Intellectual Property Bill [HL]
Debate between Earl of Erroll and Lord Stevenson of Balmacara
The Earl of Erroll
My Lords, I rise briefly to support the noble Lord, Lord Clement-Jones, in this argument. I think that this provision should be exactly parallel to that for copyright. I would say that the Minister should have used these arguments in the copyright case to change that provision so that it was in line with the principles in this Bill—because I think that copyright is probably overprotected—but that is a different argument. However, I certainly think that the arrangements should be the same. At some time in the future we can rationalise, if we need to, the two arrangements so that they move together in the same direction. With the advent of 3D printing it is now quite possible easily to make a three-dimensional copy at not a huge cost, so I do not see the rationale for distinguishing 2D from 3D copying. 3D copies were not possible until very recently. Logically, the two principles should be aligned, as the noble Lord, Lord Clement-Jones, has just stated. Whether we think that this should be dealt with differently, in copyright or under this arrangement, is another matter.
Lord Stevenson of Balmacara
My Lords, I found a lot of what the noble Lord, Lord Clement-Jones, said very convincing and want to hear how the Minister will respond. The noble Lord made a very good case for taking the situation that we have currently, under which copying registered designs will be subject to criminal penalties, and asking why the very large number of unregistered designs that are lodged in a different register from the registered designs—with the IPO—cannot be given a similar sort of protection. I think that the arguments comparing that with copyright and trademarks are very persuasive. The noble Earl, Lord Erroll, made the point about 3D printing, which of course begins to muddle all our previous conceptions of what 2D and 3D design were about. Again, that will require some movement, if not now, in the very near future, in order to keep pace with the way that technology is changing.
Our Amendment 20 departs from the principles articulated by the noble Lord in moving Amendment 9 because we think that we have to take the situation as it is on the ground. As I have said before, there are 350,000 designers in the UK and UK businesses spend around £35.5 billion annually on design. These are substantial figures and make up a significant slice of our creative industries. However, the vast majority of designers rely on unregistered rights. There are 4,000 registered designs against 18,000 unregistered designs. Something like 99% of designers in the country rely on unregistered designs, and there has to be a question about how the Government will provide an appropriate framework for that development.
Our amendment suggests to the Secretary of State that there is another possible route to think about, which makes clearer what the effect would be of having a register of unregistered designs, even if that is perhaps a contradiction in terms. If it was possible to have within the government machinery some system that allowed a way to evidence the existence of the design right, and document its existence on a particular date, that would go some way to giving us certainty about cases, whether they were criminal or not, affecting the unregistered design right. We could perhaps use the copyright harm analogy to find a way for metadata to be applied to designs that would allow them to be picked up and trailed.
The noble Lord, Lord Clement-Jones, asked why there was a growing discrepancy between the registered and unregistered design right routes. Presumably, the Government have made a decision that they are going to bulk up what is available to those who have registered designs and give them more in the hope that that will persuade designers to sign up to the registered design route. But what will happen if they do not? The problems and difficulties will still be there, particularly in the fashion industry, where unregistered design is the mode that is used.
We need to do something and our Amendment 20 tries to make some suggestions that we hope the Government will listen to. Although we cannot support the proposal to criminalise the copying of unregistered designs as a matter of principle, we would be very interested in hearing how the Minister will respond.
Viscount Younger of Leckie
My Lords, the effect of Amendment 9, moved by my noble friend Lord Clement-Jones, would be to extend the proposed criminal sanctions to unregistered design rights. I thank my noble friend once again for presenting the Government with his strong views on unregistered design right protection. I can assure him that the Government are absolutely convinced of the value of the unregistered right and are very aware of its role in protecting small design businesses. That is why, following consultation, the UK right and its current term of protection was retained in the face of calls by some to remove it as a means of simplifying design law.
The United Kingdom has a very successful design industry and we tinker with the success of the industry at our peril. I am particularly concerned to ensure that any changes proposed in the Bill do not act as an additional burden on industry but enhance its accomplishments. As with all intellectual property systems, there is a delicate equilibrium between a reasonable return for creators and, on the other hand, access to the creation so that competitors can shape future innovation. This is the balance the Government have to be mindful of in the changes proposed. There is a real fear that extending criminal sanctions to unregistered rights will distort this balance for the following reasons.
