Draft Copyright and Rights in Performances (Licensing of Orphan Works) Regulations 2014
Draft Copyright and Rights in Performances (Certain Permitted Uses of Orphan Works) Regulations 2014 (14 October 2014)
The Committee consisted of the following Members:
† Baldwin, Harriett (Lord Commissioner of Her Majesty's Treasury)
† Boles, Nick (Minister for Skills and Equalities)
† Coffey, Ann (Stockport) (Lab)
† Fabricant, Michael (Lichfield) (Con)
† Freer, Mike (Finchley and Golders Green) (Con)
† Fuller, Richard (Bedford) (Con)
† Hilling, Julie (Bolton West) (Lab)
† Lloyd, Stephen (Eastbourne) (LD)
† Norman, Jesse (Hereford and South Herefordshire) (Con)
† Skidmore, Chris (Kingswood) (Con)
† Ward, Mr David (Bradford East) (LD)
† Watkinson, Dame Angela (Hornchurch and Upminster) (Con)
† Wright, Mr Iain (Hartlepool) (Lab)
Mark Oxborough, Committee Clerk
† attended the Committee
Fourth Delegated Legislation Committee
Draft Copyright and Rights in Performances (Licensing of Orphan Works) Regulations 2014
Tuesday 14 October 2014
[Mr James Gray in the Chair]
2.30 pm
The Minister for Skills and Equalities (Nick Boles): I beg to move,
That the Committee has considered the draft Copyright and Rights in Performances (Licensing of Orphan Works) Regulations 2014.
The Chair: The sharp-eyed among us will have noticed that we are considering two statutory instruments today. With the draft Copyright and Rights in Performances (Licensing of Orphan Works) Regulations 2014 it will be convenient to consider the draft Copyright and Rights in Performances (Certain Permitted Uses of Orphan Works) Regulations 2014.
Nick Boles: Thank you, Mr Gray. It is a pleasure to serve under your Chairmanship. I can well understand why the hon. Member for Hartlepool might look somewhat askance at the fact that yet again it is I who is taking regulations in relation to intellectual property through the House. He had to suffer a previous experience of me taking another set of regulations through in this policy area for which I am not technically responsible. I am sure that he and all my hon. Friends on the Committee will be only too delighted to know that the Minister responsible, the Minister for Culture and the Digital Economy, my hon. Friend the Member for Wantage, is currently enjoying himself in the fair city of Cannes in the south of France while we labour away on the detail of his brief. I am sure that the Committee will want to send him their best wishes as we proceed.
As you pointed out, Mr Gray, we are dealing with two sets of regulations. If it is acceptable to you, I propose to speak once to introduce both sets of regulations, although we can have a discussion about each individually thereafter. The two sets of draft regulations before the Committee will allow for the reproduction of copyright works whose right holders are unknown or cannot be located. These are known as orphan works and include photographs, diaries and film footage. At present orphan works cannot be reproduced lawfully because the rights holders cannot be asked for permission. These regulations allow for their use under conditions that protect absent copyright holders.
Richard Fuller (Bedford) (Con): For the benefit of the Committee, will the Minister explain whether a work is an orphan work only in those circumstances in which all copyright holders cannot be indentified, or when some copyright holders cannot be indentified?
Nick Boles: I greatly look forward to being able to answer that question. If my hon. Friend will allow me to make a little more progress I promise that I will return to it before I conclude my remarks.
The first set of regulations, the Copyright and Rights in Performances (Certain Permitted Uses of Orphan Works) Regulations 2014, implement the EU directive on certain permitted uses of orphan works, which must be transposed into UK law by 29 October 2014. The directive allows cultural institutions to display orphan works on their websites. The exception can only be used by cultural organisations with a public-interest mission that have the work within their collections. The directive does not apply to all copyright works. It applies to published and unpublished written, cinematographic and audio-visual works, sound recordings and embedded artistic works, such as photographs and illustrations within a book. It excludes stand-alone artistic works.
