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The Earl of Gowrie: My Lords, I said so.

Lord McIntosh of Haringey: My Lords, of course. We hope that some of the flexibility which is provided in the Bill will attempt to deal with that. But he will agree, as your Lordships will have to agree, that long-term revenue funding would not be possible because it would progressively erode the amount of money available for new grants; it would stultify the activities of distributors.

A number of points were made relating to the fines which it will be possible for the director general to impose on the operating company. I emphasise again that the fines are requested by the director general. I emphasise to the noble Lord, Lord Skidelsky, that they are part of the regulation process rather than an attack on profit. Indeed, they are a common provision in most regulatory authorities. It is unusual for there not to be provision for fines. The Heritage Select Committee supported it and the provision for fines has been generally welcomed outside.

The noble Viscount, Lord Falkland, queried the need for a ceiling on the fines. Part of the fines is punitive and part is for reimbursement for the losses experienced by good causes through mismanagement by the operator. To that extent we cannot calculate what the losses would be and it would be inappropriate to put a ceiling on them. I say to the right reverend Prelate that there would be a right of appeal on very wide grounds against the fines. I hope that he will be satisfied when he looks at the detail. Perhaps I may say to the noble Lord, Lord Redesdale, that the director general is not obliged to fine the operator unless he believes that it is highly appropriate.

Finally, because I have abused your Lordships' patience, let me say a few words about NESTA. I welcome the response which has been widely given to NESTA. The right reverend Prelate and the noble Lord, Lord Inglewood, welcome it--even the noble Baroness, Lady O'Cathain, was quite welcoming of it. NESTA is not only an endowment and therefore spending its income rather than its capital, but it is also an opportunity to raise money from other sources. The noble Lord, Lord Rothschild, was concerned about Clause 17(2) which provides for the possibility of further endowments and that that might be at the expense of other funds.

I can assure him that we have no plans at present to expand the endowment and that Clause 17(3) says anyway that we would be consulting with existing bodies. The noble Lord, Lord Hindlip, made very much the same point. I am surprised that the noble Lord, Lord Skidelsky, said that there was a danger of duplication.

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NESTA's first task will be to survey current provision and to see where new provision is appropriate from this very large fund.

In answer to the noble Lord, Lord Annan, universities could benefit from the fund. It is highly likely that they will. But we are not going to dictate to the fund to require that they should. In answer to the noble Lord, Lord Inglewood, the funding could go to other causes. Why not? Those could include sport, although there is an existing fund for sport and we have just announced the Institute for Sport at Sheffield. In answer to the noble Earl, Lord Gowrie, the fund can, and I am sure will, want to work very closely with the Arts Council.

The debate has been very wide ranging. It has been to a considerable extent well informed. It has been to a considerable extent, although by no means universally, welcoming. We have the prospect of a serious and constructive passage of the Bill through the House. I believe that the Bill deserves a Second Reading.

On Question, Bill read a second time.

Lord McIntosh of Haringey: My Lords, I beg to move that the Bill be committed to a Grand Committee.

Moved, That the Bill be committed to a Grand Committee.--(Lord McIntosh of Haringey.)

On Question, Bill committed to a Grand Committee.

Copyright and Rights in Databases Regulations 1997

4.1 p.m.

Lord Haskel rose to move, That the draft regulations laid before the House on 6th November be approved [12th Report from the Joint Committee].

The noble Lord said: My Lords, these regulations implement the provisions of the directive 96/9EC of 11th March 1996 on the legal protection of databases. The directive has to be implemented by 1st January 1998. The directive harmonises the laws of member states relating to the protection of copyright in databases. It also introduces a new right to prevent extraction and re-utilisation of the whole or a substantial part of the contents of a database. These rights apply to databases in both electronic and non-electronic (paper) form.

The regulations will therefore amend the Copyright, Designs and Patents Act 1988 to provide a new test for copyright in databases. Databases which, by reason of the selection or arrangement of their contents, constitute the author's own intellectual creation will be protected by copyright. The regulations also create the new free standing right to be known as database right.

Turning to the regulations themselves, Part I deals with certain introductory provisions of a largely formal nature. Part II amends and modifies Part I of the Copyright, Designs and Patents Act 1988 in order to align its provisions with those of the directive. In particular, the regulations modify the definition of "literary work" in Section 3 of the Act by including database as defined in the directive. They introduce a

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new Section 3A so that a database is given copyright protection only where, by reason of the selection or arrangement of the contents, the database constitutes the author's own intellectual creation. They amend Section 29 so that research for a commercial purpose is no longer covered by an exception.

The regulations introduce new Section 50D, which permits any person having a right to use a database to do any acts that are necessary to access to and use of the contents without infringing copyright. For example, in order to search a database it may be necessary to download the whole or a substantial part of the database into the memory of a computer. This could otherwise count as an infringement of copyright in the database.

There is also a new Section 296B which makes void any term in an agreement which seeks to prohibit or restrict the doing of any act permitted under the new Section 50. So, in the example I have just mentioned, the contract for use of the database could not be used so as to stop it being downloaded if that were necessary in order to search it.

Part III of the regulations provide for the new database right for a database in respect of which there has been a substantial investment. Like copyright, this is to be a property right.

The regulations provide that the person who takes the initiative and risk of investing is the maker of the database and is the first owner of database right.

