Intellectual Property Bill [Lords]
The Committee consisted of the following Members:
Georgina Holmes-Skelton, Committee Clerk
† attended the Committee
‘(1) The Copyright, Designs and Patents Act 1988 is amended as follows:
(2) In Part VII (miscellaneous and general) at the beginning insert—
“295A Director General of Intellectual Property Rights
(1) The Secretary of State shall appoint an officer to be known as the Director General of Intellectual Property Rights (“the Director General”).
(2) The Director General has a duty to—
(a) promote the creation of new intellectual property,
(b) protect and promote the interests of UK intellectual property rights holders,
(c) co-ordinate effective enforcement of UK intellectual property rights, and
(d) educate consumers on the nature and value of intellectual property.
(3) In performing those duties, the Director General must also have regard to the desirability of—
(a) promoting the importance of intellectual property in the UK,
(b) encouraging investment and innovation in new UK intellectual property, and
(c) protecting intellectual property against infringement of rights.”.’.—(Mr Wright.)
Mr Gerry Sutcliffe (Bradford South) (Lab): It is a pleasure to serve under your chairmanship, Mr Turner. Where does intellectual property lie, whose responsibly is it, who should be the lead person? My hon. Friend the Member for Hartlepool, in moving new clause 1, said that we should have a director general. I am agnostic about that. It is a good idea. It develops the idea that somebody needs to be responsible. We have referred before in Committee to the report from the Select Committee on Culture, Media and Sport about creative industries and how important they have become. The Minister might be able to reassure us that, although the new clause may not be the right route, there will be a way forward.
With no disrespect to Viscount Younger of Leckie, I do not think that it is appropriate that the person with responsibility for intellectual property is in the other place. Given the importance of IP in the creative economy, there should be someone in the Commons, whether a Minister, a director general or whoever. The hon. Member
The Minister for Universities and Science (Mr David Willetts): May I welcome you, Mr Turner, once again to the Chair? As the hon. Member for Hartlepool said before lunch, the new clause would create a new statutory role of “director general of intellectual property rights”, with a duty to promote intellectual property rights. We have several cross-currents there. One is about membership of the House of Lords. Before the election, the then Secretary of State for Business, Innovation and Skills, who was responsible for IP among many other things, was—
Mr Willetts: Exactly, and I am sure he only went to the House of Lords to create a vacancy for young talent to come through. And what a successful move that was. This Committee is not the place to object to some Ministers being in the House of Lords. It is how successive Governments have functioned. We have an excellent team in BIS. Viscount Younger is the Minister responsible for IP. That is what he does and he steered the Bill successfully through the other place. John Alty, whom I know and deal with, is the chief executive officer and—in the old language of the civil service—comptroller general at the Intellectual Property Office. Then, and this gives me particular pleasure, we have my hon. Friend the Member for Hove, acting as the Prime Minister’s adviser on intellectual property. I can only describe them as three wise men.
We have a clearly defined team and we should judge them by the quality of their output. Since 2010, by commissioning the Hargreaves report and implementing many of its findings, we have made progress—more progress, if I may say so, than the previous Government, who commissioned the Gowers report, which had a significant overlap with Hargreaves, but did not make much progress in implementing its findings.
Mr Wright: The Minister is setting out the current approach, but does he think that that approach to championing IP and co-ordination across Government is satisfactory and will not be subject to change or reform at all?
Mr Willetts: We are always open to review and reform, but perhaps I can point out to the Committee what has been happening. I have with me successive Government reports on copyright and IP, many of which reached
We have an excellent triumvirate steering policy in this area. I presume that the proposal for a new director general of intellectual property rights is another paybill for the civil service, which would create another office and another set of supporting officers. We in BIS are busy reducing our overhead. We have reduced our civil service and administrative costs by more than 20%, and we continue to bring them down. The last thing that we need is legislation urging us to create new civil service posts. We have a regime that works well and we are successfully holding down costs.
The hon. Member for Bradford South mentioned the links to the creative industries and the Department for Culture, Media and Sport. Of course, there is an overlap; although BIS is the main Department responsible for IP, certain issues fall to the DCMS. There we have the creative industries council, which is co-chaired by my right hon. Friends the Secretary of State for Business, Innovation and Skills and the Secretary of State for Culture, Media and Sport—another excellent team—who ensure that the overlap between DCMS responsibility for creative industries and our responsibilities for IP is properly dealt with. I should mention that the council is also co-chaired by Nicola Mendelsohn.
Mr Sutcliffe: The Minister is right to point out that the creative industries council exists, and I welcome that, but there is a feeling that its membership is too large and that it does not get down to the detail of issues. IP is sometimes lost in the framework of the discussions around the council. For me, the issue is that IP is becoming more important. I accept what the Minister has said about the variety of ministerial teams involved, but we need to look at whether we are accessing the best advice and support, and whether more can be done. I welcome the fact that the hon. Member for Hove has particular expertise in education, training and improving awareness of IP. As we have heard, some companies involved in the sector do not understand the issues that exist.
Mike Weatherley (Hove) (Con): I have two points on that. When the Minister says that he will keep the matter under review, will he assure me that he will look at the American IP tsar model and take representations on its potential effectiveness? Will he also take into account that, when I wrote to each Department to ask when they get involved in IP, the response from each one was, “When we have to.” It must be geared up another level. I accept that it should not be part of such a Bill and that there are lots of questions to be answered on specifics, and so forth, but will he assure me that he will keep an open mind on future representations to bring all the Departments together?
