the IPO explained what was happening on orphan works at EU level:

The European community is looking at an orphan works scheme. If that orphan works scheme does introduce a new exception, then we would be able to use that exception, provided it goes far enough. From the signs of what is happening at the moment in Brussels, the sort of exception that they may be using for orphan works may be quite narrow and restricted to cultural­only uses, which may mean it is not possible to use it beyond some fairly limited ways. It is an evolving picture at the moment; we have to wait and see how that all shakes out.[71]

80.  Stop 43 liked the approach taken by the draft Directive but had its own concept which it termed the National Cultural Archive:

We could envisage an online gallery, in which orphans could be presented simply for people to look at, in the way that you go and have a look at a painting on a wall in an art gallery, or indeed that painting on the wall in this room. I can sit here and look at it, but I cannot copy it, take it away or scribble on it. That is our concept of cultural use.[72]

INTELLECTUAL PROPERTY OFFICE PROPOSALS

81.  The Consultation on Copyright invited views on how broadly the proposed provisions should be expressed and canvassed the option of confining the proposed scheme to published and broadcast works.[73] It also mooted the idea of giving the Copyright Tribunal jurisdiction over authorising use, subject to increasing the tribunal's resources to allow it to meet the task.[74]

82.  Stop43 argued against intervention of that sort, suggesting that appropriate compensation required a face-to-face negotiation:

The commercial use of an orphan in which the rights holder is not present of course cannot compensate for that lack of primary negotiation.[75]

However, on balance the weight of evidence suggested that the Copyright Tribunal has a good reputation in similar areas already within its purview, and that a solution employing Copyright Tribunal might therefore be sensible.[76]

CONCLUSION

83.  We recognise that industry bodies such as those representing photographers have legitimate concerns on licensing of orphan works. On the other hand, the problem of stripping ownership data from photographs already exists. A properly run orphan works scheme has the capacity to improve matters by requiring due diligence searches and by pointing potential users to legitimate sources. Combined with sanctions (preferably strengthened ones) against stripping of data we believe that such a scheme has the potential to be workable and beneficial.

84.  We remain concerned, however, that there are a few places in which difficulties are being glossed over. This is illustrated by passages in the Consultation, referring to the permitted use of an orphan work by an authorising body:

What can a user of an orphan work do with the work once it has been authorised?

The use will be circumscribed by the authorising body. It will not interfere with any future uses that the revenant owner may make, even while they do not know of its orphan status (emphasis added).[77]

85.  This statement that there is no possibility of interference with the future wish of a revenant owner to use their work as they wish is presented without justification. We believe this might need reconsidering, and one way to address it might be to give the Copyright Tribunal discretion to refuse licences in instances where there might be particular harm to the revenant owner or potential (that is, yet to be identified) revenant owner.

86.  We support the development of an orphan works scheme provided that appropriate protection for rights holders is included. We agree that the Copyright Tribunal should have jurisdiction over licensing but we recommend that it, or an alternative body with appropriate powers, be given authority to block usage in instances of particular potential harm to rights holders or where monetary compensation might not suffice.

ORPHAN WORKS AND MORAL RIGHTS

87.  The concept of moral rights was outlined in paragraph 19. The Consultation on Copyright stated that there was no need to alter the UK's moral rights regime to accommodate an orphan works scheme.[78] However, Paul Ellis of Stop43 argued:

Under the CDPA, our moral rights are not automatic; they must be asserted. This gives rise to the situation in which someone wishing to use an orphaned work can assume that the author did not assert their moral rights. We need the law changed so that moral rights are automatic and unwaivable. Such rights are automatic and unwaivable in Germany and, notably, Germany has a thriving publishing sector. It seems not to be suffering from this.[79]

88.  We think there is a point that needs addressing here. When authors sign a contractual waiver they are not necessarily envisaging what might happen if their work later appears on an orphan works registry and they subsequently wish to re-identify themselves on that registry for purposes that might be entirely different from that envisaged by the waiver. In principle, contractual waiving of moral rights therefore should not conflict with an author's right to be identified on an orphan works registry.

89.  We recommend that evaluation of a potential orphan works registry include consideration of the need for author's rights of identification to persist over and against any waiver that has previously been made contractually. This might take the form of a presumed right of identification on the registry (notwithstanding any previous waiver) unless other factors apply such as the scope of the waiver itself.

