Lord Clement-Jones
Main Page: Lord Clement-Jones (Liberal Democrat - Life peer)Intellectual Property Bill [HL]
Lord Clement-Jones Excerpts
Lord Young of Norwood Green
My Lords, these government amendments implement the DPRR 3rd report recommendations and we welcome them on that basis. On the Clause 8 orders giving effect to the Hague agreement, the DPRR Committee found that the Bill created a Henry VIII power, and commented that it,
“would therefore expect to see some justification for the negative procedure that is to apply”.
However, the committee did not consider that the case for the negative procedure had been made for orders under new Section 15ZA and recommended that the affirmative procedure should apply instead. We are glad to see the Government accepting that recommendation.
Clause 11(1) inserts new Section 28A into the Registered Designs Act 1949 to provide for the registrar—that is, the Comptroller-General of Patents, Designs and Trade Marks—to give an opinion about matters specified in the regulations with respect to designs of a kind described in subsection (1)(a) and (b). The new section is purely enabling in that the whole provision about the new opinions service is to be set out in negative regulations. Subsections (2), (4), (5) and (7) set out provisions that the regulations must contain—for instance, about protecting the registrar from liability in respect of an opinion and about appeals. BIS explains, in paragraph 13 of the memorandum, that the intention is that the new opinions service will be similar to the existing patents opinions service. That service is provided for in Section 74A of the Patents Act 1977, but it is important to note that almost all the provision appears in the Act, with only one power to make regulations to provide for an exception.
The committee was not convinced by the Government’s argument for a need for flexibility and was critical that they did not explain why more provision cannot go into the Bill—for instance, about the scope of the opinions service. The committee remained unpersuaded that the negative procedure was appropriate for the introduction of this new service entirely by regulations, and recommended that the affirmative procedure should apply on the first exercise of the powers under new Section 28A, which is why we welcome the Government’s decision in this regard. We also welcome the fact that the Government now make it clear that Clause 21 incorporates countries signed up to any Act of the Berne convention by bringing the language of the clause into line with that used in the CDPA 1988. As the Minister assured us, this ensures that countries that have not signed up to the most recent Act of the Berne Convention do not receive any less copyright protection in the UK than those that have, and therefore we welcome the government amendment.
Lord Clement-Jones
My Lords, I join the noble Lord, Lord Young, in thanking the Minister for responding so effectively to the concerns raised on Report. I hope that these swallows which are already evident on Report will mean a summer for the rest of the Report stage.
Viscount Younger of Leckie
My Lords, I am grateful for the short contributions to the debate on these government amendments by the noble Lord, Lord Young of Norwood Green, and my noble friend Lord Clement-Jones. I take this opportunity to thank again the Delegated Powers and Regulatory Reform Committee for its consideration of the Bill.
Lord Clement-Jones
My Lords, briefly, I express some bafflement, especially in the light of discussion in Committee, at what the noble Lord, Lord Stevenson, has said. On the one hand, half his speech was devoted to saying that the criminalisation of registered design rights under the Bill was wrong and therefore should not proceed. On the other, the second half seemed to say that, on the basis that it would proceed, it should be amended to add words such as “deliberately”, as in Amendment 4. Looking at Clause 13, however, it is quite clear that mens rea, as the term is used in criminal law, is contained within the clause as it stands.
I can understand the position of Sir James Dyson. He believes in principle that it is not right to criminalise registered design infringement. I happen to disagree with him. A number of particularly small designers represented by bodies such as Anti Copying in Design—ACID—feel strongly that this is a very important protection. It may not be favoured by the IP Federation, which represents the larger companies and their designers, but this is something that is very much to be desired by the smaller designers. The argument used that there is a chilling effect on innovation is completely rebuttable. I am sure that my noble friend will go through that in his own way.
Taking the second limb of the objections of the noble Lord, Lord Stevenson, it is clear that Clause 13 does exactly what he wants his amendment to do. There is no doubt that the act has to be deliberate on reading new Section 35ZA(1)(b)(i). I cannot see that there is any ambiguity there.
Viscount Younger of Leckie
My Lords, in Grand Committee we had some detailed debates about the introduction of criminal sanctions for the deliberate copying of a registered design. This is a finely balanced issue, and concerns were raised by a number of noble Lords. On the one hand, some felt that criminal sanctions should not be introduced as the offence may inadvertently capture innocent infringement. On the other hand, some noble Lords agreed that the offence was necessary, and indeed some felt that its scope should be extended further.
We shall no doubt return to the latter point in the course of today’s debate. However, as we consider this particular group of amendments, I would like to speak first to government Amendment 7 in order to allay some of the concerns that noble Lords have expressed regarding the application of the offence. This amendment to Clause 13 sets out more precisely the scope of the term “use” within the context of business activities. The amendment will further focus the offence with the aim of ensuring that innocent infringement will not be captured.
Before I comment further on this amendment, I remind noble Lords of the purpose of this clause. As your Lordships know, Clause 13 introduces a criminal sanction for the copying of a registered design. This will create a more coherent approach to the protection and enforcement of designs, trade marks and copyright in the UK, and should help to reduce the scale of blatant copying of registered designs by acting as a deterrent. Under the clause, it will be an offence to deliberately copy a registered design without the consent of its owner. It will also be an offence to knowingly market, import, export, stock or use the design in the course of business activities.
Concerns were raised in Grand Committee as to whether the term “use” may inadvertently capture accidental and incidental use under the offence. As the noble Lord, Lord Stevenson, pointed out in relation to the offence, it,
“includes as a criminal act the use of a product in the course of a business and the stocking of the product for use. Does the Minister accept that the word ‘uses’ is an unacceptably vague notion for criminal prosecution?”.—[Official Report, 13/7/13; col. GC 399.]