The acts, which infringe database right, are the extraction or re-utilisation of all or a substantial part of the contents of a database. "Extraction" means transferring the contents to another medium; for example, taking something off-line and copying it into a computer memory or printing it out. Re-utilisation occurs when someone makes those contents available to the public; for example, by re-transmitting them to someone else or distributing copies.

The term of protection of database right is to be 15 years from the completion of a database. However, substantial changes to a database will give rise to a further term of protection.

Database right will apply only where the maker, or one of the makers, is a national or resident of the European economic area or a business established in the EEA. Lawful users of a database will be entitled to extract or re-utilise insubstantial parts of a database for any purpose. They will also be able to extract substantial parts for illustration for non-commercial teaching or research, subject to a test of fair dealing.

As with copyright, users will be entitled to make certain assumptions about whether database right applies; for example, that it was published in the year indicated, until the contrary is proved. Certain provisions of the Act will apply to database right as they apply to copyright--that is, those relating to dealings with rights and the rights and remedies of rights' owners and exclusive licensees. Examples of these are assignment and licensing of rights and bringing legal actions for infringement.

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The jurisdiction of the Copyright Tribunal will be extended to hear and determine proceedings relating to the licensing of database right; for example, where a dispute arises.

Part IV of the regulations make transitional provisions for existing databases and agreements relating to them.

All this may sound rather arcane, but this Instrument is important for our economy. There are believed to be about 350 firms in this sector, of which 30 are large suppliers; the rest are small and medium-sized enterprises. UK suppliers, however, have a share of the wider European Union market estimated at more than 50 per cent. So it is important.

At present, different standards of protection apply in different countries of the European Union. Databases which just consist of facts and figures, with no creative input, do not get copyright protection at all in some countries such as Germany or the Netherlands. One example could be the basic white pages telephone book.

So the Government's starting point for implementing the directive has been the existing copyright regime. We wanted to disturb the status quo as little as possible. The draft regulations reflect this approach. They aim to maintain, as far as possible, both the level of protection available for databases and a balance of rights and exceptions to rights.

The Government consulted widely on their proposals. Resulting from that consultation were three particular points of interest. They were, first, exceptions to copyright and the new sui generis right; secondly, the criterion for copyright protection based on the "author's own intellectual creation" and, thirdly, remedies for infringement of the new database right.

Not surprisingly, views between users and producers of databases were divided on exceptions which allow limited amounts of copying without infringing the rights. Many publishers wanted no exceptions, although some who are both producers and users of databases favoured exceptions. Librarians, academics and research-based industry argued that exceptions do not prejudice the economic interests of database makers and that without them untold damage would be done to education, research and scholarship.

The draft regulations continue the exceptions which currently operate in the copyright field. These relate, for example, to use for research, education and libraries. The copyright exceptions have been changed only where the directive specifically requires this. So the research exception no longer applies to research for commercial purposes--for example, the market testing of a new drug. This in fact returns to what was originally proposed in the Bill which led to the 1988 Act.

The exceptions applied to database right are those specifically permitted by the directive. The ones of most interest apply to illustration for non-commercial teaching and research. Teaching or research for commercial purposes do not fall within the exception--for example, a commercial training course might well not qualify for the exception.

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These exceptions are also subject to a general fair dealing test. This is a test which also applies to some copyright exceptions. It has been interpreted as restricting the amount of material which can be copied or used fairly so as not to damage the economic interests of rights owners--for example, a student might copy a couple of pages from a book which he might not otherwise buy without infringing copyright; but if his teacher were to copy the pages for the whole class, that would not count as fair dealing.

Another area on which many comments were received was the test for copyright in a database, based on the "author's own intellectual creation". Some felt that no amendment of the Copyright, Design and Patents Act 1988 was needed to introduce this test, and that the current test of "originality" for literary works was enough.

The Government do not share this view. The directive is clear. It requires copyright protection for databases,

    "which, by reason of selection or arrangement of their contents, constitute the author's own intellectual creation".

This is intended to exclude from copyright protection so-called "sweat of the brow" databases--that is, ones which involve time, money or effort but which are not sufficiently creative to justify copyright protection. These "sweat of the brow" databases will, however, be eligible for database right protection and, in practice, it is likely that many databases will continue to be protected by copyright, as well as by the new database right.

Views of respondents were also divided on whether infringement of the new database right should in certain cases be a criminal offence or subject only to civil remedies. Some wanted criminal offences but others thought that a new and untested right should not open up the risk of criminal prosecution, which could lead to fines or even imprisonment. The Government concluded that only civil remedies should apply. These would enable right holders to sue infringers in the civil courts in order to stop further infringement and to obtain damages in appropriate cases.

These regulations are introduced at a time of many changes. These initiatives affect the education, library and publishing sectors. It will be important to continue to monitor developments. To achieve that, my honourable friend the Minister of State at the Department of Trade and Industry, Mr. Ian McCartney, announced on 3rd December that the Government are proposing to establish a database market strategy group. This will monitor the impact of the regulations and undertake a strategic review of the way the market for databases is evolving and the implications of this for rights, exceptions and licensing arrangements. The Government intend to invite representatives of publishers, libraries and academic and research institutions to participate in the work of the group. I commend the regulations to the House.

Moved, That the draft regulations laid before the House on 6th November be approved [12th Report from the Joint Committee].--(Lord Haskel.)

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