Intellectual Property Bill [Lords]
The Committee consisted of the following Members:
Georgina Holmes-Skelton, Committee Clerk
† attended the Committee
(iii) an assessment of the degree of online copyright infringement and the extent to which identified search engines and other internet services facilitate this, and’.
‘(2) The Secretary of State must make a statement to both Houses of Parliament detailing the findings of the report referred to in subsection (1) and what actions he intends to take as result of any recommendations of the report.’.
‘(1) The Secretary of State will, within three months of this Act coming into force, report to both Houses of Parliament on proposals that will have the purpose of ensuring technology companies hinder access via the internet to copyright infringing material.’.
Mr Wright: It is excellent to see you in the Chair, Mr Turner; I look forward to your presiding over our proceedings. I am sure Mr Havard mentioned that we made swift progress this morning, as well as how grumpy the Minister was. I think we will slow down for our consideration of clause 21, not because we have had a good lunch or because of your chairmanship skills, but because the clause is so important. It is about what will be included in and what could be added to the annual report from the Intellectual Property Office.
The clause requires the Secretary of State to present to Parliament each year a report that sets out certain requirements, such as the activities of the IPO to promote innovation and economic growth in the UK, as well as how
I have sympathy with that; it is important to be flexible. However, the “broad outline” of the report will include things such as information on legislative changes and pre-legislative work; information on cross-border co-operation and international negotiations; policy development work undertaken to address challenges with the intellectual property system; main outputs of the IPO’s economic research programme and how they related to innovation and growth; and an assessment of the IPO’s activities that support business and raise awareness of the importance of protecting IP. Within that framework and the provisions of the clause, we believe that other items could be considered, and amendments 34, 35 and 36 and new clause 3 would help to achieve that.
Amendment 34 would include consideration of job creation in the IPO report. It was mentioned on Second Reading how important the creative industries are, providing 1.5 million jobs, 10% of the economy, and more than £36 billion of gross value added. However, as I think I mentioned on Second Reading, it would be entirely wrong to state that IP is the preserve only of specific creative industries such as music and broadcasting. Our value as an economy—our arguably unique value, or second perhaps only to the US—is in the difficult-to-define juxtaposition between creativity and innovation and the impact on production and manufacturing. The fact that we have a strong creative industries sector combined with a strong science and research base and world-beating manufacturing sectors, including automotive, construction, aerospace and pharmaceutical, means that our economic model and future prosperity is very much dependent upon IP.
The big question for Governments in the 21st century, especially in western economies dealing with the aftermath of 2008, is: what sort of economic model do we want to pursue? Do we want to compete on the basis of low skills, low wages and poor employment protection—is that how we will consider ourselves to be economically competitive in the modern world? Or do we want a highly skilled, highly paid, productive and innovative work force, producing high-value products that the rest of the world will pay a premium to buy? In that context, how IP drives forward job creation is an essential consideration, and on that basis it seems reasonable that job creation should be explicitly included in the Bill in clause 21. Innovation and economic growth, which are in the Bill, might not necessarily translate into job creation, so the IPO should consider and report on that too. That is the purpose behind amendment 34: to include job creation as part of the contribution made by the IPO’s activities.
Amendment 35 was prompted by a recommendation from the excellent report on the creative industries from the Culture, Media and Sport Committee, “Supporting the creative economy”. I am pleased and somewhat apprehensive that we have in this Committee several members of the Select Committee who are knowledgeable and expert, and I hope they will expand, particularly in consideration of the amendments, on what the Committee was told and what it found.
“The measures on the enforcement of copyright need to be backed up by an Intellectual Property Office that is properly resourced and focused on defending the rights of UK creators.
With digitisation, mass infringement or piracy has become widespread. The music industry has probably been the most affected by this development over the past 20 years or so with the rise of Napster and other online facilities. At the moment, that industry is playing catch-up. We have seen a lot of disruption and a lot of traditional record labels fall by the wayside as a result of what is happening with the internet and downloading, but the really interesting development is that legitimate and innovative business models are being established. There is a tension that I think it will be interesting for this Committee to explore. If consumers are able to listen to music for free, how can artists make enough money to create new product? How can consumers be given a good deal—I note that the Consumer Rights Bill is having its Second Reading this afternoon—while ensuring that the creators are rewarded for their work? What is the appropriate balance between creative industries and technology companies that distribute that content?