Mr Willetts: Of course, I am happy to reassure my hon. Friend that we will continue to consider that important matter. However, I challenge him on one point. IP is a policy responsibility of a dedicated Minister in BIS; it is not something that we randomly do when we have to. We recognised that one challenge facing us was sorting out the IP regime. There have been four or five major reports on that. For the first time, we have a report on which we can act, and we are busy acting. That is one of BIS’s priority activities. However, of course, if people have suggestions—especially my hon. Friend, with his particular responsibilities as the Prime Minister’s adviser on intellectual property—we will always consider those carefully.
For people who are concerned that we need to be doing more on IP, I hope that, during this year, we will bring forward various items, especially of secondary legislation, in the House, implementing yet more of Hargreaves. I tried to set out, in a letter to the Opposition spokesman, which we are putting in the Library, an account of how we will handle a range of regulatory issues. I hope that, at the end of 2014, people will not be saying, “This Department has failed to grip IP”, but will say, “This Department has done a lot to implement Hargreaves”. I look forward to seeing the happy faces of Committee members during subsequent scrutiny of the detailed regulations that we will introduce as part of our energetic commitment to reforming IP.
It has been an interesting debate. My hon. Friend the Member for Bradford South said that he was relatively agnostic about whether a director general or a Minister should be involved. However, IP matters and it needs a champion in Government. How that is perceived, both within Government, to ensure a co-ordinated, not a silo-driven, approach, and across private industry, is vital. The downgrading of the housing Minister’s role,
The hon. Member for Hove made a telling intervention, mentioning his writing to Departments, saying that IP is looked at “when we have to.” It needs to be better than that, given that it is going to be a big driver of economic activity in the next few years. New clause 1 was tabled so that we could debate this matter, to ensure that there is a co-ordinating champion’s role for IP.
I understand what the Minister is saying. I hope that he looks on this as a proactive, constructive step to ensure that IP gets the serious consideration that it deserves. However, given what he said, I beg to ask leave to withdraw the clause.
‘(1) Subordinate legislation to implement the government’s policy statement entitled “Modernising Copyright” published in December 2012 will not be brought forward until the Secretary of State has published, and laid before both Houses of Parliament, a report setting out the government’s long term plans for the future of intellectual property in the United Kingdom.’.—(Mr Wright.)
I still bear the scars on my back that I received during Committee stage of the Enterprise and Regulatory Reform Bill. I have fresh wounds this week, as a result of this Bill and I know that the Minister has, too. He will know that that Bill originally included clauses providing for secondary legislation to add or remove copyright exceptions. There was considerable concern in Committee, and from stakeholders, about the manner in which the Government dealt with that. The process whereby the Government introduced the proposals for copyright exceptions was universally condemned as mishandled and ill judged.
“The inclusion of copyright clauses in this Bill came as a surprise to many copyright stakeholders. We widely anticipated copyright legislation, but we did not anticipate that the copyright legislation would be attached to this particular Bill. This ‘surprise’ generated a degree of confusion and alarm amongst our community. This was needless. Better communication between the Government and its key stakeholders would have prevented this.”
The phrase “confusion and alarm” is strong and does not give the impression of a Government with any clear vision of how they wish to move on IP generally and copyright specifically in this country. They did not originally produce any impact assessment for the copyright exceptions part of that Bill. The Minister, when he was discussing new clause 1, said that there was a grand vision and that the Government were moving in a stately manner towards its implementation, but that is simply not happening. It actually suggests that the
The Government have had to backtrack and rethink, but significant problems remain. There are concerns about the lack of clear definitions in many parts of the exceptions. Stakeholders have found so many holes in the proposals that it seems inevitable that they will not be complied with. Perhaps that is why we are still waiting for them to be tabled and debated, as there is again a need to go back to the drawing board.
I am very much aware that some stakeholders believe that there is a strong business imperative to bring about certain copyright exceptions to help with their sectors. We will come to them when we consider the secondary legislation. Conversely, doubts remain in some quarters. I have referred on numerous occasions in Committee to the excellent Select Committee report on the creative industries, which concluded:
“We are not persuaded that the introduction of new copyright exceptions will bring the benefits claimed and believe that generally the existing law works well. We recommend that the introduction or amendment of copyright exceptions should be contemplated only following detailed impact assessments and after proper parliamentary scrutiny on an individual basis.”
I must stress that last point, because it is crucial. There remains a risk that the Government will bundle all the copyright exceptions into one statutory instrument, giving Parliament the opportunity only to say yes or no to the entire package. That is unacceptable given the nuances and differences in some of the proposed exceptions. What the Minister said on Second Reading was fascinating. To my mind, the language that he used appeared deliberately imprecise:
“What the Government intend to do on copyright exemptions is to lay down the regulations in February, and they will then be subject to a debate under the affirmative resolution procedure. We understand the need for individual consideration;”—
leaves open the prospect of some element of bundling in the regulations. We need clarity on the issue. Will the Minister confirm in responding that none of the proposed exceptions will be lumped together, and that all will be subject on an individual basis—that is the key point—to affirmative resolution? What sort of preliminary stage will the Minister offer Parliament to ensure that both Houses are fully aware of the nuances and repercussions of the copyright exceptions?
