Business, Innovation and SkillsWritten evidence submitted by the Alliance for Intellectual Property

The Alliance for Intellectual Property welcomes the opportunity to contribute to the Select Committee’s pre-legislative scrutiny of the draft Consumer Rights Bill. Our comments are limited to the areas of the Bill which have the potential to impact the ability of rights holders to protect their digital content and the ability of trading standards to effectively investigate instances of IP crime. We also respectfully submit thoughts on issues and areas that are currently not contained in the Bill but whose inclusion would go a significant way to protecting consumers’ rights online.

Chapter Three: Digital Content

The Alliance broadly supports the proposals contained in the draft legislation which will make it clearer to consumers what their rights are when they have purchased legitimate digital content.

Clauses 44–47

We support the approach that, in instances when legitimately purchased or accessed digital content breaches the contractual terms set out in clauses 36, 37 and 38, a consumer’s first remedy is the right to a repair or replacement (clause 45). In the absence of sealed packaging, as around physical goods, it is difficult to ascertain whether a digital product has been used (be it watched, listened to, read, or played). We believe providing a repair to the faulty product or a replacement of the product is the fairest way to ensure consumers receive what they have paid for whilst protecting traders from nefarious claims ie those attempting to get a refund after they have enjoyed the product.

We support the measures outlined in clause 47 which set out the conditions and circumstances in which a refund would be appropriate.

Clause 48

From discussions with BIS officials we understand that this clause is to be amended to introduce similar remedial steps to allow for the trader to repair the device or digital content prior to being required to make a payment for damage, and also to ensure that any subsequent payment reflects the level of the damage caused. We support such amendments.

Schedule 5 Part 3: Enforcers’ Powers

Trading standards have lead enforcement responsibility for protecting the public and legitimate businesses from IP crime. They ensure that trade is fair and lawful, that consumers are protected from shoddy, substandard and potentially dangerous products, that local criminality is combated, and rights owners, shops and traders, who are operating legally and selling legitimate products, are protected. They also have powers to ensure companies are not abusing intellectual property rights by, for example, committing copyright offences by knowingly installing or reproducing copyright protected material without the proper licences. Specifically, they enforce the criminal provisions of the Trade Marks Act 1994 and the Copyright, Designs and Patents Act 1988 making their role, as the front line in intellectual property rights enforcement, a critical one.

Requirement to give notice

The Alliance agrees with paragraph 20(2) that a warrant should be required to enter a premises used wholly or mainly as a dwelling. Even though there is an increase in criminal activity connected to IP infringement taking place in the home (because of the increase in internet based IP crime) we understand the reasoning behind this and that this reflects what is, effectively, existing practice amongst trading standards officers.

However, we remain concerned about the new requirement for trading standards to give notice of a routine inspection (paragraph 20(1)–(4)) unless they have “reasonable cause” to either suspect that there is or has been a breach of the enforcer’s legislation (paragraph 20(5)(b)), or that evidence may be lost or destroyed if notice is given (paragraph 20(5)(c)).

On many occasions trading standards come across instances of IP infringement in the course of undertaking routine inspections. Being required to give notice for such inspection when an officer has no reasonable cause to suspect illegal activity could result in a business removing infringing items from its premises. Removing such a major tool in trading standards enforcement armoury will significantly negatively impact their ability to protect consumers from fake goods.

For example, when Alliance member UKIE accompanied trading standards on routine inspections circumvention devices for Nintendo DS consoles where uncovered for sale. As there had been no indication from outside displays or other intelligence that would have given trading standards “reasonable cause to suspect” it is difficult to see how, under the new proposed rules, a notice would not have been required for such an inspection, which in turn would have led to these illegal devices being hidden from view.

It is important to note that the power to observe the carrying on of a business (as in paragraph 15(1)) does not assist in these instances, as this does not give trading standards the right to look anywhere other than where the consumer has access, therefore not behind the counter or in any stockrooms.

Trading standards services across England and Wales have been, and continue to be, subject to significant budget cuts which are having an impact on the level of service they are able to provide. It is the wrong time to be increasing their regulatory burden and curtailing how they carry out their duties. In addition, given that, when it is appropriate and necessary to the successful carrying out of an inspection, trading standards routinely provide notice to businesses, we are unsure what problem this measure is designed to fix.