Physical sales of CDs are in decline, although I understand that vinyl is making a comeback, but what is interesting is that digital downloads are also on the wane. Digital subscription services such as Spotify and Deezer use a business model that is being developed to give consumers access to a vast catalogue of music for about £10 a month. That shows that legitimate and innovative business models are being produced and that, crucially, consumers want to buy legitimate product that does not infringe copyright if it is easy, convenient and cheap for them to do so.
I have mentioned music, because I am a music lover, but I also like video games, and that is another great British industry that is growing and should be nurtured. Online piracy in video games is rife. Sports Interactive makes the “Football Manager” series, of which the most recent version was downloaded illegally 10 times for every legitimate copy sold: 8.5 million individuals illegally downloaded “Football Manager 2013”. How much income is thereby lost to the industry, which in turn will restrict product development?
Jim Dowd (Lewisham West and Penge) (Lab): I do not know if my hon. Friend is going to come to this, but the other aspect of illegal downloading is that it increases the costs for those who buy the product legitimately. Clearly, the rights owner needs to recover the loss from so much of it being traded illegally.
Mr Wright: My hon. Friend makes an important point. People often say that this is a victimless crime, in the same way as stealing from a supermarket might be a victimless crime, but we all pay for it as a society. Supermarkets mitigate the risk of shoplifting by increasing prices. This is no different as an economic model. That point is at the heart of this amendment. To what extent is widespread infringement and online theft facilitated by search engines? Should the IPO know and what is the cost to the industry and to our competitive advantage as a result?
I was talking about the video games industry. Like music, the industry is adopting new business models like free-to-play and in-game purchases. Equally, we
should be included. As the basis for amendment 35, I have included the actual wording of the recommendation from the Select Committee. I thought the report was excellent and I hope the Minister is amenable to such a request.
On a similar theme, new clause 3 proposes that within three months of the Act coming into force, the Secretary of State will set out to both Houses firm proposals on how the Government plan to take action to ensure that technology companies hinder access to infringing material. Again, my amendment was prompted by the sterling work carried out by the Select Committee. I was struck by the eloquence and frankly direct nature of the language proposed by the Select Committee in its report. It said this:
“We strongly condemn the failure of Google, notable among technology companies, to provide an adequate response to creative industry requests to prevent its search engine directing consumers to copyright-infringing websites … on the flimsy grounds that some operate under the cover of hosting some legal content. The continuing promotion by search engines of illegal content on the internet is unacceptable. So far, their”—
Amendment 35 would ensure that the IPO actively looks at this matter on an ongoing basis as part of its annual reporting procedure, and new clause 3 would prompt the Government to bring to Parliament within three months firm plans to deal with this issue.
Finally in this group, amendment 36 would ensure that the Secretary of State would act on any findings and recommendations made in the IPO report. Under the amendment, the Secretary of State must make a statement to Parliament setting out how he intends to take forward—or otherwise—the recommendations made. This would allow Parliament the opportunity to scrutinise the plans, it would provide greater parliamentary accountability, and it would help push the issue of intellectual property further up the agenda, where it rightly belongs.
It may well be that the commitment is already implicit in clause 21, given the specific requirements of the clause, but I would not mind if the Minister made that clear, ensuring that the Secretary of State will act upon any recommendations and that this will be included in the report. I am interested in what the Minister and others will say on this matter. This is a big issue which is affecting the competitive position of innovative UK firms and it must be addressed swiftly. I hope the Minister is amenable to our suggestions.
Mr Gerry Sutcliffe (Bradford South) (Lab): It is a great pleasure to serve under your chairmanship, Mr Turner. I am grateful to my hon. Friend the Member for Hartlepool for mentioning the work of the Select Committee. It is, of course, made up of Members from both sides of the House. My hon. Friend was quite right to say that ours was a strong report on the impact that the creative industries have on our economy. I think I mentioned in the report and on Second Reading the importance of the creative industries to constituencies such as mine, where we have lost the manufacturing base but are finding new jobs through the creative industries.
I was heartened on Second Reading by the Minister’s response to the idea of reporting. Not only could we hear the good news about the positive things that have happened, but perhaps we could hear some of the bad news, and some of the problems that bodies might face. I mentioned the important role that trading standards play, and while it is not specifically included in the clause or amendments, perhaps before Report stage we can look at which additional bodies could give support to the IPO report.