This goes to the heart of new clause 2. All those things point to ensuring that the Government must set out a long-term vision for intellectual property, rather than undertaking piecemeal and ad hoc attempts to tinker without consulting this House or key stakeholders. It is insufficient to claim that the long-term vision for IP has been set—that Hargreaves has reported, and that the Government are merely implementing his recommendations. Both the BIS and CMS Committees have questioned the evidence used in Hargreaves, and the delay and dither that have characterised the
The Minister said today that the Government have produced reports. It is not necessarily a question now of producing other reports; it is about what they do with them. All the evidence in this part of the IP regime indicates that they have blown it in many respects. They have tinkered and been proved lacking. Before further mistakes are made, the Government should set out a formal and long-term plan. That is the purpose behind new clause 2, and I am interested in what the Minister has to say in response. I commend the new clause to the Committee.
Mr Willetts: I very much disagree with what the hon. Gentleman has just said, and I have the evidence. I have here a pile of reports about copyright and IP. I have “Creative Britain—New Talents for the New Economy”, signed up to by a range of Secretaries of State in the previous Government, including the right hon. Member for Southampton, Itchen (Mr Denham), then Secretary of State at the Department for Innovation, Universities and Skills, or DIUS—we used to call it the Department for ironing underwear and shirts. I also have the final report of “Digital Britain”, which was published in 2009 with a foreword by the right hon. Lord Mandelson. The right hon. Member for Exeter also got his smiling face in the foreword. We had other reports, including that by Gowers. We have had a series of reports.
Mr Ben Bradshaw (Exeter) (Lab): I hope that the Minister has in his pile the much more recent Select Committee report to which my hon. Friend the Member for Hartlepool referred, which was supported unanimously—the Committee has a Government majority—was highly critical of many elements of the Hargreaves recommendations and advocated exactly what my hon. Friend has just suggested.
Mr Willetts: Let me complete what I was saying, because there is a roll of honour. Alongside the right hon. Gentleman I see the right hon. Member for Tottenham. His shining face is in another report, “The Way Ahead—a Strategy for Copyright in the Digital Age”. We have had many reports. We commissioned Hargreaves and we took the decision to implement it. The Government’s clear commitment—there will be a sigh of relief from many members of the Committee, and from others—is to no further broad reviews of the IP rights regime during the lifetime of this Parliament. Instead, we will get on and implement. We are not short of reviews. We do not need a new clause calling for another review. The problem with IP and copyright is not insufficient reviews, but insufficient implementation. We are implementing. That is what the Bill is about, and that is what the other measures we are bringing before the House are about.
Mr David Lammy (Tottenham) (Lab): The Minister makes a considerable point, but why, if he is taking action, are we discussing a Bill with 24 clauses, and not the substantive change that most people are waiting for, following the reviews on his desk?
Mr Willetts: No, we are moving to tackle specific issues one by one, and the big prize in the Bill, which I refer to but do not want to delay the Committee on, is better protection for people in the design industry. We are introducing other legislation in other areas. We have introduced some measures, and there are more to come. In my view, that is absolutely correct. There comes a point in any Government at which to stop reviewing and start deciding and doing.
We recognise the particular sensitivities around copyright exceptions. That is not the subject of the Bill, but let me give evidence of our continuing engagement with the issue since the original Hargreaves report. It is estimated that copyright exemptions have been discussed at more than 250 meetings involving Ministers, officials and outside experts since the formal consultation began in early 2012. We are not short of consultation and reviews, so we intend to introduce specific measures in 2014.
The hon. Member for Hartlepool asked questions and said that I had been deliberately imprecise. He asked how many different instruments we can expect, and whether they will be bundled. We are not in a position to say exactly how many different instruments there will be. We are consulting parliamentary counsel on that, but it is important for the accountability of Government and sensible that they be considered separately as far as possible. I was unable in the Chamber or here in Committee to give a 100% assurance that everything would be done separately. Sometimes with parliamentary scrutiny there are good reasons for combining one or more statutory instruments because of the nature of the interaction between the various parts of the law. It may sometimes be for the benefit of everyone to introduce together more than one regulation or statutory instrument for the purposes of more coherent scrutiny, and I hope the Committee understands that. However, our overall intention is that as far as possible there will be opportunities for separate consideration.
We will bring the statutory instruments forward over the next few months and give several opportunities for proper parliamentary scrutiny as we implement, not review, policies that have been clearly formulated.
Jim Dowd (Lewisham West and Penge) (Lab): There is concern about considering the statutory instruments collectively, rather than individually. I am sure that a great deal of work has been done in the Department, and everyone knows the reasons why bundling may be appropriate, but can the Minister give any indication of how many statutory instruments there might be?
Mr Willetts: It is hard to say, when we are still consulting parliamentary counsel. As soon as possible, I will communicate to the Committee, or place in the Library, the proper guidance on how we plan to structure things. I fully understand that as there is a legitimate issue of parliamentary scrutiny, all parts of the House—everyone has an interest—are entitled to see the overall shape of the exercise: the different statutory instruments, how they interact, and how occasionally it might make sense for them to be considered together. I will undertake to share that information with the Committee as soon as possible.
Mr Willetts: I believe in proper parliamentary scrutiny. I undertake absolutely, wherever possible, to ensure that there are coherent bodies of regulation before the House. I cannot make a complete commitment that nothing will be bundled, but coherent bodies of regulation will give scope for proper scrutiny of those specific issues. I am also happy to set out as soon as possible, once we have the authority and advice of parliamentary counsel, exactly what we propose for the structure. I undertake absolutely to provide proper opportunities for scrutiny.
Given that we do not yet have the final advice of parliamentary counsel, and that it might be better for all concerned if some of the statutory instruments were considered together, the hon. Gentleman will understand that we cannot 100% guarantee that each one will be considered separately.