Because the offence has been drafted to require an element of active knowledge in order to be found guilty, it should be the case that accidental use will not be caught. However, the Government accept there may be cases where incidental use could conceivably come within the scope of the offence. For example, a business may lease a vending machine, which is a copy of a registered design, for use by its employees. This is completely ancillary to its main business but some have suggested that because the business is “using” the machine, a responsible person within that business who knew the machine was copied but still tendered its lease would be liable for the offence. The Government believe that, in practice, such cases should not attract the criminal offence. This is because the use of the registered design in this case would be ancillary to the main purpose of the business.
I reassure noble Lords that the Government have listened carefully to their concerns, and believe that this amendment is the right way to clarify the detail of the offence. By qualifying the word “use”, it will ensure that the mere incidental use of a copy of a registered design in the course of business will not be subject to criminal proceedings.
Amendment 4 in the names of the noble Lords, Lord Stevenson of Balmacara and Lord Young of Norwood Green, would add a qualification to proposed new Section 35ZA(1)(a) in Clause 13. The noble Lords have set out their position on this amendment. This would mean a person would attract the criminal offence contained in Clause 13 only if an act of copying was undertaken deliberately. The Government are of the opinion that “copying” refers to a deliberate “taking” of the design in question. In crafting the offence of registered design copying, the Government worked hard to ensure that it caught only cases of intentional and deliberate copying. For example, the existing test for whether, in civil law, design is infringed is to ask whether the product creates a “different overall impression” on an “informed user”. This was rejected for the proposed criminal offence because it left too considerable a margin for subjective judgment within a criminal case. The offence was purposefully drawn to be narrower than civil infringement, and while it of course remains a subset of such infringement, it will not be used in cases where there has been no blatant copying of a design. This ensures that designers can continue to be legitimately inspired by, and innovate around, existing designs without fear of their actions being caught by criminal sanctions.
Lord Clement-Jones
“Offence of unauthorised copying etc of a design protected by design right
(1) The Copyright, Designs and Patents Act 1988 is amended as follows.
(2) After section 235 insert—
“235A Offence of unauthorised copying etc of a design protected by design right
(1) A person commits an offence if—
(a) in the course of a business, the person copies any design protected by design right so as to make a product exactly or substantially to that design, and(b) the person does so—(i) knowing or having reason to believe that the design is protected by design right, and(ii) without the consent of the owner of that design right.(2) Subsection (3) applies in relation to a product where a design protected by design right has been copied so as to make the product exactly or substantially to the design.
(3) A person commits an offence if—
(a) in the course of a business, the person offers, puts on the market, imports, exports or uses the product, or stocks it for one or more of those purposes,(b) the person does so without the consent of the owner of the design right in that design, and(c) the person does so knowing or having reason to believe that a design has been copied without the consent of the owner of the design right in the design.(4) In this section “design right” includes an unregistered community design and a reference to the owner of the design right is also to be read as a reference to the owner of a community design right in a design.
(5) A person guilty of an offence under this section is liable—
(a) on conviction on indictment, to imprisonment for a term not exceeding ten years or to a fine or to both;(b) on summary conviction in England and Wales or Northern Ireland, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum or to both;(c) on summary conviction in Scotland, to imprisonment for a term not exceeding 12 months or to a fine not exceeding the statutory maximum or to both.”(3) In section 235B (enforcement) substitute all references to “35ZA” for “235A”.
(4) In section 235C (forfeiture in England and Wales and Northern Ireland) substitute all references to “35ZA” for “235A”.
(5) In section 23ZC, in subsections (2) and (3), substitute all references to “registered design” for “design right subsisting in a design”.
(6) In section 235D (forfeiture in Scotland), substitute all references to “35ZA” for “235A”.
(7) In section 235D substitute all references to “35ZC” for “235C”.
(8) For section 235E (offences committed by partnerships and body corporate) substitute—
“235E Offences committed by partnerships and body corporate
(1) Proceedings for an offence under this Act alleged to have been committed by a partnership shall be brought against the partnership in the name of the firm and not in that of the partners; but without prejudice to any liability of the partners under subsection (2) below.
(2) The following provisions apply for the purposes of such proceedings as in relation to a body corporate—
(a) any rules of court relating to the service of documents;(b) in England and Wales or Northern Ireland, Schedule 3 to the Magistrates’ Court Act 1980 or Schedule 4 to the Magistrates’ Courts (Northern Ireland) Order 1981 (procedure on charge of offence);(c) a fine imposed on a partnership on its conviction in such proceedings shall be paid out of the partnership assets;(d) where a partnership is guilty of an offence under this Act, every partner, other than a partner who is proved to have been ignorant of or to have attempted to prevent the commission of the offence, is also guilty of the offence and liable to be proceeded against and punished accordingly;(e) where an offence under this Act committed by a body corporate is proved to have been committed with the consent, connivance or neglect of a director, manager, secretary or other similar officer of the body, or a person purporting to act in any such capacity, he as well as the body corporate is guilty of the offence and liable to be proceeded against and punished accordingly.””
Lord Clement-Jones
My Lords, my noble friend the Minister correctly said that later in the proceedings we would be coming to the issue of criminal penalties for infringement of unregistered design. This is a rerun of an amendment that I moved in Grand Committee to provide that criminal sanctions would also apply to the deliberate infringement of unregistered designs. As I explained in Grand Committee, design is of key importance to the UK economy. However, the great majority of designers rely on unregistered rights, a point that has already been made eloquently by the noble Lord, Lord Stevenson. The introduction of criminal sanctions for the deliberate infringement of registered designs is a progressive step, but for most lone and micro designers the cost of registering every iteration of a design would be prohibitive. The extension of criminal sanctions to unregistered design rights for the majority of UK designers would be a deterrent to persistent copying in much the same way as it is for copyright and trademark infringement.