The need for training came out strongly on Second Reading, and the hon. Member for Hove has alluded to it. Perhaps there ought to be a report back about the prospects and the promotion of training as part of the development of IP, for the reason that my hon. Friend set out: lots of businesses and companies still do not know the need or what is taking place. I know that roadshows will help in that, but maybe we can put training in there as well.
Let me turn to search engines, on which the Select Committee took a great amount of evidence. The Under-Secretary of State for Culture, Media and Sport, the hon. Member for Wantage (Mr Vaizey), once said that Google had more chance of seeing the Prime Minister than he did. I think he now regrets saying that, because we remind him of it every time he appears before us. He was making the point also made by the hon. Member for Perth and North Perthshire, that Google has some work to do here. It is not good enough to keep giving us excuses about why they do not pursue illegal sites. This is an emerging problem, which perhaps we must tackle elsewhere.
At a surgery on Friday, a constituent came forward who had been charged an extra £50 to buy a driving licence. The first driving licence site which she saw on the internet was not an illegal site—although it was not the Government site—but it offered to get driving licences for a fee of £50. Whether on the Consumer Rights Bill or elsewhere, we need to have a discussion
I welcome the clause and the amendments that my hon. Friend the Member for Hartlepool tabled. I also welcome the Minister’s response on Second Reading. Hopefully he will be equally positive today on the matters that we raise, because we do so to strengthen and support the Bill, and to help ensure that people understand intellectual property and the issues around it.
I very much support what has been included in clause 21. We were all relatively surprised when we saw the clause in the Bill, particularly given the IPO’s obligation and responsibility to report in statute. That is a very welcome development. Like the hon. Member for Hartlepool, we should look at this as a real opportunity to examine the IPO and see how it works, to ensure that, when it reports to us in Parliament, we get the fullest and most transparent report possible.
We need the opportunity to examine to the nth detail every role the IPO plays in increasing its work and ensuring that we get innovation growth, which is at the heart of everything we are trying to achieve with the Bill. On Second Reading, everybody commented on the value of IP-supported industry and the fantastic contribution it makes to the general economy. I hope that we will look at the amendments that the hon. Member for Hartlepool introduced, to be sure that we are doing all we can to get the fullest possible Bill.
The Hargreaves process has been mentioned on several occasions. I believe it has been generally positive and resulted in a number of great initiatives, and we now have this Bill in front of us. However, it was also a painful process for a number of people in the creative industries. Those who served the creative industries found themselves greatly undervalued during parts of this process. They were told that a lot of the evidence they brought to Government was nothing more than lobbynomics, and they were patronisingly dismissed when they presented evidence from their industries that suggested that things needed to be done and addressed. There was a sense that they were told to go away, as if they did not really understand the working environment they were in, even though the creative industries had delivered such fantastic success in the past few years.
When we reach the annual report, it is important that we can all feel confident in it. All the stakeholders must have the opportunity to contribute to it and examine it in full detail, and if necessary, see if they could add to it to make it better and ensure the proper way forward.
A lot of the argument was over the economic assumptions. Some truly heroic assumptions were made by the Intellectual Property Office about some of the Hargreaves recommendations. For example, it was said that GDP would increase by 0.6%, and that the format shifting exception alone would bring something like £26 billion to the economy. That figure seemed to have been reached on the ground that there is some sort of private copying exception holding back the industry, and had this measure been in place originally, the UK probably could have invented the iPod, or something
On copyright exceptions, I support the comments of the hon. Member for Hartlepool on music, which was the first creative industry to be part of the digital revolution because music is easily cloned. The music industry is at the interface between digital technology and the traditional models. Where music has gone, the rest of the creative industries have followed. Features that were pioneered for music are now common in all other creative industries. It is therefore right that we look at those things.
Search engines are an issue; the British Phonographic Industry has sent 5 million take-down notices to Google. When you search for the name of your favourite band, Mr Turner, you will be directed to illegal sites. Something must be done about that. We must be able to challenge the large technology companies that are the gatekeepers of our content industries. Search engines have an important function, but when they direct people to illegal sites it is right that we take an interest and do something to address that. We must ensure that when people search for music they are directed to legal sites, not illegal sites, as they currently are.
The Minister for Universities and Science (Mr David Willetts): I welcome you to the Chair, Mr Turner. I enjoyed the challenge set by the hon. Member for Hartlepool, and the interventions of the hon. Members for Bradford South and for Perth and North Perthshire.
