Appendix: Government Response
Introduction
The Business, Innovation and Skills Select Committee's
inquiry into this important area of policy has been a timely and
valuable complement to public discussion, and to policy-making.
The environment in which Intellectual Property of
all types operates is changing fast. The Government is determined
to ensure that the framework can adapt appropriately, so that
it can continue to deliver its core aims in this changing environment,
and in relation to developing technologies. We warmly welcome
the Committee's interest in Intellectual Property issues, and
look forward to its continuation.
Below are the conclusions and recommendations of
the Committee, and specific responses by Government.
Evidence-based policy
(Recommendation 1) We welcome the Hargreaves Review's
recommendation of a more evidence-based approach to intellectual
property policy development. Although we agree that certain estimates
used to support recommendations in the Hargreaves Review might
be criticised as optimistic, the Review itself acknowledged that
further economic analysis would be necessary. We welcome the Intellectual
Property Office's reassurances that more detailed analysis is
on-going and trust that it will pursue that work and act on external
criticism of data and methodologies. We also agree that the involvement
of the Regulatory Policy Committee as an independent auditor of
economic analysis is a sensible policy development. (Paragraph
12)
The Government is committed to delivering high quality,
informed and influential policy on Intellectual Property. In pursuance
of this the Government has significantly strengthened the analytical
capability of the Intellectual Property Office (IPO).
The Office will continue to develop policy in a transparent
and balanced way based on evidence and with a range of stakeholders.
The forward research programme is discussed with stakeholders,
and all research projects are subject to peer review. Best practice
in the conduct of research is drawn into new projects where appropriate.
The Government will continue to develop economic
analysis in relation to the Hargreaves recommendations and will
continue to work with the Regulatory Policy Committee, as appropriate
in the course of further policy development and implementation.
Format-shifting
(Recommendation 2) 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. (Paragraph 36)
The Government welcomes the Committee's support for
seeking a solution on private copying (including format-shifting),
and notes the Committee's initial view that a solution for personal
use or use within the personal sphere may be appropriate. The
Government will carefully consider the Committee's recommendation
to take account of evidence relating to actual lost sales versus
opportunities for further revenue. Any potential exception would
be sufficiently narrow to cause only minimal harm to rights holders,
thus not requiring a system of compensation such as a levy.
Parody
(Recommendation 3) 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. (Paragraph 42)
(Recommendation 4) 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. (Paragraph 43)
(Recommendation 5) 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. (Paragraph 47)
The Government notes the Committee's observations
and will continue to explore those issues. The Government considers
that much of the protection of the kind the Committee suggests
would be implicit in a fair dealing exception, underpinned by
an unchanged moral rights framework.
Content mining
(Recommendation 6) 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. (Paragraph 65)
The Government welcomes the Committee's recognition
of the value of this technology, and of the need to support it
further, while minimising risks. The Government is determined
to develop a framework which gives the best support to research
over the long term, which includes maintaining successful and
secure research publishing. The Government will continue to consider
this issue and the Committee's recommendations on it.
Revision of the CDPA, and the timetable for implementation
of Hargreaves
(Recommendation 7) 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. (Paragraph 77)
(Recommendation 8) 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.
(Paragraph 78)
The Government notes the Committee's views on the
Copyright, Designs and Patents Act, and will consider this issue
further.
The Government agrees that new technologies continue
to offer new challenges to the legal framework, and the effective
operation of it. However, we do not consider that a full and comprehensive
revision of the Act could be delivered easily or swiftly. The
review of Company Law took ten years. Inevitably, this is a moving
target. EU policy continues to develop, as do international initiatives.
There are serious questions about how much new consolidation can
or should be done at national level, in the context of that parallel
activity. Any revision would also be the subject of very considerable
pressure from different stakeholders concerned to shape the law
according to their own vision, both during the drafting process
and during the legislative process, and would need considerable
time and space in the legislative programme.