The directive sets out the sources which must be searched to check for right holders. Results of the diligent search will be recorded by cultural organisations on a single European database, maintained by the Office of Harmonization in the Single Market. That office notifies the national competent authority, which is the Intellectual Property Office in the UK. Returning right holders can negotiate fair compensation from the user of the work. They can appeal to the Copyright Tribunal if fair compensation cannot be agreed.
Richard Fuller: I was remiss in not saying that I am delighted that my hon. Friend is in place today rather than his colleague in Government. I want to put that on the record before I ask him another question.
In the notes regarding this it says that:
“Emerging rights holders are entitled to fair compensation”,
as the Minister has said, but it also then says,
“..taking into consideration the non commercial use of the work”.
It would be helpful if at some stage, either directly or later, he could relate what precisely is meant by the consideration of,
“..the non commercial use of the work”.
Nick Boles: The great news is that I can answer my hon. Friend’s first question and take on board his second, so we might be getting into a productive relay race. He asked about when a work has a number of copyright holders, some of whom might not be known. Both sets of regulations allow for the use of so-called partial orphans subject to safeguards. Users need to gain permission from any locatable right holders and then the orphan regulations would apply to those who are not locatable.
I was just describing the first set of regulations, which relate to the implementation of the EU directive. As I was saying, returning right holders can negotiate fair compensation from the user of the work and can appeal to the copyright tribunal if fair compensation cannot be agreed. The regulations to implement the directive will give the cultural heritage sector the means to display works on their websites, so that the public can view them wherever they are in the EU.
The second set of regulations is complementary to the directive. The Copyright and Rights in Performances (Licensing of Orphan Works) Regulations 2014 provide
for a licensing scheme for commercial and non-commercial use, such as in books, TV programmes, exhibitions and on websites. The scheme will enable greater access to culturally valuable works, boost economic growth, reduce incentives to use orphan works illegally, increase the chances of finding right holders and hold licence fees for them should they reappear. The regulations have been developed through consultation, including with a stakeholder working group. The regulations make the scheme efficient to use while safeguarding right holders’ interests.The central safeguard is the requirement for a diligent search to be undertaken for all relevant right holders. The regulations set out the requirements for a diligent search, which are supplemented by sector-specific guidance, again developed with stakeholder input, which was published last month. The applicant will provide details of this search to the authorising body, the IPO, which must take reasonable steps to satisfy itself that it is adequate. The IPO will maintain a free, electronic register, allowing right holders to check if their works have been licensed as orphans or are subject to application for a licence. Another significant safeguard for right holders is the presumption that where their name is known, they must be credited when the work is used, together with the details of the authorising body. The authorising body will also reject any proposed adaptation of an orphan work that it considers derogatory treatment.
Licences issued by the IPO will be for specified purposes and will run for a maximum of seven years, with the possibility of renewal. Licences will not permit sub-licensing. However, additional follow-on uses may be purchased, for example, to allow broadcast and subsequently sale as a DVD. The requirement to pay a licence fee in advance ensures that the market for non-orphan works is not distorted by orphan works. Commercial fees will be at commercial rates. Licence fees are held by the authorising body for the absent right holder, who will have eight years from the issue of a licence to claim the fee. That covers the time when right holders are most likely to reappear. The IPO will have discretion to pay the right holder after the eight years when reasonable.
To provide for business certainty, any licence will continue to run for the remainder of the licence period after the right holder has reappeared, but the work will cease to be an orphan work and no new licences can be issued by the authorising body. After eight years, unclaimed licence fees will be used to offset the costs of the scheme. Any surplus funds will be used for social, cultural and educational activities. The regulations also provide for two appeal routes. Returning right holders will be able to appeal to the first tier tribunal if the IPO has acted improperly. Applicants for orphan works licences will be able to appeal to the copyright tribunal about the licence fee, licence conditions or a refusal to grant a licence.