If there are substantive problems around the giving of notice which require addressing (such as if some businesses are finding unannounced visits problematic) we believe these would be better resolved by updating the Regulators Code of Conduct. This is not such a blunt instrument and allows for greater flexibility to take into account different circumstances; thereby ensuring businesses are not unduly burdened and that trading standards are not impeded in the investigation of criminal activity and that consumers are properly protected.

We recommend these provisions are deleted from the draft Bill and instead measures are taken to review and update the Regulators Code of Conduct.

Instances when notice is not needed (20(5))

Should these provisions remain, guidance is needed as to what would constitute “reasonable cause to suspect”. It is currently not clear whether this requires actual intelligence or includes intelligence based on an officer’s experience; whether any intelligence needs to be connected to the specific business or based on a risk identified in the wider locality.

In addition, reassurance is needed that should infringing items and/or activity be uncovered evidence is not at risk of being deemed inadmissible should the trading standards officer be challenged on what constituted his “reasonable cause to suspect”.

Seizure of digital products

Paragraph 29(1) refers to the ability of law enforcers to access any electronic device on which information may be stored or from which it may be accessed. As a great deal of infringing copyright material is now held digitally in the cloud as opposed to on discs, we would appreciate confirmation that “information” also includes the actual infringing material itself, not just business documents relating to the offence. This will also need to be accessed, examined and, if appropriate, seized and forfeited. Similarly, the definition of “container” in paragraph 29(4) needs to be expanded to include digital containers such as cloud based storage services.

Additional Measures for Inclusion in the Bill

1. Other issues and problems faced by consumers online

The current focus of this Bill is to aid and provide rights to consumers who have brought legal content online which has subsequently be found to be faulty or caused damage. Whilst clarifying what rights they have once they have purchased digital content is certainly important, the consumer experience in relation to this content starts much earlier.

The biggest problem facing consumers online is inadvertently buying or accessing illegal content and fake goods and the lack of redress they then face; the implicit contract consumers enter into with third parties not to be directed to illegal sites or made to believe a site it legal when it is not. This problem falls into three broad categories:

1.Illegal online retail offers on legitimate online market platforms.

2.Sites created for the express purpose of selling counterfeit goods.

3.Legitimate businesses/services providing reassurance that purchasing from a particular site is safe.

1. Illegal online retail offers on legitimate online market platforms

The problem began with eBay some years ago, with the online auction site becoming a virtual shop front for some counterfeit products, such as DVDs and luxury goods. Their auction sales quickly expanded to include almost every counterfeit product you can think of, from car parts to electrical goods.

While eBay does now carry advice about the protection of IP rights, works with law enforcement and has introduced a method of takedown for rights holders through its VeRO programme, brands still face a huge challenge trying to police eBay’s sites where they have found that between 20% and 90% of their products are fake.

A continuing problem lies in the checks and verification eBay make of those trading on their site. Law enforcement can order eBay to suspend a trader’s account but there are no rigorous checks to prevent that same trader from setting up a new account.

The past two years has also seen an increase in the use of pages on social media platforms such as Facebook to advertise and trade goods. While these are used legitimately by many retailers they are also used by traders of counterfeit goods. A recent case in Scotland saw suspected counterfeit goods estimated to be almost £20,000 seized by trading standards. While Facebook does have a reporting and take down process, it is generally too slow and sometimes takes several weeks to remove offending items, while creating such a page can take a matter of minutes.

The Consumer Rights Bill should include measures to ensure that eBay and social media platforms have robust and effective processes in place to prevent illegal traders from a) selling on their platforms in the first place and b) are not able to register under a different name and continue their illegal activity.

2. Sites created for the express purpose of selling counterfeit goods

A further problem for consumers are sites that purport to be official distributors, licensed by the brand owner to sell their products, or are designed in such a way as to deceive the consumer into thinking they are visiting and purchasing from a brand’s official website.

While it is relatively easy to identify the ISP used to host an infringing website, problems often arise in finding out who is actually responsible for the site itself. This is because, as a registrant, you can pay for your information to be hidden or register as a private individual when in fact you are running a business. Inadequate checks are undertaken by domain registrars to confirm that the registration information, personal and financial, is correct which means taking action, for example serving legal notices or warnings against these businesses is very difficult.

The Consumer Rights Bill should include measures to compel domain registries to carry out effective verification and validation of all their registrants contact details.

