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The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, I am delighted to take part in this debate and to respond for the Government. The billing of my noble friend Lord McKenzie was on the basis that I was trying to come back from Brussels. In the event, I managed to do this with two minutes to spare.

This is an extremely important and interesting area. I say to the noble Baroness, Lady Buscombe, that whatever the timing of the debate, the Government can show that they have been taking this issue very seriously for the past 18 months to two years, since we published the innovation report in November 2003. In it we made a major statement about the importance of intellectual property rights and of the Patent Office taking forward an agenda involving enforcement and education as part of the importance of this area in the knowledge economy. I am sure that the noble Baroness is aware that our manifesto contained a reference to intellectual property and the creative industries. I failed to see such a reference in the Conservative Party manifesto, but then it was, of course, a very short document.

The noble Baroness has already highlighted the importance of intellectual property rights for the UK creative industries. Intellectual property is very much at the heart of the creative industries, so I welcome the opportunity to set out the Government's agenda in this area.

For the purposes of this debate, I should like to make it clear that in talking about the creative industries, we are talking about music, film, software, publishing, design and broadcasting. These are all industries which depend critically on individual creativity, skill and talent as the starting point for their business success.

The creative industries matter a great deal in our economy. They grew by an average of 6 per cent per annum between 1997 and 2002—twice the rate of the average growth for the whole economy during that period. Employment in the creative industries grew at a rate of 3 per cent per annum between 1997 and 2003, compared with 1 per cent for the economy as a whole.
 
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These figures, which are part of the statistical estimates for the creative industries compiled in August last year, are impressive. They show that the creative industries are an enormous asset to the UK and are growing very fast.

The creative industries have, for some years, been facing the challenge of new technology—the digital revolution, including the expansion of the Internet and broadband roll-out. In a world where digital material can be passed over networks, including the Internet, almost instantaneously, the temptation for people to share music and other protected content illegally is great.

The music industry has been at the forefront of seeing its traditional business models threatened by illegal uploading and downloading of its copyright material. New technology therefore means that it is much more difficult to protect IP and preserve business models of the past. There is, however, cause for optimism. We are seeing more and more creative sectors identify and embrace the opportunities of new technology to grow their business. The music industry is at the forefront of this transformation, with a marked expansion of legal download sites over the past year or so. A recent newspaper report suggested that the number of legal downloads could overtake illegal activity in the next 12 months. It looks as if the use of new business models and careful legal enforcement of IP is beginning to bring this problem under control, and we support the action which has been taken by the music industry to do so.

On the protection of intellectual property rights, our recent business manifesto commitment clearly shows our strong commitment to tackle IP crime and other types of infringement. IP crime is a very serious threat, and a considerable amount of work has been done in recent years. That includes legislative changes in 2002 to increase the maximum penalties applying to copyright theft. In 2003, the law as it applies in the information society was clarified, and a new criminal offence to catch the most prolific illegal uploaders was created.

As a result of the innovation report, which acknowledged the damage caused by IP crime to businesses dependent on IP, we set up the IP Crime Group, led by the Patent Office. This brings public sector enforcers and private sector right-holders together with government to deliver more effective enforcement on the ground.

Last year we launched the IP Crime Strategy to underpin the work of the IP Crime Group. This year we published the first annual enforcement report, which will provide a firm base line from which we can measure the success of our future activity.

We are also heavily engaged in setting up regional hubs for trading standards officers, modelled on the very successful one in the north-west. And we are refining the training resources available, something we specifically promised in the business manifesto. In the
 
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coming months, the results of better co-operation and co-ordination under the IP crime strategy will start showing.

The creative industries are clearly helped by a commitment to deal with IP crime. However, in recognition of the challenges and opportunities faced by the creative industries as a result of rapid technological advance, I set up the Creative Industries Forum on Intellectual Property jointly with the former Minister for the Arts, Estelle Morris. The forum, comprising industry and other stakeholder interests as well as Ministers, set up three industry-chaired working groups to explore certain issues in more detail.