In conclusion, these two sets of regulations will both allow cultural heritage bodies to display some orphan works on their websites and will introduce a licensing scheme for wider use in the UK. Both are subject to safeguards to protect absent right holders. They are good for right holders, good for cultural organisations, good for businesses and good for all of us as citizens and as consumers. I will return to the second question
of my hon. Friend the Member for Bedford in my summing up, but I commend the regulations to the Committee.2.39 pm
Mr Iain Wright (Hartlepool) (Lab): It is a pleasure to serve under your chairmanship, Mr Gray. I am pleased to see the Minister back in his place. He did such a good job on extended collective licensing schemes that he has been brought back for this Committee, although I imagine that he would rather be in Cannes than in Committee Room 10. We discussed orphan works a lot in the Enterprise and Regulatory Reform Bill Committee, so I will not detain the Committee for too long, but I have several questions for the Minister.
My first question goes back to first principles. Why did the Government not properly consider an industry-led solution? The largest single risk in this field, I would have thought, is that the owner of a work that has been thought to be an orphan work might come forward and rightly demand recompense for the use of their work. I know that the Government are always keen to rush to regulation, but why can insurance not be used to mitigate such a risk for people who want to access orphan works? Why does an authorising body have to be set up, at a cost of £267,000 and with annual running costs of £33,000?
On the subject of costs, an annual running cost of £33,000 for the authorising body seems very low to me. That is not lean regulation; it is naiveté in the assessment of costs. How was that figure calculated? The impact assessment of licensed works under the scheme estimates that between 1,500 and 3,000 orphan works will emerge each year. That works out a unit cost per orphan work of between £11 and £22, which is incredibly low. Similarly, the cost of diligent searches to users of orphan works is estimated to be some £176,000. That works out at a cost per work of between £58 and £117. Can the Minister look members of the Committee in the eye and say that a diligent search will be carried out, given those costs? I think that such cost estimates are recklessly low.
The regulations pertain to the granting of a license for an orphan work in the UK only. There is clearly an enforcement problem, however, because they will allow the digitisation of orphan works in order to provide online access. Is it really feasible to think we will be able to prevent unlawful online access to UK designated orphan works from other jurisdictions? What evidence allows the Minister to conclude that enforcement will not be an issue?
The principal concern regarding orphan works is the reasonableness of a diligent search. As I understand it, the regulations do not distinguish between published and unpublished works. If a person were to obtain a license for the use of an unpublished work, could they publish the work themselves and derive commercial benefit from it? In an era of liberation from third parties, such as traditional record companies or publishers, I imagine that that will be a problem. I understand that the British Library has stated that half of all orphaned books are by self-published authors, who are much harder to trace than those who have followed more traditional publishing routes. Can the Minister genuinely tell us that a diligent search will be carried out in those circumstances?
Photos that are uploaded and shared on social media sites are sometimes stripped of metadata that can identify their creator. In such circumstances, how can owners be satisfied that their work has not been taken and resold? If I share something on Facebook or Twitter, I have copyright on it, but users of social media often do not understand that. What will the Minister do to publicise and communicate that message, to alert people to the fact that copyright exists on their work and they may be able to derive some benefit from that?
What percentage of diligent searches will find the rights holder? The impact assessment states that in Canada, the figure is 22%. Does the Minister suggest that that will be the case in the UK, and if so, on what grounds? Is seven years too long for a diligent search to be relevant? What role does the Minister envisage the industry-led copyright hub playing? Is there potential to reduce the cost of diligent searches by using interlinked databases? There is no mention in the regulations of whether licences for orphan works will be transferable. What is the Government’s position and intention on this matter?
Finally, the regulations do not impose any positive obligations on organisations to respond to diligent search requests. How will an organisation’s refusal to respond to a request be taken into account when evaluating whether a reasonable search, as per paragraph 4.2 of the regulations, has been carried out? I realise that I have thrown a number of questions at the Minister, but this is an important point. I am concerned that people, often those who are not aware of the power and the right that they have as providers of creative content, should be protected in this field. IP law is important to ensure that those people are protected. Orphan works are an important point, certainly in the research field, but we do not want that to be at the expense of proper rights holders. I hope the Minister can explain that.