The Government fully recognises the Committee's concerns,
but believes that the immediate priority is to act where change
is needed now. Following the Hargreaves Review, the Government
is proposing a considerable group of measures for implementation.
Furthermore, at Budget 2011 the Government committed to "no
further broad reviews of the IP rights regime during the lifetime
of this Parliament".[1]
We will consider further, and we will discuss in more detail with
the legal experts.
On the timetable for implementation, the Government
welcomes the Committee's recommendation to press ahead as soon
as possible with measures to reform copyright where the case is
made out for urgent change. For Hargreaves measures in the current
Enterprise and Regulatory Reform Bill, subject to Parliament's
approval for the Bill, the Government is continuing its productive
discussions with a range of stakeholders on the detailed operation
of the policies and envisages consultation on the draft secondary
legislation as we move from 2012 to 2013. Schemes would then be
introduced by secondary legislation on or after the October 2013
common commencement date.
The timetable for future work on the Digital Copyright
Exchange will depend on the recommendations of Richard Hooper's
report, and how those are taken forward by business, users and
potentially also the Government.
On other Hargreaves copyright measures, the Government
has set out its intention to publish its response to consultation
later this year, and will outline a timetable for implementing
measures taken forward at that stage.
Orphan works
(Recommendation 9) 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. (Paragraph
86)
(Recommendation 10) 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. (Paragraph
89)
On orphan works, the Government welcomes the Committee's
support for the development of an orphan works scheme provided
that appropriate protection for rights holders is included. The
Government has proposed powers for the Secretary of State to implement
an orphan works scheme subject to certain safeguards, including
mandatory diligent searches with verification by an independent
authorising body, so self-certification will not be possible.
Remuneration would need to be set aside at a rate appropriate
to the type of work and type of use. These safeguards and further
operational details will be set out in secondary legislation.
The Government will consider the Committee's observations and
recommendations very carefully.
With regard to the powers of the authorising body,
the Government is considering the scope of the scheme and whether
the authorising body should, for example, restrict any adaptions
that might be considered derogatory. It may, however, be difficult
in practice in some circumstances to ascertain when instances
of particular harm might occur or where monetary compensation
might not suffice.
With regard to the authors' right of identification,
this is a moral right. Under the proposed scheme, the assumption
would be that moral rights had not been waived but had, in fact,
been asserted, because in many cases it would not be known whether
this was the case or not. Therefore, any licensed use of the orphan
work should carry a credit where the name of the creator is known.
This would also be an appropriate piece of information to put
on the orphan works register to help with identification, but
there will also be many occasions when the names of creators/rights
holders is not known. In those cases the licensed use of the work
would carry information to say that it has been licensed as an
orphan work and give details of how to claim ownership.
The proposed Digital Copyright Exchange
(Recommendation 11) 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.
(Paragraph 108)
The Government welcomes the Committee's support for
this. We look forward to Mr Hooper's report.
Collecting societies
(Recommendation 12) 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. (Paragraph 114)
The Government welcomes the Committee's agreement
that copyright collecting societies should adopt codes of conduct.
Following the recent consultation, we will be publishing minimum
standards on which these codes should be based. In addition, we
will legislate for a reserve power to put in place a statutory
code for a collecting society which fails to self-regulate.
The Government agrees that statutory regulation should
be a last resort. Collecting societies will be given every chance
to self regulate. The reserve power will only be used where this
fails. However, it was clear in evidence from the Hargreaves Review
and from the Government's subsequent consultation that users of
collecting societies, many of whom are small businesses, feel
that codes need to be enforceable to provide real protection.
The reserve power provides that reassurance.
Designs
(Recommendation 13) We welcome the review of UK
design law being undertaken by the Intellectual Property Office.
The present complexity of the design protection system in the
UK might be acting as a disincentive to use and hence as a brake
on innovation. If a revision of the law is called for by the industry,
the Government should press forward with proposals for implementing
a new and simplified structure of design rights following that
review. (Paragraph 119)
The Government welcomes the Select Committee's support
for the ongoing work on the reform of the design legal framework.