First, the existence of the register represents a public database, which can be searched with relative ease. Third parties can quickly assess what has been registered and what has not. This means that they can take due notice of designs protected by registration with some degree of certainty. In particular, they will know accurately when it will be possible to copy a design with no degree of legal risk. With unregistered designs, there is the problem of not knowing exactly when the design right came into existence and the duration of its protection. This means that it is more difficult for third parties to discover when they can legally copy or exploit a design. Where information about the design of an article is limited but copying it attracts a criminal sanction, it is entirely possible that industry will become risk-averse. As I stated in Grand Committee, against the background of a threat of a criminal conviction, third parties are more likely to wait longer than necessary to be sure that a design is in the public domain before building on it, therefore extending the unregistered design right beyond its term and delaying potential innovation.
I will give your Lordships an example. A furniture manufacturer is aware of a rival’s design that is successful in the marketplace and knows that it is not protected by registration. That is easily discovered by a swift inspection of the registry. He is also aware that the unregistered design right is now protected by a criminal sanction. The manufacturer will have no ready knowledge of when the item was first protected—for example, when it was in a design document, made into an article or first marketed. These all affect the term of protection. To be on the safe side, it is likely that the manufacturer will avoid copying or even engaging in reasonable follow-on innovation until he is certain that the product is out of its term of protection. With registered designs, any potential chilling effect is much reduced by the certainty of facts on duration, scope of protection and ownership, which registration creates.
Secondly, the nature of the UK unregistered right magnifies the uncertainty problem. Unregistered right in an article can relate not only to the overall design but to the individual elements of the design. The unregistered design right can therefore be seen as a basket of individual rights. For example, a kettle may have design protection in its overall shape and configuration but also in its individual parts, such as the spout, the handle and the lid. The kettle may be one of a series of kettles, so different design components may have different timelines of protection. The handle may have 10 years of protection to run because it is new, the spout may have three years as it was used in an earlier version of the kettle, and the lid may be out of protection because it is an old design. None of this information will be readily available to a business which wants to use the design or aspects of the design itself. This creates a cumulative uncertainty about the rights, which is not shared where a design appears on the public register.
Thirdly, a chilling effect is likely to be more serious in particular industries. Some designers, such as those in the fashion trade, thrive on novelty, speed of change, imitation, and rapid turnover of seasonal ranges. It is in these industries where the Government have real concerns that criminalisation of unregistered designs, which are often relied on, would have a freezing effect.
Fourthly, the potential inhibiting effect on innovation that has been identified is likely to be a particular problem in relation to functional designs, which the UK unregistered right also protects. This problem does not apply to registered designs that specifically exclude functionality. I also remind noble Lords of a further issue that relates to functional designs, which could cause difficulties in criminal proceedings. Such technical complexity should be avoided in criminal proceedings if possible.
Finally, I will say something about the protection for unregistered rights holders and, at the same time, consider Amendment 20, in the names of the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, which would place, in effect, a reporting duty on the Secretary of State. I can assure noble Lords that the Intellectual Property Office is already aware of its responsibilities to SMEs and fully recognises the difficulty that designers face in enforcing their rights. The IPO will continue to work with representative groups for the design sector to help improve the situation for designers. There are many ongoing projects. For example, the IPO and the European design and trade mark office—OHIM—are working together to consider approaches to IP enforcement. This includes the costs of searching for prior rights.
The IPO currently funds IP audits to SMEs that are enrolled on one of our partner business support programmes. From next year, a number of these will be specifically allocated to design SMEs within the Design Leadership Programme run by the Design Council. This will help design-focused SMEs effectively to manage their rights, including unregistered designs, and the creation of audit trails. Such information is readily available from organisations such as the IPO and ACID.
I hope noble Lords will agree that by accepting this amendment the Government would be duplicating information already available. I have already referred to private companies such as ACID, which provide access to highly successful unofficial databases. The amendment would place the Government in direct competition with these companies.
The amendment also raises a number of questions. For example, would an official government-run unregistered designs database be compulsory for designers to use? What about the design rights that exist in other parts of the EU? These can have an effect on rights in the UK so would all European design rights owners be required to record their unregistered designs with the IPO?
These questions may warrant further thought. However, the Government do not believe that it is wise to legislate at this stage without more consideration, particularly given the ways in which the UK IPO is already working hard to ensure that designers are as informed as possible when making business decisions about their intellectual property. For example, the IPO will provide training to the Design Council’s business advisers, to help understand IP and the value of design rights, and to direct SMEs towards the audit programme. On that basis, I am not persuaded of the need for the noble Lord’s Amendment 20.