Mr Wright: To clarify, the Minister said on Second Reading that regulations would be introduced in February. Is that still the intention, because that does not seem tremendously far away? If so, they must be at quite a late stage in the process, and that would give us a greater idea of the thinking behind the regulations, their structure and their bundling.
Mr Willetts: That remains our intention; I cannot put it more strongly than that, can I? I will of course share with the House further information when we have parliamentary counsel’s advice on the overall structure. In the light of those genuine, sincere assurances about proper parliamentary scrutiny, I hope that the hon. Gentleman will withdraw the new clause.
Mr Wright: The point was well put by my right hon. Friend the Member for Tottenham that the Government have been tinkering, and that there is not a long-term view. The way in which they have had to deal with this issue shows that the Government ought to go back and think again. The Minister has not provided a great deal of reassurance. Industry and Parliament are calling out for the best possible parliamentary scrutiny. This is something that we will look at extremely closely, because it is incredibly sensitive to a whole range of creative industries. In order to make progress, however, I beg to ask leave to withdraw the new clause.
‘(1) The Secretary of State will, within six months of the commencement of the Act, bring forward a report to both Houses of Parliament outlining his view as to whether section 73 of the Copyright, Designs and Patents Act 1988 (reception and re-transmission of wireless broadcast by cable) is still applicable in today’s broadcasting medium, and what further changes to legislation he plans to make in the light of his review.’.—(Mr Iain Wright.)
Section 73 of the Copyright, Designs and Patents Act 1988 allows the immediate retransmission of the main free-to-air public service broadcasters, or PSBs, by cable in the area where the original PSB channel was broadcast. The purpose of the section was to allow cable operators to retransmit PSB services without agreement, consent or, at times, payment, and without the risk of infringing copyright.
Under the Communications Act 2003, PSBs must offer their PSB channels to cable operators. It is my understanding, however, that the PSBs have to pay for the right for their channels to be carried on satellite platforms. As I have hinted, the purpose of section 73, a quarter of a century ago, was to encourage the roll-out of cable in the 1980s and ’90s as a competing platform to terrestrial television. Everyone is aware that the world of 2014 is different from that of 1988. Consumers access programmes on a vast variety of different platforms, in the way that is convenient for them.
Committee members might be familiar with the recent lengthy court case between TVCatchup Ltd on the one hand, and ITV, Channel 4 and Channel Five on the other, about TVCatchup streaming programmes by public service broadcasters. The High Court judgment on 7 October 2013 stated that TVCatchup had infringed the PSBs’ film and broadcast copyrights by streaming to members of the public. That was mentioned a number of times on Second Reading. Committee members will have seen the comprehensive briefing on this issue from ITV, which is actively looking for section to be 73 repealed.
ITV claims that the current re-transmission and access regime is distortive and unsustainable, and is hindering investment in original UK broadcast content, and says that evidence suggests that changes to the platform access regime will result in event greater investment in content. It says that maintaining the current regulatory arrangements is making it harder to invest in high levels of UK-originated content, reduces income for creators and stifles overall growth in the UK creative industries. Those powerful arguments must be considered carefully. Although section 73 seems to be from a different time, we need to be clear about it and, before we move actively to repeal it, think about the consequences.
In the summer, the Department for Culture, Media and Sport published “Connectivity, Content and Consumers: Britain’s digital platform for growth”. The Minister said confidently that there was a joined-up Government approach on this matter, but it did not seem that the Department for Business, Innovation and Skills was involved much in it. I am worried about that, about IP and copyright matters being spread across two Departments, and about the silo approach to government. In that report, the Government stated their wish
“to see zero net charges, where the fees for access to the main platforms and for PSB channels cancel each other out…We are looking closely at how we can help achieve this without allowing other kinds of online services to exploit PSB content, with no benefit flowing to the PSB. ”
Jim Dowd: I do not know whether other Committee members have received a similar communication, but in fairness, having mentioned this on Second Reading, I should say that I have been contacted by Virgin to say that its current position is that it does not charge for the products to be broadcast, and does not pay for the channels from the PSBs.
Mr Wright: That is a fair point. I understand that some four million cable customers do not have to pay additional charges. I hope that that continues under any subsequent regime. The new clause is meant to be helpful; it is meant to ensure that section 73 is still applicable in today’s digital broadcasting world.
What further plans for legislation might be needed? The new clause ties in well with the consultation that has been aired by the Government and the review that is planned, although the clause might, I hope, bring forward that process. I appreciate that some PSBs are adamant that section 73 should be repealed. However, as I just said to my hon. Friend, outright abolition might hinder the consumer rights of four million people who gain access to PSB content through cable. Virgin has a different approach from ITV. This needs to be looked at carefully; there should be active consideration of all possible consequences and repercussions, and a subsequent discussion on how a clause could be drafted that would meet the Government’s intention for a level playing field for all platforms, and net zero fees either way. I hope that the Minister regards the new clause as constructive and helpful—that is what it is intended to be—and will adopt it as part of the Bill.
Mr Willetts: I can offer the hon. Gentleman some comfort: we understand the need to review the effect of section 73. In the Department for Culture, Media and Sport policy paper, “Connectivity, Content and Consumers”, published in August 2013, we set out our policy objective of wanting zero net charges—that is, we wanted fees for access to the main platforms and for public service channels to cancel each other out. That is actually quite close to the current market position. We recognise the issues with section 73 that the hon. Gentleman identified, and we understand the need for further consideration of it.
