The Digital Economy Contents

6Intellectual property, and the Digital Single Market

Intellectual property

54.In 2011, the Government initiated a review under Professor John Hargreaves to study copyright, and other parts of Intellectual Property. As with regulation and compliance covered in the previous Chapter, intellectual property and copyright laws need to be flexible and robust to adapt to whatever technology comes along.58 Richard Mollett, from the Alliance for Intellectual Property, told us that there is enough flexibility within copyright law to say “it almost is technology neutral”.59

55.One of the innovative measures that the Government has taken is supporting the establishment of the Copyright Hub. The Copyright Hub was set up in 2013, as a not-for-profit, industry-lead organisation, to implement the recommendation of the Hargreaves Review, that the UK should establish a Digital Copyright Exchange to facilitate licensing. It was set up with the help of the Digital Catapult, which was itself set up in 2013 by Innovate UK, to drive future economic growth in the digital economy. The aim of the Copyright Hub is to make it easy and free for any piece of content to have a globally unique and resolvable identifier, which Copyright Hub’s written evidence describes as “a serial number, if you like, which can be ‘resolved’, a bit like a domain name, to a server which has information about the identifier and the content it relates to”.60 The Copyright Hub connects the content to its owners, allowing machines to talk to each other about permission, rather than people; “the same thing the internet does”.61

56.The Copyright Hub is unique,62 ensuring that the ability to ask for permission is done in a way “that is as simple, cheap and automatic as the discovery of the content itself”.63 Dominic Young, CEO of the Copyright Hub, praised the Government and the Hargreaves Report:

The UK should pat itself on the back for doing something really practical and meaningful in this area, which can benefit the global economy and the British economy in particular, because we punch above our weight in the creative industries globally.64

57.The Coalition Government introduced some wide-ranging changes to the intellectual property regime through primary and secondary legislation on important issues such as copyright exceptions. Witnesses told us that the current regime more or less strikes the most appropriate balance between the rights of the creator and the consumer. Susie Winter, from the Publishers Association, told us that one of the biggest threats to innovation was legislation, especially legislation proposed in the context of the digital single market “that is trying to fix a problem that is not there. That is really where we have got to with the Commission at the moment”.65 We agree that further change in this area would not be helpful at the moment, and a period of stability would now be welcome.

58.Intellectual Property is increasingly important to the economic success of the UK, but it is hard to manage in a digital context. The Intellectual Property regime in the UK is flexible enough to withstand technological and digital challenges. While we have not carried out a detailed study into the work of businesses working within IP issues, we were impressed with the evidence from the Copyright Hub, which incentivises creators and creativity, ensures that mechanisms are keeping up with technological disruption, and uses identifiers to connect the work with the creator.

59.The Government has shown foresight in leading on this work, in supporting the Copyright Hub, through the Digital Catapult (set up by Innovate UK, to drive future economic growth in the digital economy). It needs to continue to pledge financial support for this world-leading asset, particularly during the next few years of the Copyright Hub’s existence, when its work will be focussed on driving adoption.

60.The Coalition Government introduced some wide-ranging changes to the intellectual property regime through primary and secondary legislation on important issues such as copyright exceptions. The current regime strikes the appropriate balance between the rights of the creator and the consumer, and further change in this area would not be helpful at the moment.


61.The enforcement of intellectual property rights is crucial for the fostering of innovation. The Intellectual Property Office funded the City of London police to set up the IP Crime Unit in 2013, and it has pledged funding until 2017.66 There have been successes concerning websites with digital material and websites dealing in physical material (buying counterfeit goods); since its inception in 2013, the IP Crime Unit has seized £3 million worth of fake goods, arrested 52 people and suspended over 6,000 websites.67 Richard Mollett told us the IP Crime Unit “is close to unique in Europe”.68

62.Under the Copyright Designs and Patents Act 1988, it is illegal to remove rights management information (including identifiers) from content. Many of the large platforms remove them, by intercepting them, so the ability of content to retain its connection to its owner is removed by the process. However, if platforms keep the identifiers, as they should, that means that they are, in the words of Dominic Young, CEO of the Copyright Hub, “not just enablers of this environments but participants, too, because they will then be part of a value chain in which they can increase and add value, and participate in that value”.69

63.We heard of the work that the Government is doing with organisations that benefit, sometimes inadvertently, from illegal sites. John Alty, CEO of the Intellectual Property Office, told us that Government and the police were working with payment providers and advising advertisers that they might be funding illegal websites, with the aim of starving such illegal websites of funding and revenue. He told us that “it is the so-called follow-the-money approach”70, and that the UK was leading internationally on this. Baroness Neville-Rolfe told us that criminals can expect two years in prison for online crime, compared with 10 years for other crime, “and that seemed to me to be an anomaly that we would like to do something about, once we get some parliamentary time”.71

64.The IP Crime Unit was set up by the City of London in 2013, with £5.6 million funding by the Government until 2017. We support the work it does in stopping people breaking the law, and preventing creative industries from having their rights infringed. We recommend that funding should be available beyond 2017. Furthermore, we recommend that the Government replicates the work of the IP Crime Unit in other parts of the country, and provides the necessary resources to support this.