Lord Clement-Jones: My Lords, perhaps I may intervene before the Minister moves on too far. He has spoken about enforcement and the IP crime aspect, but, unless he is coming to it, he has not spoken about the activation of Sections 107A and 198A, which are crucial to the industry.

Lord Sainsbury of Turville: My Lords, I was going to come to that issue shortly, but perhaps I may help the noble Lord immediately. This has been an issue since 1994 when the Trade Marks Bill was enacted. Since then, it has not been enforced because a government regulation states that if more jobs are referred to trading standards, matching resources must be put into them. We are trying again to talk to all the relevant stakeholders to find a solution to this situation. I hope that we can bring forward legislation that allows us to put in the extra resources and make certain that the Act is enforced. It is a totally unsatisfactory situation. It has been going on since 1994 and it is about time that we brought it to a conclusion.

To reiterate, the Government have set up the Creative Industries Forum on Intellectual Property. One of its working groups has been examining IP enforcement issues; another group has looked at better education about, and communication of, IP messages. We welcome the care with which these industry-chaired working groups have investigated these extremely important subjects. The forum has therefore done some useful work in these areas which we will be taking forward in the future. The Government will soon provide a response to the detailed recommendations that these working groups have produced.

However, many of the recommendations on IP crime are linked to the work within the framework of the IP crime strategy. I am happy to announce that we will be establishing a subgroup of the IP crime group specifically for the creative industries, so that they have a voice at the heart of our strategy.

However, not all infringements of copyright can, or should, amount to a crime. Most people agree that a different response is needed to deal with online infringement. The promotion of a better understanding of copyright, and the impact of this illegal activity on creators, many of whom are struggling artists at the beginning of promising careers, is one approach to online infringement. The education and communication working group of the forum has identified the need to
 
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ensure that messages are positive and empowering, relevant to people's lives, and not just negative and piracy-focused. We are looking very carefully at how we can take account of these ideas as we develop and expand our IP education programmes.

In our manifesto, we also made a commitment to modernize copyright and intellectual property regimes. Our IP regime must, of course, be fit for a digital age, providing an appropriate and fair balance between the interests of different stakeholders. Creators, entrepreneurs and creative industries must be able to invest, knowing that they will be able to get a proper reward for their investment.

This manifesto commitment was inspired by our concern that business opportunities, dependent on content protected by IP, are maximised for the benefit of all in the IP value chain. We are therefore delighted that the work that was started by the industry-chaired business opportunities working group of the Creative Industries Forum will be continuing.

As this work continues, one of the most important issues facing those who are trying to maximise the benefits of new technology for the creative economy is the scope for using digital rights management. This can enable exciting new uses of protected content, while keeping it secure and deterring or preventing illegal use, such as online infringement. Apple's iTunes is just one example of effective use of digital rights management. It is relatively hidden, so most users will never notice the restrictions on use.

As a means of giving consumers what they want in attractive new ways, digital rights management has much more to offer than we have seen so far. But issues such as interoperability and technical standards for digital rights management and other technologies and devices need to be considered.

We will be carefully monitoring how this work develops and considering whether any other IP issues should be explored or addressed. As part of its response to the manifesto commitment, the Department of Trade and Industry will be working very closely with the Department for Culture, Media and Sport on a new project looking at intellectual property issues. Along with my honourable friend the Minister for Creative Industries, James Purnell, I will be chairing a high-level group of officials to drive this project forward. This will build on the very useful work that has already taken place in the forum. We do not envisage that this group will look again at recent copyright law changes or at any major changes to the IP regime. I recently heard people from some of the key creative sectors say that, since our work in 2003 on implementing the EC Directive on Copyright in the Information Society, copyright law in the UK is generally in a good state. We will be checking that no issues need to be addressed at this time.

We are extremely pleased to be supporting a conference in the middle of our EU presidency looking at the creative economy. This will provide an opportunity to stimulate a dialogue throughout Europe on delivering value for all in the IP value chain, based on a robust but fair intellectual property regime. Many of the issues on which we have touched today are likely to be developed further at that conference.
 
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Perhaps I may deal with one or two of the specific issues that were raised in the debate—

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