However, I would not want noble Lords to gain the impression that, in not extending the criminal sanction to the UK unregistered design, the Government regard unregistered rights as second-class rights. The Government recognise that the introduction of criminal sanctions for designs is an important issue that is subject to strong opinions. We believe that the sanction as drawn is the best option to maintain and enhance the success of the UK design industry.
My noble friend Lord Clement-Jones and the noble Earl, Lord Erroll, raised the issue of the discrepancy between protection for 2D and 3D works. There was some debate on this in Committee and it is worth reiterating a number of key points. In the view of the Government, this is a consequence of copyright protection vesting in the “work” that consists of a design drawing, and there is no direct protection of the 2D representation of the design per se. The protection arises as a by-product of the copyright in the work. As noble Lords will know, copyright will protect against the reproduction of the drawing where the defendant knows or has reason to believe that the reproduction is an infringement of the drawing. This is merely a coincidence, caused by the fact that the drawing is a literary or graphic work and nothing more, and is a result of the existence of parallel IP regimes that coincidentally overlap in this case.
It is questionable that the existence of this anomaly, which is hardly unique in IP law, counsels equalisation or harmonisation by criminalisation of unregistered design right. As the noble Lord, Lord Howarth of Newport, who I see in his place, stated in Grand Committee:
“My Lords, consistency is not necessarily a virtue and I think that we should be very careful in the field of intellectual property. We legislate not simply out of tidy-mindedness or a desire to achieve a satisfying consistency by transferring rules and regulations that may have applied relatively successfully in one area to another”.—[Official Report, 13/6/13; col. GC 392.]
Enterprise and Regulatory Reform Bill
Debate between Earl of Erroll and Lord Stevenson of Balmacara
The Earl of Erroll
My Lords, I add a slight note of dissent. I entirely agree with Amendment 9, which gives greater flexibility to,
“make different provision for different purposes”.
However, Amendment 8 paints the regulation-makers into a corner. I quite see the point of the noble Lord, Lord Clement-Jones, on the commercial stuff. This is his word as a commercial lawyer among the large rights holders and the people who make money out of this material. I see their point. They have invested heavily in some of this stuff, as in other cases, and they want a commercial return on it.
The trouble is with all the other stuff. This is not just about photographs sitting in commercial archives or produced for a commercial purpose. This is not about film sitting in a commercial archive, or from which, published or not, somebody is trying to make some money. It is everything. The sort of stuff that has ended up with genealogical societies around the country and in libraries’ photographic collections will all fall under this. I realise that this does not apply to pre-1957 photographs, so it will not affect people doing research on the Second World War, but you will suddenly have this strange cut-off point. It would have been wise to keep greater flexibility in this so that the Minister, using,
“make different provision for different purposes”,
could have introduced a definition of which kinds of photograph or film were covered. It would not have been difficult to do.
Therefore, Amendment 8 should perhaps be withdrawn because it can be covered in the rest of the provisions, which says that he can then go on to reduce the duration of copyright in existing works. It is made by regulations. If you can do different provisions for different purposes, I would have thought there would be the flexibility to be able to meet the concerns of the noble Lord, Lord Clement-Jones, and the perfectly valid commercial concerns, and also have done things for the libraries, universities, researchers and other people who want to do other things with the works where there was no commercial intent in the first place. Therefore, I would accept Amendment 9 for flexibility, and if I were the Minister, I would withdraw Amendment 8.
Lord Stevenson of Balmacara
My Lords, I echo the initial comments of the noble Lord, Lord Clement-Jones, on this. The Minister has again shown his willingness to listen to some of the concerns that have been expressed on this matter. I welcome the two amendments in this group, although I note the points recently made, which may bear further thought. However, the Government are in the right place on this. It is a question of sticking to where we are and recognising that.
We should also recognise that this has been a complicated journey through these legislative clauses. Copyright is never an easy issue to get into. I am sure that the noble Lord would recognise that; he has always looked a bit punch-drunk when we have had discussions on it but has come up smiling, which is one of his nice characteristics. However, there are a number of difficult and complex issues underneath this. They are not going to be resolved by what is in the Bill, although we have caught up in a number of areas and that is good. This is really about setting up discussions that we will have to have in this House and another place as the various changes that are being provoked by the Hargreaves report are brought forward as what are in generic terms called “copyright exceptions”. They of course deal with a large number of issues that could have been, as we have argued, contained in this Bill but have been left deliberately to secondary legislation. That is not to say that we will necessarily agree with everything that we see when that comes through. There have to be a lot of complicated discussions on some of these points. We welcome the opportunity to have those, based on where we are now. On that basis, I am happy to agree with these amendments.