65.The Government should be proactive in stopping metadata stripping, which removes identifiers from digital works. This is already an offence under the Copyright, Designs and Patents Act 1988. The current Digital Economy Bill includes the provision that perpetrators of online crime are subject to similar punishment to perpetrators of non-digital crime, which we support. Just as regulation must keep pace with digital economy development, so must enforcement.


66.While we did not include digital connectivity and infrastructure in our terms of reference, inevitably concerns were raised about the inconsistency of digital connectivity in the United Kingdom.72 Concurrently with our digital economy inquiry, the Culture Media and Sport Committee carried out an inquiry into the coverage, delivery and performance of superfast broadband in the UK, and will also be publishing their Report in July 2016.73

67.We welcome the measures outlined in the Digital Economy Bill, introduced in March 2016, which will create the right for every household to access high speed broadband, through a new Broadband Universal Service Obligation, and to make the United Kingdom a world leader in the digital economy, “a place where technology ceaselessly transforms the economy, society and government”.74 This will improve the internet connection for both individuals and businesses located in rural areas. However, clarification will be needed on how that coverage will be delivered on (or indeed in) the ground.75 We welcome the fact that new digital industries will be supported, by addressing difference in online and offline copyright laws, and that registered design owners will be able to give notice of their rights more cheaply and flexibly.76

Digital Single Market

68.In October 2015, the European Commission published a strategy for upgrading the digital single market, and set out a mix of legislative and non-legislative initiatives to be tabled in 2016 and 2017, based on three main areas: ‘creating additional opportunities for consumers, professionals and businesses’; ‘encouraging modernisation and innovation’; and ‘ensuring practical benefits for people in their daily lives’. There are 16 headings under the digital single market, and Baroness Neville-Rolfe told us that “I am very clear that the consumer benefits of the digital single market are extremely important”.77 The decision to leave the European Union risks undermining the United Kingdom’s dominance in this policy area. We could have led on the Digital Single Market, but instead we will be having to follow. The Government must address this situation, to stop investor confidence further draining away, with firms relocating into other countries in Europe to take advantage of the Digital Single Market.

69.In December 2015, the European Commission introduced the first legislative proposal aimed at implementing the copyright strand of the Commission’s Digital Single Market Strategy, intended to ensure the portability of digital services across the EU, allowing the same access to digital content in France, for example, as in the United Kingdom. There is always a balancing act between the enabling of greater accessibility, letting consumers have access to a wide variety of digital text, and the protection of the rights of producers, especially those in the creative industries. Susie Winter, from the Publishers Association, stressed the importance of the digital single market supports makers and exporters of creative content, and does not support those EU member states who are just consumers of content.78

70.We heard that the Government should be negotiating on behalf of film, television and travelling content in reference to portability, and Baroness Neville-Rolfe told us that we need the UK’s strong film and television industry to be able to sell rights in different markets, and then—if it becomes a hit format—to sell it right across the EU and around the world.79

71.The implications of the European Single Digital Market were beyond the remit of this inquiry, but the Government needs to address the issue of whether businesses will be able to access the European Single Digital Market, if they want to do so. In broader terms, we recommend that the Government sets out in its digital strategy the implications of withdrawal from the European Union, in reference to specific, current EU negotiations relating to the digital economy. The Government must address this situation as soon as possible, to stop investor confidence further draining away, with firms relocating into other countries in Europe, to take advantage of the Digital Single Market.

58 Q 209 and Q 210 [Richard Mollett]

59 Q 209

62 Q 216

63 Q 210

64 Q 215

65 Q 198

66 Q 222 [Richard Mollett]

68 Q 216

69 Q 223

70 Q 242

71 Q 240. The Digital Economy Bill part 4, section 26(3), proposes this change.

72 Q 14, Q 19, Q 20.

75 Q 19 [Mike Cherry]

77 Q 234

78 Q 196

79 Q 237

© Parliamentary copyright 2015

15 July 2016