We note the Committee's suggestion for a simplified
structure for design rights. Despite the complexity of the current
system, a completely new structure for design rights does not
seem to be what users want. According to responses to the 'call
for evidence' both registered and unregistered types of UK design
right have a place in protecting the work of UK designers. Currently
the Government does not have a decided position on the way forward,
but in view of these responses, the proposed consultation focuses
on improving the way the existing rights work. The Government
will be engaging with as wide a group of stakeholders as possible,
during further policy development.
Patent thickets
(Recommendation 14) Patent thickets are clearly
an area that requires in-depth analysis. We therefore applaud
the level of detail as well as the alacrity with which the IPO
approached its initial study. Further work needs to be done to
establish whether a proportion of increased patent filings has
derived from the wish to support negotiating strategies. We look
forward to hearing more on this from the further studies being
conducted on behalf of the IPO. (Paragraph 127)
The Government welcomes the Committee's support for
work to explore the scale and prevalence of patent thickets, including
whether they present a particular problem to small to medium enterprises
(SMEs) seeking to enter markets. The Government will consider
the Committee's recommendations in the course of further policy
development.
The first part of this work, a report on patent thickets,
has been published on the IPO website. The Economics, Research
and Evidence team at the IPO have initiated a second section of
work on thickets, including research to provide further insight
into the potential barriers to entry for SMEs and points of entry
and exit into and out of the technology space. It is expected
that the outcomes of this research will be delivered in November
2012. Once the second report has been issued, and the evidence
reviewed, a policy decision will be made on the need for and form
of any future action.
In parallel, the Patent Informatics Team of the IPO
will develop the thicket detection techniques over the next 12
months to allow the IPO to continue to provide further value-added
services. The scope for further work on the increase in patent
filings which may be linked to negotiating strategies will be
considered, but lies beyond the current remit of that project.
The proposed unified patent and patent court system
(Recommendation 15) It is clear to us and the
European Scrutiny Committee that the Government's current negotiation
strategy for a Unified Patents Court is not fit for purpose. As
a matter of urgency the Government needs to take a firmer stand
for UK interests in the UPC negotiations than was manifested in
the recent evidence session held by the European Scrutiny Committee.
In particular, it needs to set out clearly defined options for
outcomes acceptable to the UK and a robust strategy on how to
translate those options to an acceptable overall solution. Such
a strategy has to clearly state the Government's position on avoiding
European Court of Justice jurisdiction, avoiding the risk of remote
and costly litigation for UK business, and neutralising or mitigating
the effects of any bifurcation regime. Furthermore, that strategy
should include a cogent argument for locating the central court
in London and not one that relies upon hope and aspiration. Anything
less runs the risk of undermining the competitiveness of British
industry. (Paragraph 148)
(Recommendation 20) We have major concerns about
the proposed Unified Patents Court treaty. The treaty has the
potential to offer great benefits to the UK but only if UK interests
are protected. The Government's current approach does not provide
a robust defence of those interests. We believe that the Government
needs to reconsider its strategy and the capability of the negotiation
team as a matter of urgency. (Paragraph 170)
The Government notes the Committee's comments on
this issue. The Government is committed to the creation of a Europe-wide
patent system that brings real benefits for businesses, consumers
and the economy. We have listened to our stakeholders, lobbied
hard and secured some important decisions in the UK's favour.
The agreement achieved in the European Council represents a major
success for the UK and for businesses. The Government will continue
to work hard to ensure the detailed arrangements reflect the needs
of UK users.
Enforcement
(Recommendation 16) We applaud the work that is
being done by way of informal approaches to intermediaries to
discourage pirated content. Furthermore, the recent April 2012
decision of the High Court to insist that internet service providers
block file-sharing by pirated content sharing sites is to be welcomed.