Criminal sanctions have been available for copyright infringement since 1862 and for trademark infringement since 1994. Criminal prosecutions have been used sparingly, sensibly and appropriately. Persistently copying designs, however, is not a criminal offence at all, which is anomalous. Persistently copying a two-dimensional drawing of a design or a design document can give rise to criminal liability under Section 107 of the CDPA, but when this two-dimensional work is converted into a 3D design, unless it is protected as a work of artistic craftsmanship, which we have previously discussed on the Enterprise and Regulatory Reform Act, copying that 3D version would not be a criminal offence. Nearly all designs, however, are copied from the 3D original, not the 2D drawings. How do the Government justify providing a higher level of protection to a two-dimensional design than to the 3D manifestation of that design?
I have also described the inequality of arms between infringers and designers and said that, if anything, in these circumstances, there are stronger reasons for imposing criminal offences for unregistered design right infringement than there are for infringing a registered design. In Grand Committee, to my arguments the Minister riposted:
“Registered rights can be readily accessed through the Intellectual Property Office and the EU designs registry website. They include crucial information, including the design that is protected, the date on which protection commenced and whether it is still in force. This is not the case with an unregistered design right”.
However, there is no registration of copyright in this country, yet infringement is a criminal offence as I have described. Why is it not for unregistered design?
The Minister went on to say that,
“the uncertainties surrounding unregistered designs, such as the difficulty of knowing when the design right came into existence, mean that it is more difficult for third parties to ensure that they are not infringing that design right. Therefore, against the backdrop of a threat of a criminal conviction, third parties are more likely to wait longer than necessary to be sure that the design is in the public domain before building on it, thereby extending the design right beyond its term and delaying potential innovation”.
However, exactly the same arguments could be applied to copyright infringement. What is the difference between this and copyright? The evidential burden is exactly the same; it is very similar in these circumstances. It is simply that the term for copyright is longer.
Viscount Younger of Leckie
The noble Earl makes an interesting point but I see the two as being very separate.
The noble Lord, Lord Stevenson, raised the issue of the low number of registrations. The importance of registration should not be underestimated. Official registers in the UK and OHIM contain approximately 728,000 registrations, which may be of help to the noble Lord.
My noble friend Lord Clement-Jones asked why expert witnesses cannot be used to determine technical matters under unregistered design matters. If the noble Lord’s proposed extension to include unregistered design rights was the right way to proceed, what he says about expert witnesses could indeed be helpful. However, as I have said, there are many reasons why the Government believe it is not right to criminalise unregistered design copying, which is the overarching issue.
Finally, the noble Lord, Lord Stevenson of Balmacara, raised the issue of the Copyright Hub to apply metadata to designs, which is an interesting point. The digital Copyright Hub is an industry-led initiative, of which the noble Lord will be aware. I am sure that the noble Lord will understand that I cannot therefore make commitments about what the hub will do in this respect. However, I am happy to speak to the industry team about the noble Lord’s suggestion. I therefore ask that the noble Lord withdraws his amendment.
Lord Clement-Jones
My Lords, first of all I thank the noble Earl, Lord Errol, for his intervention. We do not often agree on matters in this kind of debate, but I very much appreciate his support on this occasion, and in particular his reference to 3D printing. That will give rise to a number of particular issues. I also thank the noble Lord, Lord Stevenson. I understand that he does not follow me down the same road of principle, but the horizon to which he is pointing in terms of the ability of the Copyright Hub to apply metadata on its database to unregistered designs, could be an extremely interesting salient. It may be that when the Copyright Hub is up and running and it includes a whole data bank of unregistered designs, I come back on a future IP Bill and say, “Right, we know exactly what the provenance of these designs is, we have the metadata applied to them and it is entirely appropriate we should now apply criminal offences to infringement of unregistered design”. I can see that on the horizon, coming down the road.
The Minister was entirely consistent. He may have praised the virtues of inconsistency, but his reply was entirely consistent with his reply in Committee. However, I thought it was more considered and more elegantly constructed than in Committee. Some of his points were good ones. The least convincing were the non-technical ones such as “tinker at our peril”, “the delicate equilibrium” and so on; but some of his more granular points about magnifying the uncertainty where you have different elements within an overall design, and those he made about functional design, had a plausible ring about them. On his point about making industries more risk-averse, in many ways people in the fashion industry would love people to be rather more risk-averse. One of the real issues is copyright and design infringement in that industry. A little risk-aversion would go quite a long way. I still do not see the plausibility of his argument about the chilling effect and so on. However, I understand that the Minister has taken great care to respond, and I thank him very much.
If we can use the principles contained in Amendment 20 to develop the Copyright Hub, we might see a better future for unregistered design, which, as we have heard in this debate, is relied on by 350,000 designers. Registered design is a very small part of that. In the mean time I beg leave to withdraw the amendment.
Lord Clement-Jones
“(iii) progress has been made in protecting metadata”
Lord Clement-Jones
My Lords, briefly, this is a shameless attempt to publicise a success story from the Copyright Licensing Steering Group, the people who are bringing us the Copyright Hub. I take your Lordships back to the passage of the Enterprise and Regulatory Reform Act 2013, when a number of us argued for progress on metadata protection to be included in the Secretary of State’s annual report. On 6 March of this year the Minister said,
“The Government are keenly aware of and sensitive to the concerns of creators in relation to metadata. They believe that an industry-led approach is most likely to identify the key issues and the most effective solutions. … The Intellectual Property Office will also be working with the Technology Strategy Board to consider other options to tackle the issues around the misuse of digital images as well as search and stripping of metadata. I hope that in the light of what I have said in my brief comments my noble friend can withdraw his amendment”.—[Official Report, 6/3/13; col. 1602.]