2.46 pm
Nick Boles: The hon. Gentlemen raises a number of intelligent and perceptive questions. Unfortunately, they are somewhat inconsistent because he started by asking why on earth we were not just letting industry regulate this issue, but then seemed very worried about how lots of different aspects of it were going to be enforced, which, of course, is something that an industry-led body would be almost incapable of doing. A Government-backed scheme, however, with regulations to support it has slightly more chance of doing that.
Perhaps refreshingly for a member of his party, the hon. Gentleman also seemed very concerned about relatively small—in the scheme of public spending—sums of money. He seemed worried that we were even proposing to spend so much and I hope that that is a change that he will be able to spread among his colleagues on the Opposition Benches. If he will forgive me, I will start by trying to reply to the question from my hon. Friend the Member for Bedford, which was about fair compensation for non-commercial uses. The directive only allows non-commercial use by certain cultural organisations with a public interest mission. In that context, non-commercial means digitising certain works to be displayed on a cultural organisation’s website where that organisation
will make no profit from doing so. I hope that answers the question. If it does not, perhaps he could reflect on how to make it more precise and come back to me.As I said, the hon. Member for Hartlepool started by asking why we were not just relying on an industry-led solution. There was a similar question in our previous discussion on collection bodies, about how, in a sense, that already happens, but in a legal grey area. I am great believer that a lot of the best things that happen are things that are not mandated or forbidden; they are just things that people get on with and Government should not necessarily always feel in a position to get involved. The fact is that there is currently no legal basis for publishing works that have a rights holder, but where the rights holder is not known and is not paying a fee for that activity. An industry-led solution could not create a legal basis. It might create, as collection bodies have, a pragmatic solution, but it would be one that would not have a legal basis. We think it is right to put a legal basis in place. As he has pointed out himself, it is not going to lead to a vast or expensive Government bureaucracy.
The hon. Gentleman also asked how we were going to ensure that enforcement works. To some extent he is right that it is not going to be possible to enforce the regulations in every case. There will be cases where that is beyond the powers. However, we can recognise that at the moment orphan works are used illegally and nobody enforces that current law. The regulations at least create a system and legal route that, hopefully, will be attractive. I suspect that most people are not illegally using orphan works out of a malign attempt to deprive the rights holders of their due income, but are simply doing so because they do not know that there is any way of using the work and properly crediting the creator of it. We are creating a legal route that is relatively simple and low-cost, which will hopefully mean that most cases of the publication of orphan works will come under it without requiring a diligent enforcement process.
The hon. Gentleman then asked about the estimated costs of the Intellectual Property Office. The first point to make is that there will be significant economies of scale. Where, for instance, there is a whole box of photographs from one author, the process of undertaking a diligence search will clearly not be individual for every item. The IPO is certainly confident that with existing staff and a newly developed online application scheme, it will be able to manage within the estimates given, which are not estimates imposed from above; they have been generated in consultation with the IPO.
Finally, the Committee should be reminded that the income from many such works may not ultimately find its way into the hands of the original creators, as they may never come forward. That income will cover the costs of the scheme, so if the scheme ends up costing more than we originally anticipated, that will not necessarily fall on the taxpayer; it will hopefully be funded by revenues from the scheme.
The hon. Member for Hartlepool asked what the Government are doing on copyright education to ensure that consumers understand when they might be about to infringe somebody’s copyright. The Government are working with industry to educate consumers, including through a new partnership called Creative Content UK, which is co-funded by Government and industry. As technology develops—particularly social media sites, as
he pointed out—it is much more likely that through perfectly normal private activity, individuals may publish things in ways that could run into trouble. It is right that through a partnership with industry, not least with a lot of online businesses, we can inform people when they are getting into grey areas that could pose legal risks for them.The hon. Gentleman asked how people would know about the scheme. Obviously, there is no point setting up a whole new system if people do not know about it. We are working with all the stakeholders to publicise it. There will be a press launch and specialist briefings and, because we have located it with the IPO, that organisation will be in a position to ensure that everybody who is used to turning to the IPO knows about the scheme. Most people who use orphan works in that way—not everybody—will also be pretty regular users of other copyright and therefore used to dealing with the whole system of paying a reasonable amount for the right to publish. Although it will not necessarily be possible to inform everybody who could be in that position, most of the volume users of orphan works already use rights in other ways and will be working with the system.