I invite the hon. Gentleman to withdraw the new clause, which would set a specific deadline by requiring the Government to report on whether section 73 of Copyright, Design and Patents Act 1988 is still necessary and effective within six month of the commencement of the Intellectual Property Act. The difficulty is that, although he used the past tense, the court case that he referred to is going to appeal; the litigation therefore continues. We have to wait for a result in the ongoing litigation about the meaning of section 73. It is not possible to impose timetables for review or resolution until the litigation is resolved, so we cannot accept the timetable that he proposes. However, I can assure him that following the resolution of the court case—whenever that is—the Government will consult on section 73 and the broader framework of checks and balances. In the light of that assurance, I hope that he feels able to withdraw the new clause.
Mr Willetts: I have said to the hon. Gentleman that the zero net charges policy is not far off the current market position, and I have accepted that there needs to be some kind of review. However, the litigation is proceeding, and the Government have no control over its timing. It would be wrong to set a timetable that we have no capacity to deliver. I repeat my assurance that we intend to conduct a review after the litigation is resolved.
‘(1) The Copyright, Designs and Patents Act 1988 is amended as follows.
(2) In section 107(4A)(b) (criminal liability for making or dealing with infringing articles, etc) for “two” substitute “ten”.
(3) In section 198(5A)(b) (criminal liability for making, dealing with or using illicit recordings) for “two” substitute “ten”.’.—(Mr Iain Wright.)
This should be a quick contribution, because the point is obvious and straightforward. The new clause would increase the criminal penalties for digital copyright offences, so that they were consistent with the criminal penalties for physical copyright theft. [ Interruption. ] We are not talking about the Stone Roses, although I am more than happy to do so. I am also happy to say that today is the 25th anniversary of the release of New Order’s “Technique”. That was a fine time—New Order aficionados will understand what that means.
Copyright theft should be medium- or platform-blind. Why should online theft be considered differently from physical theft? The new clause seeks to harmonise criminal penalties, making them easier and consistent. Together with the Government’s proposals, it would make trademark, physical copyright, registered design and online copyright theft all subject to 10 years’ imprisonment. If the purpose of the Bill, as the Minister has said on a number of occasions, is to simplify, clarify and provide consistency across the various parts of the IP regime framework, including sanctions, I fail to see why the new clause cannot be accepted.
Mike Weatherley: I want briefly to echo some of the points made by the hon. Member for Hartlepool, and to clarify some others. We have said many times in Committee, on Second Reading and in many other
That goes to the heart of the matter. People perceive that the two crimes are different. I would be the first to say that I do not really want anyone to go to jail; I would just like them to stop carrying out the theft. There is probably a strong argument for saying that 10 years for the offline crime is draconian. I do not know the full reasons behind the choice of 10 years, but I know that the two crimes are equally valid and equal attention should be given to stopping them. As the hon. Gentleman said succinctly, people perceive the online crime to be less of an offence, but it is an equal offence. I have some sympathy for the new clause, although more work must be done on whether 10 years is the right length of sentence. I look forward to the Minister’s comments on that. I feel that there should be some parity of penalty.
Mr Willetts: I understand the points that my hon. Friend makes, and I will tackle them along with those made by the Opposition spokesman. The new clause would increase the maximum penalty for online copyright infringement to 10 years. The current maximum penalty available for online copyright infringement is only two years, which is very different from the 10-year maximum penalty for physical copyright infringement. I fully understand the arguments made by my hon. Friend and the Opposition spokesman against that gap in penalty. The equalisation of penalties has been looked at before, and it was one of the proposals in the Gowers review. After consultation, however, the previous Government decided not to change the custodial sentencing regime.
In many cases, prosecutors can use a range of other offences that carry sentences of up to 10 years—for example, offences under the Fraud Act 2006, or conspiracy to defraud. We have looked at the evidence, and although 10 years sounds like a tough, draconian maximum penalty, the average custodial sentence given for physical copyright offences was 12.7 months in 2011, which is much less than the theoretical maximum. Five years is the maximum actual punishment that any individual has received.
My hon. Friend asked where the proposed 10 years comes from. It has an interesting history, having been proposed by my right hon. Friend the Secretary of State for Business, Innovation and Skills in a private Member’s Bill more than a decade ago when he was clearly in a Judge Jeffreys mood and wanted some tough penalties. I look forward to telling my right hon. Friend that he set such a tough benchmark that there is now pressure from both sides of the Committee to repeat that for the online offence.
Jim Dowd: I accept that, but the point is that regardless of the average sentence, the clear implication is that copyright theft is not proper theft, and that if someone does it in one way, they are liable for less of a penalty
Mr Willetts: The hon. Gentleman makes a fair point, as did my hon. Friend the Member for Hove. There is an issue, so I will explain what the Government propose, in the light of the points just made and our debate on Second Reading. There is a genuine issue, and we do not deny that the gap between the two years and 10 years looks to many outsiders as something that is hard to justify.
We propose undertaking a study of the criminal sanctions available for copyright infringement. We will commission the study shortly, with the aim of its starting early in the new financial year and of publishing its findings before the end of 2014. The study will review the penalties for both physical and online infringement. There is the possibility of reaching an aligned, equal penalty for both online and physical infringement of somewhere between two and 10 years. That would be an option. The study will review the penalties. It will be informed by sentencing data and practitioner views. It will consider the impact of the Government’s recent enforcement initiatives, such as the police IP crime unit, and my hon. Friend Lord Younger, the Minister for Intellectual Property, will lead the exercise.
Although timelines inevitably shift, we expect research and field work to be concluded by around September 2014, with a final report expected in December. Members of all parties recognise there is concern about the gap, and we understand the need to consider it.