It is very gratifying to be able to report that a sub-group of the Copyright Licensing Steering Group has produced, with a very comprehensive range of people within the industry, a draft code of practice that aims to ensure that relevant licensing metadata is identified in a consistent manner and remains readily available for licensing purposes. It calls on creators of images—photographers, and so on—to make it easier for potential users to find them by ensuring that they include key information such as their name, the date of creation of the image and a contact address. For users of images, the code of practice recommends that they take all reasonable steps to check that licensing metadata is attached to an image before they use it.
I understand that the draft code of practice is currently out to consultation and the Copyright Licensing Steering Group is seeking views on whether it is pitched at the right level and whether having general principles rather than more detailed principles is the right way forward. The Copyright Hub itself is now using Getty Images technology to search and identify images. It looks as though the Copyright Hub will fulfil the hopes placed in it, together with this whole development of protection of metadata.
The irony is that metadata stripping is unlawful under Section 296ZG of the CDPA 1988. The problem until now has been the issue of policing and enforcement. It looks as though photographers will be able, through a combination of the code of practice and the fact that the Copyright Hub is coming into existence, to remedy the unlawful stripping of metadata. It is good to know that other aspects of the Copyright Hub are being developed; some of them involve metadata, others do not. In the case of music, that is in conjunction with the new Global Repertoire Database.
It is useful to reflect briefly that this has been an interesting year in terms of debating and discussing intellectual property so fundamentally, and that there is some good news out there. I beg to move.
Lord Howarth of Newport
My Lords, the noble Lord, Lord Clement-Jones, takes us back quite nostalgically to the days of the passage of the Enterprise and Regulatory Reform Bill. He is absolutely right to remind us of the importance of the metadata issue. It would be welcome if the annual report were to include a section describing such progress as may be being made on that important issue.
I will speak to Amendment 14, in my name. I very much welcome the commitment that the Minister has made in the Bill to the publication of an annual report. Policy on intellectual property is arcane and is vigorously contested among specialists and between special interests. It is very important—its effects are far-reaching—yet it is not well understood, either by Parliament or the public. I therefore hope that the annual report will be more ambitious than is suggested by the terms of the clause in the Bill. I want it to range rather more widely to help Parliament and the public better understand the major policy issues and the principles which animate the Government in taking their specific decisions and formulating their broader policy.
I take it that the role of government is to judge the balance of the public interest in relation to intellectual property between affording protection to creative individuals and enterprises, and opening new possibilities as early as possible to the wider public, consumers and other originators of ideas and knowledge, such as academics, designers and other creative people.
Of course we need to protect intellectual property in certain circumstances. It is essential to incentivise innovation. Often there is a strong public interest in that—but not invariably. It should not be axiomatic that we grant more and more intellectual property rights. Applications should be judged on their merits. The Intellectual Property Office and the Government should not be negative but should be sceptical about applications, and should all the time be ready to question the consensus. While it is desirable to achieve an alignment of international regimes, for example through agreements at European Union level, it is important not to rest on the achievement of those agreements. As the noble Viscount reminded us, consistency is not necessarily a virtue.
Intellectual property is a form of monopoly. It leads to some rigging of the market and restraint of trade—and rigged markets and restraint of trade carry with them inefficiencies and opportunity costs. Others are restrained from accessing or exploiting new knowledge as early as they might do. Price competition is postponed. The holders of intellectual property, being protected, may become complacent and less innovative. That would be an ironic outcome of a policy intended to promote innovation. The incumbent may try to use monopoly power to crush rivals and new challengers who dare to enter the field.
Historically there have been vast benefits when decisions have been taken not to patent new discoveries. Jonas Salk declined to patent his invention of the vaccine for polio—to vast human benefit. Sir Tim Berners-Lee thought it was wrong to patent the world wide web. While it will be many decades before we can begin to assess the benefits or otherwise of that decision, it certainly created large new freedoms.
In Committee, my noble friend Lord Stevenson and I used the historical metaphor of the enclosures movement. We agreed that we preferred intellectual commons to intellectual enclosures. As the House will know by now, my view is that intellectual property is a necessary evil and that we should keep it to a minimum—just enough but no more than is needed to incentivise. Yet the tendency of policy has been to lengthen protection, and Governments have been prone to brag about the number of patents that are held in the UK, as if it was a measure of success. It is a measure of inventiveness, but it is also an index of economic rigidities. The Government should not simply equate maximising the profits of intellectual property holders with the public good. The question must be asked: cui bono?
It is commonly preferable to enlarge opportunities for small and medium-sized enterprises rather than to buttress the monopoly strength of giant multinational corporations. If we want to generate more jobs, spread wealth, tackle the negative externalities of certain business practices and raise more taxes, it may be preferable to support SMEs as against corporate giants.
The methodology needed to establish the necessary minimum has to be pragmatic and based on an assessment of the benefits and disbenefits of protection in relation to the economy, social well-being, research and culture. There are different effects of intellectual property depending on different timescales, industrial sectors, amounts of market share and geographical scales, just as there are different effects between luxuries and necessities.