I think that I have covered most of the questions, but I will check. Is my hon. Friend the Member for Bedford satisfied, or would he like a further answer? I remember that he asked whether licences will be transferable under the scheme. They will not be freely transferable, but the authorising body will have discretion to allow a licence to be transferred when it considers that there are compelling reasons to do so. Given that the absolute number of such licences will probably remain reasonably low, I think that it is right to have such a discretionary ability.
Mr Wright: I have a specific question for the Minister and I hope that he will illustrate his whole argument with a case study. This will be a finger in the air at the moment, but what proportion of orphan works will be returned to rights holders? I will then ask about the case study.
Nick Boles: The hon. Gentleman referred to the Canadian example, which is a scheme that has been operating successfully for quite a long time. The Canadian estimate, I think, is 22% of diligent searches, but I am reluctant to get into the question of what we expect, because it is slightly new territory. Obviously, there will be every effort to make things work. The key point is the protection in place if a diligent search is not ultimately successful. That is the whole point about the eight-year period within which a rights holder may come forward and say, “Oi, this was mine” — that the money will have been held and be available. In a sense, the system does not rely on the diligent search being successful in every case, although it is an important process; nevertheless, it ensures that the people who created work can get the benefit from it.
The hon. Gentleman also asked a question that I do not believe I have yet answered, and I hope to have the opportunity to answer briefly what happens when we have an orphan work that someone suddenly has an opportunity to publish. I will get that answer while he sets out what he wanted to ask about the case study.
Mr Wright: I was hoping that the Minister would illustrate his whole case with a particular case study. Take Grantham, a famous daughter of which was
Mrs Thatcher. We can imagine letters, photographs and different creative pieces of content relevant to the life of a British Prime Minister. What would a diligent search look like? Inhabitants of Grantham might be unaware that they are the rights holders because they took the photograph or were the recipient of the letter. How will that work in the wider context?Nick Boles: That is a very good question, to which I do not have a complete answer. In a sense, I imagine that where the subject of a work is from a particular place and there are lots of people who might have corresponded or had photographs or whatever it is and are likely to be in that same place, it might be rather easier for a diligent search to take place, because local media and local contact networks could be used. Where it becomes more difficult is if it could be anyone, anywhere in the world. It could be someone who took a photograph of Lady Thatcher when she was on a visit to China. How do we establish whether the original author has a right? I suspect that that is why, while the diligent search is a critical part of the process, it is not the complete answer.
The complete answer comes from the point when, for example, Grantham museum—a fantastic volunteer-run charitable museum—publishes on its website a photograph that is an orphan work. The diligent search might have failed, but once it is up there, lots of people may see it, including someone who says, “Oh, I know the person who took that.” That person then has eight years to come forward to say who created it. The other point—and it is perhaps easier to say this with photographs than other works—is that there might be clues in the photograph about who created it, and those clues could be used.
I am not willing to set an expected percentage, but apparently when museums use orphan work on a risk basis—the legal basis on which they do so—only about 1% of rights holders appear, and most do not want payment because they are unpublished works by non-professionals. That is if they are not doing a diligent search—1% appear without any active effort to go out and find them. One would hope to obtain a substantially better result, but whether 10% or 30%, I have no idea and I would not want to commit to an estimate—[ Interruption. ]
Unless the hon. Member for Stockport who is clearly gripped by our discussions has no other questions—
Ann Coffey: Extremely gripped.
Nick Boles: Excellent. On that basis, I recommend to the Committee that we pass the regulations.
Draft Copyright and Rights in Performances (Certain Permitted Uses of Orphan Works) Regulations 2014
That the Committee has considered the draft Copyright and Rights in Performances (Certain Permitted Uses of Orphan Works) Regulations 2014.—(Nick Boles. )