Mr Wright: I might have missed this, but will the Minister clarify who will carry out the review? He said that the IP Minister in the other place would help to facilitate it, but who specifically will carry out the review?
Mr Willetts: My hon. Friend the Minister for Intellectual Property will be the Minister responsible for leading the review. It will be carried out by the Intellectual Property Office, and it will, as I said, involve commissioning a study that will be conducted by an external organisation. We will commission the study shortly. It should begin in the new financial year and should publish its findings before the end of 2014. It will be by an external organisation. We will shortly put out to tender opportunities for external organisations to carry out that study, reporting to my hon. Friend the Minister for Intellectual Property. I hope that Members on both sides of the Committee will take that as clear evidence that we are indeed serious about looking at this apparent anomaly, and we will identify possible ways forward in tackling it. I hope that, in the light of that assurance that we will address it, the hon. Gentleman will withdraw his new clause.
Mr Wright: I thank the right hon. Gentleman for what he has said. In our considerations of earlier new clauses, he was incredibly eloquent in saying that the Government were done with reviews, but I am pleased to hear him announcing a review, but I do not want to be churlish, and at this late stage in the Bill’s deliberations I will take what I can get.
Given where we are in the parliamentary cycle, the start of the review at the beginning of the financial year and a reporting deadline at the end of 2014 will make it difficult for the Government to enact any legislative changes. It will fall to the next Labour Government, from May 2015, to do that. However, I am glad about what the Minister has said. It will help provide clarity and ensure that there is consistency between the various forms of copyright theft. Such theft should be medium- and platform-blind, and at the moment it is not. I welcome what the Government are doing and thank the Minister for moving on this matter. I am happy to beg to ask leave to withdraw the clause.
‘(1) A person (“A”) shall not, in relation to any goods or services, use any features of packaging, marking, labelling or decoration in such a way that the public is likely to attribute to A’s goods or services the reputation of another person (“B”) or the qualities or reputation of B’s goods or services.
(2) For the purposes of subsection (1) it is immaterial whether there is any similarity between the goods or services of A and those of B.
(3) Subsection (1) shall not apply to features of packaging, marking, labelling or decoration that are commonplace.’.— (Mr Iain Wright.)
New clause 6 would combat the problems of lookalikes or parasitic packaging, which are products, websites or physical goods and services designed deliberately to look like well-known branded products. The practice is used by rival products to mislead customers into believing that they are buying another, probably better-known, brand. All hon. Members will have seen such things while shopping at the local supermarket—the specific branding, design, colour or wording on, say, a shampoo bottle. I can see that some hon. Members may have more experience of shampoo than others, but let us leave it at that. You are looking at me quite fiercely, Mr Turner.
Certain animals, colours and wording might be used on, say, cereal boxes to make a product look like a branded products. Customers might not be buying the product that they believe they are buying. The reputation of a brand will be undermined as a result, leading to loss of business and an erosion of reputation and brand value. Members may remember the £1 million advertising campaign by Kellogg’s a couple of years ago that stated that the company does not make cereals for anyone else. Kellogg’s values its reputation and brand value, which are an important part of what the company does.
The Minister will be aware that during the passage of the Trade Marks Act 1994—this has been an issue for some time—the Minister at the time undertook to consider the problem. The 2006 Gowers review of intellectual property found that brands in the UK are not well protected. Gowers stated that
“the Review believes that passing off does not go far enough to protect many brands and designs from misappropriation for the following reasons: if copycats appear on the market before the defendant has built up goodwill in a certain appearance, the
The purpose of the new clause is to combat lookalikes. It would not allow a person to use any features of packaging, marking, labelling or decoration in such a way as to allow the public to believe that that person’s goods or services were another person’s goods or services. Subsection (2) makes it clear that it is immaterial whether there is any similarity between the goods or services. Indeed, that is the point. Whether someone is buying shampoo or cereal, the intention is the same. Subsection (3) is necessary to ensure that the provision does not apply to features of packaging that are considered commonplace. The example I mentioned on Second Reading was ready salted crisps, which are generally sold in red packets—that is universally accepted. Similarly, mint toothpastes are often packaged in green, or in some cases red, white and blue. The latter point is more debatable, but the packaging of toothpaste seems to be a common point.
In responding to the new clause, I would like the Minister to respond to points raised both on Second Reading and in Committee on Tuesday on the growing issue of fraudulent websites that look authentic—they look like the real deal. I have mentioned Ugg boots; the HMRC tax returns website and the Driver and Vehicle Licensing Agency website were mentioned in Committee. That is a big issue that is causing real problems. What additional protection will the Government introduce to help improve the situation for consumers? I imagine that such protection may be considered in the Consumer Rights Public Bill Committee, but it would be interesting to hear the Minister’s thoughts while we are considering the Intellectual Property Bill. This a relatively straightforward and long-standing problem that can be resolved, so I hope the Minister will agree to the new clause.
Mr Sutcliffe: I will try to be brief. My hon. Friend is right about search engines, and we have already mentioned the DVLA. Since Tuesday, a large number of Members have recognised the problem, so it would be welcome if the Government took the opportunity to put it right.
On Second Reading, my hon. Friend the Member for Lewisham West and Penge talked about Henderson’s sauce, which caused consternation in Yorkshire and Sheffield. He has received a number of e-mails, and there have been stories in local newspapers and on television in Yorkshire. The new clause will give him an opportunity to put the record straight about what he meant when he talked about Henderson’s relish in relation to Lea & Perrins Worcestershire sauce.