The Earl of Erroll
My Lords, I support both amendments, which were spoken to most ably by the noble Lord, Lord Howarth of Newport. The noble Earl, Lord Clancarty, also made comments that were absolutely right on the nail.
A review is only sensible. An awful lot of the figures should be obtainable from the licensing authorities, whoever is going to be appointed, on the financial stuff, how much is done, and so on. I do not imagine that it will require a huge amount of public money to try to do a review at whatever period is thought best.
As a taxpayer, I am concerned about the up-front fees. The noble Lord, Lord Howarth, almost did not stress that point enough. The notion is that those fees should be set at a rate that means that orphan works do not undercut stuff that might be in a commercial library of works that people can license. They would probably not be on the same subject in most cases; they would be for different purposes. If one of the big national libraries or a university was trying to prepare a work of academic interest, they would not rush around paying fortunes to these libraries that have collections of pictures or text. They cannot do that; they will not have the budget for it. If someone was to look at what this stuff was currently sold for, or licensed for, we could be talking about a huge sum of money going into the bodies collecting for orphan works. We are not talking about a petty million, or something like that.
A department always expands to spend the money provided, so if it is going to be ploughed into trying to collect these things will get enormous and complex, and they will spend money like water. On the subject of BIS sponsoring training programmes, well, we know what happens with most government training programmes, so just to get the point across and to see the horror on the Minister’s face, I volunteer to be either one of the societies collecting the money so that I can have a huge scheme, or one of the chief accredited training agencies, because this will be a licence to print money.
The point is well made by the noble Lord, Lord Howarth. The funding of universities and libraries and institutions like that, which this provision is aimed at, comes out of public or charitable funds, and it is there for a purpose. The concept that this is a hidden tax that then goes back to the Exchequer or to fund a nice quango or whatever is totally unethical. I cannot put that strongly enough. If the public woke up to the fact that that was happening, they would be absolutely horrified, so the Minister would be incredibly well advised to accept this amendment to protect the Government from all sorts of accusations in future—unless, of course, they do not expect to be in power by the time this happens and think that another Government will take the flack. However, given that most politicians think they will still be in power, if I were them I would protect myself.
Lord Stevenson of Balmacara
My Lords, my noble friend Lord Howarth, when introducing this amendment, mentioned that in Parliament as a whole there was a genuine sense that issues to do with copyright were dealt with in a non-partisan way, and he explained some of the background to the CDP Act 1988 and to the Digital Economy Act. This debate has shown that the spirit lives on. I stress that I do not think that this is a partisan issue; we are all very interested in this new and broadly welcome provision, which anticipates the EU directive and perhaps gold-plates it a little. However, there is no doubt that we need an orphan works scheme. It is right that it should be introduced and we are backing it all the way. Within that it is absolutely clear that rights holders must be remunerated if they wish. However, as many of them will not be easy to find, a diligent search of a high standard must be carried out. I recognise that the way to prove all that is to create this escrow account approach, and that that should be done for a reasonable period. However, the more one listens to the points that are made round here, the more one feels that this is going in the wrong direction in this respect. As virtually all speakers have said, surely it cannot be in the best interests of the Government to tax the institutions that are expected to carry out this work and mainly benefit from it. That cannot be right. The Minister was reported in Hansard as saying that if the escrow funds were building up and not being used, they could be used to defray the costs of running the licensing body, to pay for preservation costs and for training. However, that escrow funding is the money that would be paid to rights holders, so it does not really belong to the licensing body to do with it as suggested.
We are at the fringe of moving in the wrong direction here. It would be sensible if the Government were to pause and think about this again. This is a good scheme and is the right thing to do, but perhaps there is a way in which one can retain the funds that are going to be held for potential rights holders within the original institutions. At least then they would have the benefit of the money even if they could not allocate it, and the sensibility that this somehow was a taxation scheme would be avoided because it would not work. It would be the worst of all possible worlds if, at the end of this process of trying to get these proposals scheduled and incorporated in legislation, the whole scheme was stillborn because people could not see how it could be financed. I very much want to hear what the Minister has to say on this matter. Some movement towards the position of the noble Lord, Lord Howarth, would be much appreciated.