We encourage the Government to press forward with bringing sections
3 to 16 of the Digital Economy Act fully into force, subject to
proper review after implementation. (Paragraph 160)
The Government welcomes the Committee's recognition
of the importance of enforcement and the recent achievements of
government is this field, in particular in addressing online infringement.
The Government agrees that the High Court's decision
to require internet service providers to block file-sharing by
pirated content sharing sites is welcome, as is the copyright
owners' action in utilising the protections provided under existing
legislation. The Government also welcomes the Committee's endorsement
of our approach to encouraging intermediate content providers
to cooperate with copyright owners in making illegal sites less
financially rewarding in relation to advertising and other revenue
streams.
The Government will continue with its approach to
these issues, and is constantly building on its links with both
rights holders, content providers, ISPs and others.
The Government intends to continue implementing the
online infringement of copyright provisions in the Digital Economy
Act as the Committee recommends. The Secretary of State for Culture,
Media and Sport laid the draft Sharing of Costs Statutory Instrument
in Parliament on Tuesday 26 June. On the same day Ofcom published
the Initial Obligations Code and started a one month consultation
under s.403 of the Communications Act 2003 as well as consulting
over a 12 week period on the implementation of the Sharing of
Costs Statutory Instrument. Government still expects the first
notifications to be sent under the system in the first quarter
of 2014, and for this to make a significant impact on unlawful
peer-to-peer file-sharing.
In addition to this activity in online infringement;
the Government is making significant and ongoing changes to the
Patents County Court which will dramatically improve access to
justice for SMEs wanting to protect their IP rights. These changes
have reduced costs and streamlined the process. The IPO also continues
to coordinate the IP Crime Group, which brings together government,
industry and enforcement agencies to identify and disseminate
best practice, co-ordinate enforcement activities and raise awareness
of IP crime.
Advice for SMEs
(Recommendation 17) We are impressed with the
range of solutions that the Intellectual Property Office has developed
to address SME needs in the area of intellectual property. This
is an important area to address to support growth in the economy
and we recommend that in its Response to this Report the Government
set out in detail its commitment to this service in terms of money
and resources. (Paragraph 167)
The Government welcomes the Committee's positive
appraisal of plans to address SME needs. Ensuring that these businesses,
which make up 99% of UK enterprises and nearly 60% of UK employment,
can maximise the value of their intellectual property assets is
key to economic growth. We are continuing our discussion of the
proposals in our paper 'From Ideas to Growth' document with businesses,
their representative organisations, advisory partners and others.
Conclusion
(Recommendation 18) A considerable amount of high-quality
work on policy development has been undertaken in the year since
the Hargreaves Review. It will be important to maintain that momentum
alongside the more rigorous approach to policy formation that
Hargreaves recommended. Conclusions are near to formation in many
areas, and the Government should press ahead with measures to
implement new policy in those areas as soon as possible. We recommend
that the Department act swiftly to bring in legislation to that
effect. (Paragraph 168)
(Recommendation 19) While we recognise that the
Government is undertaking a major reform in a complex area, changes
are both necessary and urgent. We therefore will expect the Government
to set out its road-map for implementation, including a timetable
for legislative action, in its Response to our Report. (Paragraph
169)
The Government is grateful for the Committee's appreciation
of the work done so far.
The Government is now proceeding with legislation
to implement the proposals on orphan works, extended collective
licensing, and the regulation of collecting societies, in the
Enterprise and Regulatory Reform Bill now before Parliament. The
ERR Bill has just completed its Commons Committee stage, and is
expected to reach Report and Third reading in the autumn.
The Government will set out plans in relation to
the other proposals deriving from the Hargreaves review, including
copyright exceptions as soon as possible. We have summarised the
next steps on patent thickets, designs and online enforcement
above.
1 The Plan for Growth, HM Treasury/BIS, March 2011,
p.100, http://cdn.hm-treasury.gov.uk/2011budget_growth.pdf Back
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