The Government’s vision should not just be of what is in the narrow interest of the United Kingdom. They should not take the view “my country right or wrong” in relation to intellectual property. We should not always reflexively back UK plc. As we move towards a world with a population of perhaps 10 billion people and with vast migrations, it will be enormously in the interests of the United Kingdom that the poorer peoples of the world should be able to make rapid progress in knowledge, education and the growth of their economies. Judgments about intellectual property policy need to be economically farsighted, humane, ethical and wise. They will be very difficult indeed to make in, for example, the burgeoning field of the life sciences and where bioethical issues are at stake. I very much welcome the judgment by the US Supreme Court in relation to Myriad Genetics. However, as the noble Lord reminded us in Committee, it poses a significant challenge to the European Union. The EU biotechnology patents directive may need to be reconsidered in the light of that American judgment. As we see the development of techniques of so-called human enhancement, such issues are likely to proliferate. I hope that, year by year, the annual report will offer discussion of these matters.
The Minister very understandably and rightly said in Grand Committee, at col. 53 of Hansard on 18 June that each annual report should not be “a Hargreaves-like review”. But it should be thoughtful and instructive and should be more than a catalogue or parade of BIS or IPO activities, statistics, lists of negotiations and seminars and an account of assistance given to business. It should articulate values and principles and the Government’s vision. I mean the vision of the whole Government, not just the business department but other departments that have a vital interest in intellectual property such as the DCMS, the Department of Health, the schools department and the Department for International Development.
I conclude by noting that the noble Viscount, as Minister for intellectual property, has vastly important responsibilities which go beyond what is written into the clause as we have it now—that is,
“the promotion of innovation and of economic growth”.
The annual report ought to reflect those wider responsibilities and should be the basis of Parliament’s and the public’s continuing consideration of this policy area, which has such wide significance.
Viscount Younger of Leckie
The first amendment in this group from my noble friend Lord Clement-Jones would require that the annual report from the Secretary of State to Parliament include specific mention of,
“progress … made in protecting metadata”.
As I said in Committee, this report will have value to the extent that it addresses issues pertinent to the year in which it is published. While some issues such as innovation and growth are bound to endure, other issues may rise and fall in their topicality.
My noble friend Lord Clement-Jones talked about the work being carried out currently by the industry-led Copyright Licensing Steering Group to develop a voluntary code of practice on the handling of metadata. The Government support the voluntary approach being taken by industry to look at this problem, and we welcome the consultation that was published on 27 June. This consultation exercise, which is indeed good news, ends on 28th August, and I would encourage anyone working in this area to contribute their thoughts. I am sure that noble Lords join me in hoping that this work by industry will mean that metadata stripping is not a significant problem in years to come, and as such I hope they will also agree that although it is topical today, it would not be right to require the Secretary of State to report on progress with the issue every year. Of course, that does not mean that the Secretary of State cannot include such information in the annual report at his discretion while it is both topical and of interest. It is fair to say that, for the initial report at least, that will be the case. Accordingly, I am happy to commit today that the first report will contain an assessment of progress made on this issue.
Amendment 14, tabled by the noble Lord, Lord Howarth of Newport, is intended to require the Government to report on how the activities of the IPO impact on the interests of wider society and the economy. The amendment returns us to the debate which we had during Grand Committee on the detail of what should be included in the Secretary of State’s annual report on innovation and growth. Indeed, the noble Lord tabled a similar amendment at that time. In Committee, I explained:
“I entirely agree with what I believe is the principle behind the noble Lord’s amendment, that the wider interests of society are important in the context of IP rights. I can assure the noble Lord that the report will indicate where other policy objectives have been taken into account, alongside economic considerations—for example, where, say, freedom of speech, public health, or international development considerations have taken priority over economic ones”.—[Official Report, 18/6/13; col. GC 51.]
However, as the noble Lord has returned to the issue today, I return to the Hargreaves review to which the report responds. The review stated that the IPO should focus,
“on its central task of ensuring that the UK’s IP system promotes innovation and growth through efficient, contestable markets”.
The intention of the report is to sharpen the focus of the IPO on this core objective. Broadening the scope of the report would reduce its effectiveness in clearly setting out what the IPO is doing to promote innovation and growth.
However, I reassure the noble Lord that the Government take very seriously the need to balance the protection of intellectual property with the promotion of the wider interests of society and the economy, both in the UK and throughout the world. I was delighted to see that international negotiators, including representatives from the IPO, came to an agreement last month on a new treaty to improve access to books for millions of people who are blind, visually impaired or print disabled.
Also last month, the World Trade Organisation Trade-Related Aspects of Intellectual Property Rights Council decided to extend the transition period for least developed countries to comply with the TRIPS agreement until 30 June 2021. This has been government policy since 2011 and is about balancing the potential value of IP policy to least developed countries with the real-life priorities in those countries. The report will include such examples where the interests of wider society have been balanced with economic objectives.
The noble Lord, Lord Howarth of Newport, said that the Government should not rest on the achievements of international agreements. The Government are determined to improve the global IP system so that it benefits the UK and the global economy. I reassure him that we are certainly not resting on our laurels. Whether it is reducing patent backlogs or agreeing transitional periods for least developed countries in TRIPS agreements, we take a global view and seek continuous improvement. In the light of this, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Clement-Jones
My Lords, I thank all noble Lords for their remarks during the course of the debate, particularly about the importance of the protection of metadata. I thank my noble friend in particular for his assurances that the first annual report will include a report on progress on metadata protection. The marvellous thing is that it will be a good news report in that respect. I beg leave to withdraw the amendment.
Lord Clement-Jones
“Lookalikes
(1) A person (“A”) shall not, in relation to any goods or services, use any features of packaging, marking, labelling or decoration in such a way that the public is likely to attribute to A’s goods or services the reputation of another person (“B”) or the qualities or reputation of B’s goods or services.