3. Legitimate businesses/services providing reassurance that purchasing from a particular site is safe

Search engines are increasingly consumers’ first port of call when looking for a product or service. The BPI alone, which represents the recorded music industry, sends in excess of three million requests to Google each month to delist URLs which point to infringing content. These search links are subsequently delisted by Google and other search engines who receive notices.

In fact, these delisted URLS can relate consistently to the same sites. Therefore, as a responsible company, Google should not only delist the individual URLs but de-rank the actual sites.

Consumers rightly expect to be directed to legal sites as opposed to sites which are illegal and infringe copyright. Illegal sites, featuring so high on search results, inevitably damage legitimate online retailers by diverting traffic elsewhere and places consumers at risk of downloading viruses and malware. With no ability to get a refund should the product be faulty, greater efforts need to be put into ensuring consumers are not misled into using illegal sites in the first place.

In addition, the presence of advertisements on these illegal sites of legitimate companies and the ability in certain instances to pay for products and content using well-known payment services such as MasterCard or Visa, adds to the consumers belief that the business or service they are contracting with is legal.

To this end, the Consumer Rights Bill should include measures to require:

Businesses (entities) to take all reasonable steps not to promote or support sites where they have reasonable knowledge of infringement of copyright


Businesses (entities) to have an obligation not to trade with or to promote sites where they have actual knowledge of infringement

2. Parasitic packaging

In addition, this Bill provides an ideal vehicle to resolve the outstanding problem that the UK does not comply with the requirement in the Unfair Commercial Practices Directive that Member States provide for adequate and effective enforcement against misleadingly similar packaging. This is because it chose to limit its enforcement options to public sector law enforcers, in contrast to 22 other Member States which allow private companies the right of action.

It is important to note that this is not a question of whether the UK should legislate in this area—it has existing obligations under both European Law (the Unfair Commercial Practices Directive (UCPD)) and international treaty (Article 10bis of the Paris Convention and Article 2 of TRIPS) not only to legislate but also to provide effective enforcement against misleadingly similar packaging that affects consumers transactional behaviour.

Recent research conducted for the IPO shows that:

Excessive similarity of packaging misleads and causes large numbers of consumers to buy products they would not have bought had the packaging been more distinct. This transactional effect is prohibited under the UCPD. “Substantial proportions (50–60%) of the UK, German and US populations report having purchased a lookalike accidently or mistakenly at least once or twice” (Section 7.5.1).

Excessive similarity of packaging to a familiar brand causes consumers to be more inclined than they would otherwise be to believe that the similar goods come from the same source and/or share qualities with the familiar branded product. Where the packaging is similar then it appears that more people think the own brand has a common origin with the manufacturer (section 7.4.4). Increased perceived similarity of packaging…is significantly correlated with higher perceived (ratings/expectations of) price, quality, suitability for intended us and (marginally) value for money (section 7.4.3)

Concerns that allowing for private action would lead to a significant increase in litigation are unfounded. Ireland, with its very similar legal system, provides for private rights (along with 21 other Member States) and this has not led to anything approaching a flood of legal cases.

To this end, the draft Consumer Rights Bill should include measures to amend the Consumer Protection Regulations 2008 to allow brands the right of private action in cases of misleading packaging.

August 2013

About the Alliance

Established in 1998, the Alliance for Intellectual Property is a UK-based coalition of 24 trade associations concerned with ensuring that intellectual property rights are valued in the UK and that a legislative regime exists which enables the value and contribution of these rights to be fully realised. Our members include representatives of the audiovisual, music, games and business software, and sports industries, branded manufactured goods, publishers, retailers and designers.

Alliance Members

Anti-Copying in Design

Anti-Counterfeiting Group

Association of Learned and Professional Society Publishers

Authors’ Licensing and Collecting Society

British Brands Group

BPI (British Recorded Music Industry)

British Video Association

Business Software Alliance

Cinema Exhibitors Association

Copyright Licensing Agency

Design and Artists Copyright Society

Educational Recording Agency

Entertainment Retailers Association

Federation Against Copyright Theft

Film Distributors Association

Motion Picture Association

Premier League

PRS for Music

Publishers Association

Publishers Licensing Society

UK Interactive Entertainment

UK Music


British Allied Trades Federation

Video Standards Council

Prepared 20th December 2013