We all share the same objective. We want to ensure that the activities of the IPO are reported to Parliament and are more fully accounted for than ever before. Therefore, the clause is significant. I hoped that it would have been welcomed more generously, because it will place a statutory duty on the Secretary of State to report annually to Parliament about how the activities of the Intellectual Property Office
It is the first time that the Government have provided for such an obligation. We are absolutely up for it, because this is an important subject and there is a lot of legitimate public interest in it. It is a way that we can be held to account. The clause responds to the central challenge of the Hargreaves review, which was for the IPO to focus on its core objective of supporting innovation, and therefore growth, in the UK. The publication of an annual report will significantly increase transparency. I hope that is shared ground on both sides of the Committee. The clause is a significant step forward.
The question, which is the linking thread in all the amendments, is to what extent we should specify in primary legislation what the IPO report should cover. We are sceptical about the merits of being as prescriptive as the hon. Member for Hartlepool. The issues that were raised in all three speeches are genuine—they are hot topics. They are absolutely what we would expect the IPO to cover in its annual report this year. However,
Amendment 34 refers to employment. Of course we want the IPO to contribute to employment, although it is hard for a lot of what it does to have a direct impact on employment. Let me be clear—I hope this helps the hon. Gentleman with his understandable concern—that where there is evidence that particular activities carried out by the Intellectual Property Office have had or are expected to have an impact on employment, its report can and should include that. I am happy to make it clear to the Committee that where there is an employment angle, that is absolutely what we expect the IPO to cover. We do not think that it is necessary to make this an obligation in primary legislation.
There is then the issue in amendment 35 of copyright infringement. The hon. Member for Bradford South and the hon. Member for Perth and North Perthshire also referred to this. We completely understand its significance. That is why we have done a lot of work to establish the basic data on trends in online infringement of copyright. We published in September last year the final wave of the large scale consumer tracking study, which Ofcom commissioned. We are working with industry, including internet intermediaries, such as internet service providers, search engines, internet advertising bodies and payment facilitators, to address this problem. It is a cross-Government approach in which the Culture Minister plays a crucial role.
Should this be specified in primary legislation as an area that has to be covered every year? We think that would be too inflexible. Again, it might help Opposition Members if I give them this assurance: given the IPO’s work in this area over the past year, the whole subject of online infringement of copyright will be included in the 2014 report. That is a crucial issue of public concern and it will continue to appear in the report so long as it remains such.
Mike Weatherley (Hove) (Con): I appreciate all the points that have been made today. Will the Minister also confirm that the report will specifically allude to the IPO’s educational activities? On Second Reading, I suggested a possible amendment, which I am happy not to advance here in Committee, provided that there is an absolute assurance from the Minister that this will be thoroughly covered in the annual report and able to be debated on the Floor of the House each time.
Mr Willetts: Let me pay tribute to my hon. Friend’s work generally, but especially on this Bill. Let me give him my clear assurance: yes, education will be covered in the report because it is very important. Its significance has already been recognised in our discussions today. I can give him that assurance. He is right to press for it. He has been a realist about what can and cannot be prescribed in primary legislation. This is not about the significance of copyright infringement or education or employment, which are all absolutely valid issues. The issue before the Committee today is simply whether we wish to prescribe in permanent, primary legislation
Amendment 36 would require the Secretary of State to inform Parliament what actions he will take as a result of recommendations in the report. Of course, the clause already commits the Secretary of State to lay the report before Parliament. It is a retrospective assessment of the work of the IPO. We think that the further actions are best set out and laid before Parliament in the IPO’s corporate plan. That is a separate document. It is not the same as the annual report. The IPO is required to publish it annually. It is agreed with Ministers. It contains the future work programme for the office and it is therefore something that is publicly open to scrutiny and on which Ministers and the IPO can be held to account.
Members on both sides of the Committee have expressed their understandable concerns about real issues affecting intellectual property. Let me reiterate that the Government completely understand those issues. The Department for Business, Innovation and Skills is committed to working with the Department for Culture, Media and Sport and Ofcom on tackling online infringement of copyright. We are funding the new City of London police IP crime unit to tackle all IP crime facilitated through the internet. We have extended the rights to licence for sound recordings used by charities. We will be hosting a major international summit on IP enforcement in London in June. We have carried out extensive research on the issue of online copyright infringement. All those issues are absolutely live, but the question is whether we set out in primary legislation that they have to be covered in the annual report. We believe that would be excessively prescriptive for what we all agree is a rapidly changing scene, so I hope that, in light of my assurances, the hon. Member for Hartlepool will withdraw his amendment.