(2) For the purposes of subsection (1) it is immaterial whether there is any similarity between the goods or services of A and those of B.
(3) Subsection (1) shall not apply to features of packaging, marking, labelling or decoration that are commonplace.”
Lord Clement-Jones
My Lords, I return to an amendment on lookalikes which was first proposed by my noble friend Lord Jenkin in Grand Committee on 18 June. He and the noble Lord, Lord Borrie, from the opposition Benches, made an eloquent case that this kind of parasitic copying was designed to—and did— confuse and mislead the consumer, and should have a remedy available to those whose products are copied in this way.
The Minister responded with a number of points on, first, the IPO study, the amendment itself, the Consumer Protection from Unfair Trading Regulations, the Which? report and TRIPS compliance. I will take each of his statements in turn and comment on them. First, the Minister said that the findings of the IPO study,
“were, perhaps surprisingly, fairly equivocal”.—[Official Report, 18/6/13; GC63.]
Having now studied the IPO study findings, I believe that they are unequivocal in key areas. The review of existing surveys concluded the following:
“It is clear across all these studies that consumers report making mistakes in what they have bought and in high numbers”.
In addition,
“where the packaging is similar then it appears that more people think the own brand has a common origin with the manufacturer”.
The study also states that,
“as the similarity of packaging increases it becomes more likely that consumers will perceive the quality of products to be the same”.
The study’s own consumer surveys found:
“Increased perceived similarity of packaging to manufacturer brand product packaging of one own brand product relative to another is significantly correlated with higher perceptions (ratings/expectations) of price, quality, suitability for intended use and (marginally) value for money … Substantial proportions (50-60%) of the UK, German and US populations report having purchased a lookalike accidentally or mistakenly at least once or twice … In summary, across the three national samples 5-15% of accidental purchasers of lookalikes rated the purchases as having been of the highest level of disadvantage … to them, and 30-40% rated the purchases as having been of the next highest level of disadvantage”.
The study also concluded that,
“some lookalikes are already unlawful in the United Kingdom as they are contrary to the Consumer Protection from Unfair Trading Regulations 2008”.
Tellingly, it went on to say:
“However, certain lookalikes already being unlawful under the 2008 regulations is of little significance if trading standards (or others) do not have the resources to take action against those breaching the regulations”.
The Minister went on to say that,
“there is a fine line between confusing packaging and the use of ‘generic cues’ to signal to customers”.
Competitors may adopt a category cue—typically this is one design element. The Minister quoted green for mint toothpaste. Nevertheless, each product can be distinct from others carrying the same cue. There is a big difference, however, where competitors set out to mimic a range of features associated with a familiar brand in order to create a similar overall appearance. Where there are borderline cases, the courts should have no difficulty in drawing an appropriate line. They must do so, for example, when determining whether or not a product is a counterfeit.
Category cue arguments are often used to justify copying familiar brands. However it is one thing to say that green equals mint or yellow equals lemon, it is quite another to say that red equals cola or squat, dark bottles equal Marmite. The Minister went on to say that,
“a substantial majority of consumers had deliberately purchased a lookalike and, of those consumers, most of them found the experience to be advantageous. The research did not analyse why some consumers perceived the purchase to be advantageous”.—[Official Report, 18/6/13; GC63-64.]
It should not be inferred from these findings that similar packaging is benign. A copy may be purchased deliberately, in the belief that it is comparable to the brand. This is what the copy intends to convey and the consumer may feel advantaged. However, the consumer would be misled were the copy not to share all the functional and emotional attributes normally associated with the brand. The IPO study demonstrates that similar packaging increases perceptions of quality and price. A consumer may feel advantaged, but actually may be paying more than would be the case were the product not free-riding and boosting its appeal artificially on the back of a brand.
The IPO study also demonstrates that similar packaging increases the belief that the product comes from the same manufacturer as the brand. The consumer may feel advantaged, but is actually misled when the product is not made by the brand owner. As the study states, crucially the research did not analyse why consumers perceived an advantage. It also makes a far-reaching and rather far-fetched assumption that shoppers have perfect information about the products on offer in supermarkets. This is clearly absurd. The finding therefore has little value in policy analysis.
Lord Clement-Jones
My Lords, I thank my noble friend the Minister for a very careful and well crafted reply, which had resonance in a number of areas. I particularly appreciated him saying that he and his officials were committed to protecting IP, that the Government are very receptive to the interests of brand owners, and that he had a real interest in discussions with brand owners and in continuing that dialogue. That is very important. I do not think that we are going to get very far in debating equivocal versus unequivocal—that seems to be a tomahto versus tomayto-type debate—but it will no doubt continue nevertheless. That continuing discussion and dialogue is extremely important and the noble Lord, Lord Stevenson, put his finger on it when he said that it could well be that enforcement of the CPRs is absolutely at the root of this. They are not being enforced currently. It may well be that there are some equivalent remedies to the comparative advertising rules that the Minister mentioned and I very much hope that, whichever way it goes, that continuing dialogue bears fruit. In the mean time, I beg leave to withdraw the amendment.
Lord Clement-Jones
“Copyright in broadcast
Omit section 73 of the Copyright, Designs and Patents Act 1988 (reception and re-transmission of wireless broadcast by cable).”
Lord Clement-Jones
My Lords, this is a rerun of an amendment I tabled in Grand Committee. On 18 June in Committee, the Minister said in response to this particular amendment:
“Given the interrelation between Section 73 and many other rules and regulations, it is key that this is looked at in the context of the wider framework”.