The proposed Digital Copyright Exchange

90.  The Hargreaves Review focused strongly on recent failings in, for instance, the sphere of music commercialisation where changes in market dynamics have overtaken the industry and produced a collapse in value. The Review argued that although part of the solution lay with enforcement (to which we return below), there was an additional need for new models of copyright licensing and marketing. The Review noted that the technological and market challenges were not confined to the music industry but extended to newspaper publishing and book publishing, commenting further that:

Television, film and video games have suffered less disruption to date only because broadband speeds and earlier generations of mobile phones were not hospitable to large video files, but this too is rapidly changing, as the internet matures as an audio visual network.[80]

91.  The Review argued convincingly that there were problems not only with models of supply but also with the complexity of obtaining copyright clearances:

The BBC has said that it took nearly five years to assemble the rights necessary to launch its popular iPlayer service. Among a group of young technology SMEs the Review met at a meeting at TechHub, half claimed to have had difficulty licensing others' IP across all rights. One SME, providing on demand streaming of radio shows and DJ mixes, reported it took about nine months of lobbying music collecting societies to make any headway on licensing.[81]

92.  As a solution, Professor Hargreaves offered the concept of a Digital Copyright Exchange, which he compared to Amazon:

Where very large numbers of different merchants sell goods through an electronic trading system, where it is quick and easy to pay, and quick and easy to get delivery of the goods.[82]

93.  Ed Quilty of the IPO used the analogy of telephone directories with bodies such as the Performing Rights Society as the provider of one directory:

In a sense, what the DCE would do is first of all bring all these digital telephone directories together so they would be interlinked and you would have a better chance of finding the rights you want.[83]

94.  There have been three main criticisms of the Digital Copyright Exchange proposal, however:

  • That the potential benefits claimed by the Hargreaves Review were overstated;
  • That it might be unnecessarily bureaucratic or might replicate other structures wastefully; and
  • That if it were made compulsory it would contravene the Berne Convention and lose credibility. (Equally, there was a counter-argument that if there were no incentives to participate it could lose credibility in that way too.)

95.  On the first of these, that benefits have been overstated, Professor Hargreaves believed that if anything the opposite might be the case.[84] When asked about the potential benefits, the Minister and the IPO were equivocal, believing it was too early to say.[85] Ed Quilty saw the main potential benefit as a reduction in transactional costs:

The advantage of that is that you should not need a lawyer for every single transaction and every single rights holder. That would be the benefit of the DCE.[86]

96.  He stressed that the model need not be complex, universal and bureaucratic:

Some people, for example, assume that the exchange must mean one single, vast database that spans the globe. There is no reason why it necessarily should be like that; it could be an interlinking of databases. It might even just be a protocol that regulates the way the databases interact.[87]

97.  Professor Hargreaves likewise did not believe that costs should be excessive:

There is no reason why this should be frighteningly expensive. This is not setting up the NHS patient records system; this is about securing agreement and technical capability of interoperability between systems that are currently not interoperable.[88]

98.  There was dispute as to whether there was market failure from existing provision, with Creative Coalition Campaign citing a recent example to support its position that the situation is not broken:

We worked recently with Microsoft Networks when they launched their own video­on­demand service. It was not about licensing. What they wanted to do was come up with a pro forma standard licence to reduce transaction costs, which we did with them and that was made available to every single independent production company in the UK to sell their works at minimal transaction cost to MSN.[89]

99.  But Jim Killock of Open Rights Group argued:

The market is not entirely functional and that is why the Digital Copyright Exchange has been suggested. There is absolutely no question but that content is being licensed; the question is whether it is being licensed sufficiently and quickly enough […].[90]

100.  Pete Wishart summed up some of the concerns on potential compulsion to participate:

I think it is right that we do have a look at what is going on, in terms of what already exists. If the Digital Copyright Exchange is to be successful, a) it has to be voluntary, b) it has to be business­led or interest­led, and c) we have to see what is going on already. The first step going towards creating that Digital Copyright Exchange is to have a proper audit of all the databases that exist across all sectors to see what is actually required in order to try to deliver a proper Digital Copyright Exchange.[91]

101.  The Minister and the Department confirmed that participation in the DCE would not be compulsory.[92]As Ed Quilty put it:

It is something that people could use if they want to, in the same way as if you wanted to put your works on Amazon to sell them or if you wanted to sell them through a distributor, you are not forced to do it, but you can use it as a mechanism; that is how we should look at it.[93]

102.  Despite its misgivings about other aspects of Hargreaves Review, Stop43 was enthusiastic about the DCE:

To overcome the problem of digital copyright infringement, which is of course a problem with machines, the solution must in large part rely on machines. That implies a rights registry. This is of course where we are all in agreement.[94]

103.  This might well have been because, as was pointed out by the IPO, the DCE could operate as a very effective part of the due diligence checks for orphan works.[95] Ed Quilty told us:

It may be that we have that happy coincidence of legal progress or change in this area accompanied by the technical ability to do something about it. If, for example, we had an orphan works registry, then every photograph and any other work could be put up on the registry and it would enable people who were photographers, for example, to look at what is there and see if they think their stuff is there even if it had been stripped of metadata, which it should not be. It would also mean that you could use technical abilities to find the stuff.[96]

OVERVIEW AND STATUS

104.  The Digital Copyright Exchange was among the proposals which Professor Hargreaves envisaged as particularly crucial:

The Review's judgment is that the Government has a severely time limited opportunity to bring about in the UK the best copyright licensing system in the world. To achieve this will require firm, even inspirational leadership, given the high commercial stakes for a large number of competing firms. The prize is to build on the UK's current competitive advantage in creative content to become a leader in licensing services for global content markets; in short to make the UK the best place in the world to do business in digital content. It is not fanciful to suggest that such a development would be of comparable importance over time to the UK's position as the leading service support centre in the European time zone in financial services.[97] (emphasis added)

105.  On 22 November 2011, the Department announced the appointment of Richard Hooper, former Deputy Chairman of Ofcom, to lead on the digital copyright exchange project. In January 2012, a feasibility study was launched to consider options and recommendations "for a workable licensing solution by 2012 summer parliamentary recess".[98] There was a call for evidence by 10 February 2012 on two questions: whether respondents agreed with the Hargreaves hypothesis that the current copyright licensing system was fit for purpose, and whether respondents agreed with the proposed definitions including market definitions. Richard Hooper has stressed the need for hard evidence. An interim report has been published following the collection of evidence. [99] It remains the expectation that a further phase will be completed before the summer parliamentary recess.

106.  On the claimed potential benefits of the DCE, it will be important for Richard Hooper's review to consider the potential costs and benefits of new copyright licensing models to a greater extent than was possible in the time available to Professor Hargreaves. Any new systems need to be demonstrably financially sustainable in order to achieve buy-in from the relevant industries.

107.  The principal incentive to participate in a digital copyright exchange should lie in the scope for greater commercialisation of copyright works together with the creative opportunities that an exchange may offer. It might also be that some legal incentive is appropriate in the form of greater availability of legal remedies to those participating in the network. This may require negotiation to fit within the constraints of Berne and may indeed at a future stage require participation of foreign partners. However, Sir Robin Jacob, a former Court of Appeal of judge with decades of experience in IP, was among those who believed that incentives to participation might validly include restricting injunctive relief to participants in a scheme, with others receiving monetary remedies.[100] This might be an area where again an appropriately resourced Copyright Tribunal could intervene in cases where real harm from lack of an injunction is demonstrable.

108.  We can see many potential benefits in principle to a digital copyright exchange provided that it makes best use of technology to avoid bureaucracy and the replication of existing systems. We conclude that Richard Hooper's review of copyright licensing options and a possible digital copyright exchange is an important stage in policy development and it is critical for that review to examine the costs and benefits of the possible models fully so that policy proposals are credible.

Collecting societies

109.  Collecting societies act as brokers between users of copyright material and rights owners, collecting standard royalty payments which permit the right to use, for example, recorded music in shops. This system has the benefit of simplicity for the user and a guaranteed royalty stream for rights holders. As the controllers licensing of vast collections of works, however, the societies are in a powerful position.

110.  The UK is one of only three EU member states that do not regulate royalty collecting societies; the others being Ireland and Poland. All other member states have a system of regulation by licence, codes of practice or ongoing scrutiny. Evidence to the Hargreaves Review revealed issues regarding fair treatment and lack of transparency on costs.[101] Open Rights Group summarised some of these grievances:

We were talking earlier about the rights of artists and the importance of artists to this debate. A lot of artists feel they do not get enough information about how their royalties are calculated, what percentage of the fees that they get has been deducted for administration and so on.[102]

111.  In contrast, Mr Wishart had no complaints about the societies:

I have to say that I have never had one issue when it has come to understanding and appreciating where these royalty payments come from. If I ever have any difficulty, it is very easy to get in touch with PRS for Music.[103]

112.  The societies have accepted need for change, however. The PRS acknowledged that its monopoly position produced obligations:

We are deeply concerned and respectful of the fact that, in that part of our business, we are a monopoly. We are very concerned to be efficient, fair and transparent and, frankly, we welcome the oversight by the Copyright Tribunal.[104]

113.  The Consultation on Copyright pointed to the need for collecting societies to retain credibility on regulation if they were to be involved in making the Digital Copyright Exchange a success, setting out a plan of action with possible legislative action as an incentive toward better compliance:

The Government has therefore proposed that collecting societies self-regulate by way of voluntary codes for the time being, with an Ombudsman to regulate the codes and the prospect of legislative action as a long stop. The Government has proposed an implementation timescale for the voluntary codes of a year following publication.