Jim Dowd: What a perceptive chap you are, Mr Turner: you did not even spot me stand up before you called me. I will tread as delicately and carefully as I can. On Second Reading I raised the broader issue of what are known—as the title of the new clause says—as lookalikes.
I recounted in good faith what I encountered at the time. I did not suggest who had copied whose—anyone who reads Hansard will see what the comparison was. All I know is that one company started considerably before the other and they both wound up with considerably similar—I will not say identical—packaging. My apology for upsetting people is on the record; I would just add, before I move on to the broader question, that I am due to visit the Henderson’s company in Sheffield, in my best suit of sackcloth and ashes. I am prepared to be taken through the streets of Sheffield in a tumbrel. That is the price of public life. What astonished me even more was the fact that people actually take notice of what people say in the Chamber of the House of Commons. After 22 years in this place, I find that staggering.
On the broader question, the danger is that the public is being misled. This is not just the question of the IP infringement; there are serious consequences. There is an assumption that somehow the packaging indicates an equivalence of content. It is not just that some people are trying the use the reputation that others have established; they are also trying to indicate that the product has the same construction and the same contents. That has been a particular problem over the years in the motor industry. Substandard and counterfeit parts are sometimes packaged very similarly to genuine spares and genuine replacement parts. That has a huge impact on safety.
The greatest offenders over the years, as my hon. Friend the Member for Hartlepool pointed out, have been the big supermarkets. I will not mention anybody unless I can help it, but they have mostly gone away from that. There was a time when supermarket own brands were regarded as a cheap replacement for other goods. That time has passed. The big four supermarkets have a sufficient reputation that people will trust their name on a product. It does not need to look like anybody else’s to sustain custom. Of the new entrants to the market—I will mention this company because it is perfectly true—the biggest offender is Aldi. It is clearly running a systematic campaign to provide products that mislead people into purchasing them.
That might be something that people do at the outset of a business, when they are attempting to establish it, but it means that they are relying on the efforts of others, for which they are not paying, to obtain a business advantage. Recently there have been articles
Those articles were interesting, in that they showed that in blind tastings there were many occasions on which people found the Aldi product to be superior to the name brand. The truth is that supermarkets do not actually need to behave in this way. If their products are better quality and provide better value for money—if, from the public’s point of view, they are predictable and reliable—they should let them stand on their own merits. They should not try to mimic others or trade on other people’s reputations; they should be prepared to establish their own credentials. We should do everything we can to ensure that supermarkets do so. The new clause would go some way towards sending a signal to that end.
Mr Willetts: That fascinating contribution from the hon. Member for Lewisham West and Penge will go down in the parliamentary annals as one of the great apologies. One thinks of Nixon telling Frost he had let down the American people. Perhaps more relevant—as the hon. Gentleman will be going to Sheffield—might be Boris Johnson’s trip to Liverpool, which could provide some sort of guidance for him as he prepares his pilgrimage north to apologise. The Henderson’s Relish episode brought the Second Reading debate to life. The hon. Gentleman gave a handsome explanation of what led him to refer to Henderson’s Relish, and I hope he has got himself out of his scrape.
Behind this episode is a genuine issue. Let me briefly share with the Committee the legal framework that already applies in such cases, because there are several relevant legal powers. The first, of course, is the trademark, which gives a powerful monopoly right. A trademark is a significant identifying feature for any brand, and if packaging is distinctive, it can be registered as a trademark in perpetuity—indeed, the first ever trademark registered in the UK is still in use 130 years later. Secondly, there are registered design rights that can protect the appearance of a product, including aspects such as it being novel and of an individual character. There is also the common-law remedy, in tort law, of passing off, which protects a trader’s goods from being represented as those of another.
There is already a legal framework that provides some protection for people in the circumstances that Members have described. Indeed, I am informed that the legislation has been successfully deployed in some cases. Passing off has been used in cases involving Penguin biscuits and Jif Lemon—just two examples that show that it is possible to obtain redress using those means. As well as that legal framework, there is a lively debate about how the economics works out, and
Let me share with the Committee the further action we are taking in light of the recent concerns about this issue. We are reviewing the consumer protection regulations to examine whether there is a need to give businesses a private right of action, which they could use as an additional means of protecting themselves against lookalikes. The review will consider the nature and scale of any problems associated with the current enforcement arrangements. It will consider the costs and benefits of giving businesses the power that I have described, including any associated effects on competition and innovation, how the power would work and the impact on enforcement of the consumer protection regulations in the UK. We understand the concerns of brand owners, and the review is intended to tackle them.
Again, the new clause has put a legitimate issue on the agenda, but we believe it is deficient, as it does not list the remedies available to the person whose reputation has been attributed to another’s goods due to similar packaging. For that reason alone, we think the new clause is defective, but we are also doing further work through consumer protection regulations.
Let me touch on the issue of copycat websites, which several hon. Members have raised, both on Second Reading and more recently. Again, let me describe briefly what the legal regime is and what more could be done. Businesses on the web are covered by the Consumer Protection from Unfair Trading Regulations 2008. The regulations are enforced by local authority trading standards officers, who have the power to investigate and take appropriate action if they find that a business is misleading people. The Advertising Standards Authority also has powers and has asked businesses to change the content of their websites where it is misleading. There is the Advertising Standards Authority and there are the unfair trading regulations of 2008.