He said that the DCMS was essentially leading the work on this and that the department,
“will set out the next steps on this issue when it publishes its approach to digital connectivity, content and consumers, which is planned for publication before the end of July”.
I hope that the Minister can give us some news on that hot off the press but I am not totally optimistic. He also said:
“It is right and proper that any proposal will be consulted on with the relevant stakeholders and interested parties. This proposed amendment to the CDPA would pre-empt the Government’s approach to this area”.—[Official Report, 18/6/13; col. GC 94.]
I set out, fairly comprehensively, the reasons why it was not right to retain Section 73 of the CDPA, largely because of the outcome of the case involving an app that is retransmitting ITV and other commercial—
Lord Foulkes of Cumnock
I wonder whether the noble Lord will give way. He has spoken eloquently and diligently in Committee and now on Report on this matter, as he did on the previous amendment. I wonder whether he could give the House and me some reassurance as to whether there is any link between any of these subjects and the interest that he has declared in the register.
Lord Clement-Jones
My Lords, there is no connection at all. I am very surprised, quite honestly, that the noble Lord is asking that question, since I have spoken on this issue both in Committee and today.
Lord Foulkes of Cumnock
So none of the clients of DLA Piper UK have interests in any of these matters—is that correct?
Lord Clement-Jones
My Lords, none of those clients of DLA Piper are personal clients and therefore I have no obligation either to include them in the register or to declare them when I stand up in the House. I am sure that when the noble Lord reads the Code of Conduct, he will be absolutely clear on that point.
Lord Foulkes of Cumnock
I was not raising it as a question of obligation or, indeed, challenging what he has properly declared in the register. All I was seeking to ascertain was whether any of the many clients of DLA Piper—personal or otherwise—have interests in these matters. I wonder whether he could clarify that.
Lord Clement-Jones
My Lords, DLA Piper has something like 80,000 clients. I am sure that some of them have interests in virtually everything that passes through this House on a daily basis. However, that does not require a partner in a law firm, like me, to make a declaration or, indeed, to state who their clients are. Otherwise, I would take up even more of the House’s time than I already am. Perhaps I could continue.
The current regulatory regime governing the relationship between PSB channels and TV platforms rests on three assumptions: that some of the analogue terrestrial value enjoyed by the PSBs should be used to encourage platform competition in the UK; that platforms effectively offer audiences to commercial PSBs to sell to advertisers; and that platforms do not inhibit the ability of commercial PSBs to exploit content, originally delivered free to air, in secondary markets.
The first assumption no longer holds—there is no analogue spectrum and there is a highly successful and well resourced pay-TV platform in the UK. Increasingly, however, the second and third assumptions are also in jeopardy, in particular as a result of the rise of subscription-based, high-capacity personal video recorders. PVRs are now in the vast majority of Sky and Virgin households and are key to both platforms’ proposition to consumers. PVRs are rented or sold by the main pay-TV platforms to their subscribers as added-value services and enable pay-TV platform customers to record and keep copies of very significant amounts of commercial PSB content. They also allow viewers to skip the advertising in such content, as they are doing in increasing volumes, particularly in genres such as drama.
For example, the Sky+HD 2TB box is now capable of recording the entire ITV peak-time schedule for 11 months of the year, and storage space is expanding exponentially. The concern is not about PVRs per se—they are a great enhancement to consumer choice—but rather the fact that the regulatory regime now allows platform operators to extract further value from PSB content, which is supplied either for free or, worse still, following payment to the platform operator in the first place. The PSBs are not able to capture any of this value by renegotiating the original terms of supply to the platform, as a result of the following components of the current regulatory regime: Section 73, which this amendment attempts to deal with; the Ofcom-regulated technical platform services regime, under which PSBs have to provide content for free and have to pay several million pounds to a platform operator for the technical platform services that enable viewers to receive the PSB channels; and thirdly, the time-shifting exception to copyright that allows customers to record and keep TV content. Around 10% of all viewing is now time-shifted, which is nearly five times greater than the highest level of time-shifting in the VCR era. PSB content is the most time-shifted—drama in particular, where levels of time-shifting and advertising-skipping are far higher.
Viscount Younger of Leckie
To clarify for the noble Lord, it is indeed the strategy paper, which is due to be published by the end of July.
Lord Clement-Jones
My Lords, I thank the Minister for that response. We have elicited a very useful heralding of the communications White Paper, which the Minister has carefully labelled a strategy paper, so perhaps we are being invited not to expect too much detail. That will be very welcome, since it has been anticipated for quite some time.
The Minister has been very helpful in responding. Clearly, I believe that the discussion about Section 73 is part of an ongoing discussion, which will no doubt take place when the White Paper is consulted on and any Bill comes forward. The Minister talked about the objective to have a zero balance of payments. While that is very helpful in clarification, it is not particularly welcome to the PSBs. The DCMS can expect some argument about that, since the PSBs believe that that means they are at a disadvantage when it comes to the use of their programmes and people inserting advertisements in them for their own benefit and not for the benefit of the public service broadcasters.
I welcome the Minister’s point about the exemption being used by internet-based companies and so on. Again, that tilts the other way in terms of helpfulness. The debate will carry on, I am sure, but this has been a useful canter round the course in anticipation of the White Paper. I beg leave to withdraw the amendment.
Lord Clement-Jones
“Criminal liability
(1) The Copyright, Designs and Patents Act 1988 is amended as follows.
(2) In section 107(4A)(b) (criminal liability for making or dealing with infringing articles, etc) for “two” substitute “ten”.
(3) In section 198(5A)(b) (criminal liability for making, dealing with or using illicit recordings) for “two” substitute “ten”.”