114.  We agree that statutory regulation of collecting societies should be a last resort. The collecting societies have accepted the need for change. We support the proposal to introduce regulation by way of a voluntary code backed up by the establishment of an ombudsman.


14   New facts with a useful application might well, however, be the basis of a valid patent application Back

15   In relation to the Database Directive, the Term (i.e. copyright duration) Directive , and the Infosoc Directive Back

16   By the Copyright and Related Rights Regulations 2003 Back

17   See Glossary in Annex Back

18   Infosoc Directive, Article 5 Back

19   These include an exception for acts done for the purposes of parliamentary proceedings; section 45 CDPA 1988 Back

20   [1988] AC 1013 Back

21   Paragraph 7.24 Back

22   Paragraph 5.10 Back

23   Q 77 Back

24   Infosoc Directive Article 5(b) Back

25   Q 210 [Wishart] Back

26   Ibid. [Killock] Back

27   Ibid. [Ashcroft] Back

28   Consultation on Copyright, paragraph 7.39ff Back

29   Seventh Report of 2010-12, HC 735-I, paragraph 41 Back

30   Third Report of 2010-12, HC 561-1, paragraph 123. Back

31   www.booooooom.com/2011/10/04/remake-submissions/; 'Composition with red, blue and yellow' by Katie Jackson based on the Mondrian work of the same name. Back

32   Guardian, 17 January 2012, 'The art of the remake' Back

33   Mr Wishart agreed, saying: "I think there is nothing wrong at all with building on the works of others. I remember sitting with my old S-500 Akai sampler doing that very same thing a number of years ago." See Q200 [Wishart] Back

34   Ev w14; Ev w168 Back

35   Consultation on Copyright, paragraph 7.105 Back

36   CDPA section 80(2) Back

37   [2003] EWHC 1724 (Ch) Back

38   Q 202 Back

39   Paragraph 7.102 Back

40   Paragraph 7.121 Back

41   Paragraph 7.84 Back

42   Article 5(3)(a) Back

43   Paragraph 5.24 Back

44   Paragraph 7.97 Back

45   Paragraph 5.24 Back

46   Q 185 Back

47   Q 185 Back

48   Q 250 [Quilty] Back

49   Ev w143 Back

50   Ev w142 Back

51   Ev 86 Back

52   Ev 88 Back

53   Paragraph 7.93 Back

54   Ev 88 Back

55   www.bis.gov.uk/news/speeches/david-willetts-public-access-to-research?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+bis-speeches+%28BIS+Speeches%29 Back

56   Ibid. Back

57   There is a limited exception for copies of performances sanctioned by the Copyright Tribunal; section 190 CDPA. Back

58   Consultation on Copyright, paragraph 4.5 Back

59   Q 161 [White] Back

60   Ev 95 Back

61   Q 117 Back

62   Q 159 Back

63   Consultation on Copyright, paragraph 4.15 Back

64   Q 245 Back

65   Q 176 [White] Back

66   Paragraphs 4.36ff Back

67   Q 172 Back

68   See Consultation on Copyright, paragraph 4.48; section 296ZG, CDPA 1988 Back

69   We heard strong support for a new statute: see for example Ev 72 and Ev w97 Back

70   Report paragraph 10.26; Patents Judges response, paragraph 4 Back

71   Q 240 Back

72   Q 168 Back

73   Consultation question 7 Back

74   Paragraph 4.34 Back

75   Q 164 Back

76   Qq 97, 98, 118, 120; 207 [Ashcroft] Back

77   Consultation on Copyright, paragraphs 4.52-4.54 Back

78   Paragraph 4.51 Back

79   Q 177 Back

80   Review, paragraph 4.14 Back

81   Review, paragraph 4.17 Back

82   Q 15 Back

83   Q 231 Back

84   Q 20 Back

85   Q 233 Back

86   Q 231 Back

87   Q 236 Back

88   Q 24 Back

89   Q 205 [McVay] Back

90   Q 205 [Killock] Back

91   Q 205 Back

92   Q 235 Back

93   Q 238 Back

94   Q 168 Back

95   Q 237 Back

96   Q 245 Back

97   Paragraph 4.29 Back

98   www.ipo.gov.uk/hargreaves-copyright-dce Back

99   www.ipo.gov.uk/dce-report-phase1.pdf Back

100   Q 101 Back

101   Hargreaves Review, paragraphs 4.42, 4.44ff, 10.6 Back

102   Q 207 [Killock] Back

103   Q 208 [Wishart] Back

104   Q 207 [Ashcroft] Back


 
previous page contents next page


© Parliamentary copyright 2012
Prepared 27 June 2012