Mr Wright: I thank all hon. Members who contributed to this important debate. The Minister is absolutely right, because we were concerned while drafting the amendments not to be too prescriptive. We have no idea what technology is going to be like in a year or five years, let alone 10 or 20 years, so it is right that we are technology-blind because we will not be able to make things future-proof. I think we achieved that, and it is to the credit of the Select Committee that, when looking at the value and importance of the creative industries, it did so too.
I accept the Minister’s point about amendment 34 and job creation although, in an ideal world, I would still like such an amendment to be made. An interesting article on disruptive technologies in The Economist a week or so ago said that digitisation and technology might mean that 47% of existing jobs will be obsolete in the next few years. The impact on jobs of technology, copyright infringement and wider IP is important.
My hon. Friend the Member for Bradford South mentioned how, in the light of deindustrialisation and the move from manufacturing into services, creative industries are vitally important, so job creation in that
My hon. Friend the Member for Cardiff South and Penarth, the Opposition Whip, has been asking a lot of parliamentary questions about such practice. He asked the Minister for the Cabinet Officer what estimate
“he has made of the number of websites charging for access to Government online services…if he will take steps to ensure that the Competition and Markets Authority is able to take enforcement action on websites found to be charging for access to online Government services irrespective of whether a disclaimer statement is deployed”
“Officials in the Government Digital Service…are leading a cross-government exercise to gather information about the operation of third-party websites offering services associated with official Government services”—
“Where Government has become aware of websites that make misleading claims in their advertising it has brought these complaints to the attention of the Advertising Standards Authority. Government has and continues to take direct action to prevent the misuse of Government logos or any suggestion of affiliation with Government by these websites.”—[Official Report, 23 January 2014; Vol. 574, c. 315-316W.]
On amendment 35, the question is whether we are being overtly prescriptive by asking for detail to be put in the Bill. I do not think we are. Online copyright infringement, and the extent to which identified search engines are helping to facilitate it, has been an issue in respect of digitisation and online piracy for the past 20 years—since Napster, and arguably before. Given rapid technological changes and disruptive technologies, I suspect it will be an issue for the next 20 years, regardless of what the technology will look like. It does not seem unreasonable to ensure that it is covered by the Bill so that the conflict between creative industries and technology companies is considered to be a key thing on which the IPO reports. The Select Committee had a particularly strong view on that point, so I would like to test the opinion of this Committee on amendment 35.
The hon. Member for Hove made an good point about education and also—almost in passing—asked the very important question of whether the annual report would be debated on the Floor of the House. IP
Pete Wishart: One of my concerns is that the IP Minister has never been a Member of the House of Commons. We have never had an opportunity to put our questions to him at Question Time or during the passage of such Bills. Does the hon. Gentleman agree that it is time that the IP Minister was a Member of the elected House so that we may question him regularly?
Mr Wright: The hon. Gentleman makes a good point. IP is far too often seen as a secondary concern that is not important, even though it can be the source of a prime comparative advantage for the modern UK economy. People will invest here because we have a robust IP regime that is flexible to rapid and often disruptive technological changes. We need to ensure that that continues.
Mr Lammy: I hesitated to rise, but this was an appropriate moment to do so. It is important that we have an IP Minister in this House. The significance of the creative economy to British GDP is well understood, and it needs to grow. The importance of intellectual property is self-evident, so I support what my hon. Friend says.
Mr Wright: I thank my right hon. Friend for that intervention. He is right that the creative industries are something of which the country can be hugely proud. Other nations look with envy at the strength of our creative industries and the impact that our creativity and innovation has on things such as manufacturing. We can design and invent things that are the envy of the world—a Rolls-Royce engine is proof of that.
It is important that we protect and nurture our comparative advantage, and address the tension between content and technology that may be in conflict with that. I accept some of what the Minister has said, but will he commit to having an annual debate about IP on the Floor of the House during which the IPO report may be discussed?
(iii) an assessment of the degree of online copyright infringement and the extent to which identified search engines and other internet services facilitate this, and’.—(Mr Iain Wright.)