However, we recognise that there is a particular problem with copycat websites copying government websites. We have a direct interest because it is our websites that are being copied. For that reason, the Cabinet Office has commissioned a cross-Government group to evaluate the problem and seek the best way to deal with it. It is, for example, already engaging with internet search engine providers to mitigate the risks posed, so we are engaging with internet search providers. In addition—I am sure that hon. Members on both sides of the Committee know this, but let me reiterate it for public information—one of our welcome reforms means that consumers can now get information on all Government services in one place, via GOV.UK. That is the place for people to go if they are filling in a tax return, applying for a driving licence or trying to get a passport form.
This issue was raised on Second Reading. With the deadline for tax returns coming up, let me state again that Her Majesty’s Revenue and Customs does not sanction or in any way approve the copycat sites linked to HMRC and will take firm action against any websites that suggest that they are in any way governmental or HMRC-approved.
There is a framework of legislation. We are looking at how we can toughen it. We recognise that we have a particular responsibility for protecting the integrity of government websites. That is what the Cabinet Office is
Mr Wright: This has caused me huge problems. My senior caseworker in my constituency office, Tim Mallender, is from Sheffield, and the moment I sat down on Second Reading, he was on the phone, talking about Henderson’s Relish. Henderson’s Relish is a Sheffield institution and has a variety of different labels. Mr Mallender is a Blade—a big supporter of Sheffield United—and it is possible to get red-and-white labels. I understand that another football team is available in Sheffield, which means that it is also possible to get blue-and-white labels. Following Jessica Ennis’s gold medal in the Olympics, it was possible to get Henderson’s Relish with a gold label. This is a big issue in Sheffield, and I look forward to hearing from my hon. Friend the Member for Lewisham West and Penge on it if he ever returns from Sheffield.
Jim Dowd: I am grateful to my hon. Friend, particularly for his last remark, as I have had e-mails telling me that I won’t, although I will put that to one side. I think I may have omitted to say in my remarks what a fine sauce Henderson’s is.
The Minister has made some progress, which is important. He mentioned a number of important things, including examples of successful changes. My hon. Friend the Member for Lewisham West and Penge said that supermarkets have generally moved away from this area.
The Minister mentioned Penguin biscuits—Committee members can see that I am a big fan of biscuits, especially chocolate biscuits. The case that he mentioned related to Asda’s own brand Puffin biscuits. There could be a debate about whether “Penguin” and “Puffin” are too similar, but to be fair to Asda, its packaging is now considerably different from the Penguin equivalent. There is some scope there, but I suspect that the exception proves the rule. I wonder whether the Minister can move further on that.
All stakeholders suggest that the existing IP protection does not work. The Minister mentioned registered IP rights. Designers who produce parasitic copies often design around registered trademark and designs to avoid infringement, while creating a similar overall impression. In terms of copyright, these people are clever and tend to fall short of the substantial reproduction tests required for copyright infringement.
The Minister mentioned, as I did, the concept of passing off, but the evidence required by the courts to show confusion is difficult to obtain. The UK is not
The Minister also mentioned enforcing existing rights, but trading standards have reducing resources and increased responsibilities, and find it difficult to enforce this measure. The Minister’s suggestion is neither adequate nor effective. Is he considering moving further on that? What he said about the private right of action is welcome, and we support that. However, consumers are being misled and the brand value of many well established businesses, including Henderson’s, is being undermined. We need to consider that closely. This has been an issue for the best part of 20 years. I hope that the Minister can move quickly.
Mr Willetts: On a point of order, Mr Turner. Before we conclude, I should like to place on the record my thanks to you and Mr Havard for the excellent way in which you have chaired our proceedings. This has been brisk but effective scrutiny of the Bill, and the 24 clauses and one schedule that comprise it have benefited from our debates, both in the main Chamber and in Committee. I am pleased that we are able to improve the Bill further, with the amendments that were accepted.
I am grateful to Committee members from all parties for their active participation. I congratulate the hon. Member for Hartlepool for his careful scrutiny. I thank the usual channels for ensuring that the Bill has gone through so efficiently. I also thank the experts from the Intellectual Property Office and the other bodies representing the industries concerned with this important legislation, who have ensured that the Bill is a welcome and important contribution to improving intellectual property law in this country.
Mr Wright: Further to that point of order, Mr Turner. I thank the Minister for his kind comments. I join him in thanking you for your diligent chairmanship, Mr Turner, and I should be grateful if you passed on his kind remarks, and mine, to Mr Havard, who equally chaired the Committee well.
I thank the Minister for being less grumpy as we went along. It was a pleasure to try to battle with him, and I enjoyed it. I join the Minister in thanking the usual channels—the Government Whip and my hon. Friend the Member for Cardiff South and Penarth—for the smooth, effective running of business. I am grateful to them for that, and for being as accommodating as possible regarding our debating at length the pressure points in the Bill, such as clause 13 and others. I am also grateful to all Committee members, who have scrutinised the Bill diligently, comprehensively and often silently. That is welcome.
During our deliberations, the Minister said that my amendments were defective. He should have seen them before they passed across the desk of the Clerk. I thank Georgina Holmes-Skelton, the Clerk of the Committee, for providing fantastic help and support and for making my amendments look passable.
I hope that the Bill has shown you, Mr Turner, hon. Members and the wider House and country that IP does matter. It is part of our competitive edge. It ensures that we can pay our way in the world in the 21st century. IP is not a secondary consideration or something to be given and frittered away without due consideration. It is a key part of what makes this country economically viable in the 21st century. It matters. I hope that we have given that subject due regard during discussions of the Bill. I wish the Minister all the very best in making sure that we can retain the best IP regime in the world.