Lord Clement-Jones
My Lords, this amendment was tabled in Grand Committee and I am certainly not going to repeat everything I said in relation to it.
Criminal offences for online copyright theft have maximum penalties of two years’ imprisonment. Criminal offences for physical copyright theft have maximum penalties of 10 years’ imprisonment. This discrepancy came about because the new offences were introduced by secondary legislation using the European Communities Act as part of the UK’s implementation of the copyright directive in 2003. Penalties for new criminal offences introduced by secondary legislation via the ECA are limited to two years’ imprisonment.
In addition, my right honourable friend Vince Cable’s Private Member’s Bill, which became the Copyright, etc. and Trade Marks (Offences and Enforcement) Act 2002, increased penalties for criminal copyright offences to harmonise them with those available for trade mark offences at 10 years.
Criminal sanctions should not be dependent on whether the offence is taking place in an online or physical environment. Intellectual property is being stolen, whichever format is being used. This amendment is essentially about addressing an anomaly that arose simply because of timing. These are exactly the same offences—they are just being committed online—and therefore should have the same maximum penalties.
Having a maximum penalty of only two years for online offences can be used by defendants to argue that these are not serious offences. Prosecutors have on occasion managed to work around this anomaly by using charges of conspiracy to defraud but it will certainly not always be appropriate to use fraud legislation. The circumstances of the Vickerman case—which we discussed in Committee; he got four years in prison—will not always be repeated. In other cases there may not be a conspiracy or the Fraud Act may not be applicable. Some cases are copyright cases pure and simple but we cannot currently risk using the CDPA in serious cases because of the reasons given above.
In his response in Grand Committee, the Minister said:
“With existing legislation already providing the necessary penalties and prosecutors having a range of options already at their disposal, at the present time I see no reason to increase sanctions under the Copyright, Designs and Patents Act, despite there being a slight discrepancy”—
I would have thought that eight years was rather more than a slight discrepancy. He went on to say:
“In particular, changes should not be made without carrying out the appropriate consultation to gather evidence of the impact”.—[Official Report, 18/6/13; col. GC 98.]
Existing legislation does not provide the necessary penalties. Rather, they are different. Why would it be necessary to consult in these circumstances? I remind the Minister of comments made by my right honourable friend Vince Cable when he was steering his Private Member’s Bill through Parliament. He said:
“There is no logical reason for two sets of intellectual property law to impose different criminal sanctions … it is important that we have legislation that makes criminal sanctions effective deterrents … There are some who have argued that we do not need to change the law because it is possible to find some existing power under which sanctions can be imposed. That is an unsatisfactory way to proceed. The approach is cumbersome and costly, and often it does not work. There is an enormous inherent advantage in having a law that is clear, open and completely honest in what it is designed to achieve”.—[Official Report, Commons, 23/11/01; cols. 628-30.]
All these points are apposite today as regards physical versus digital online copyright infringement. I hope that the Minister will reconsider his position on that amendment.
On Amendment 19, in responding to the Hargreaves review, the Government committed to introducing a limited private copy exception to allow copying of content lawfully owned by an individual for their own personal use. The Intellectual Property Office has recently issued the draft private copy statutory instrument, which can be summarised as follows. First, an individual who has lawfully acquired a work on a permanent basis can make a private copy for his or her own personal, non-commercial use. Secondly, the individual cannot circumvent technological protection measures but—interestingly—will be able to appeal to the Secretary of State to intervene to obtain a private copy if the work is protected by technological protection measures. Thirdly, it does not allow contract terms to override the exception.
Amendment 19 inserts a new clause in anticipation of this draft statutory instrument. The draft SI has provoked considerable concern among the audiovisual sector—indeed, across all the creative industries. I strongly believe that copyright exceptions should be adopted only in response to a well defined public policy objective and market failure. In this regard, the Government’s draft statutory instrument disregards altogether consumers’ ever-widening choice of commercial offerings facilitated by a rapidly evolving technological landscape, and risks jeopardising these market-led developments altogether. The purpose of this amendment is to ensure that a private copy exception should not apply where a commercially available alternative already exists. This principle is entirely consistent with European and international copyright norms and, indeed, is an existing principle in UK law.
Historically, private copy exceptions were established in an analogue environment where business models and technology could not accommodate consumer offerings that provide secure copies. With the rapid conversion to digital business models in recent years, the technological and therefore the commercial landscape has changed considerably. The audiovisual sector has recognised the growing consumer demand for additional copies and portable content, and already provides many avenues for consumers to obtain legal digital copies of content they buy for their own use. Most commonly, the purchase of a DVD or Blu-ray Disc includes access to a digital copy. In addition, products such as UltraViolet allow legal and secure access to that content through the cloud among six family members for up to 12 personal devices such as laptops, tablets, smart phones and televisions, thereby enabling format shifting. Additional multicopy offerings are being brought to the market, and none requires the consumer to pay twice for the same content. At the same time, an explosion of new digital audiovisual services—currently there are more than 30 in the UK—has occurred under the existing legal framework. There are an increasing variety of means which put increased choice and control in the hands of the consumer, and are made possible only through industry-led investment and innovation.
The UK already leads Europe in its range of audiovisual services and technologies, without any change being required to the current legal framework. In proposing the introduction of any copyright exception in the absence of a clear public interest, surely the burden of proof should rest firmly with the Government to define and quantify the extent of the market’s failure to meet consumer needs. It is very questionable whether the Government have made a convincing argument in support of a private copying exception. Indeed, far from incentivising the market to continue innovating in the interest of the consumer, it may be that the private copy exception proposed will fundamentally undermine the technologies and services that the market is developing.
There are numerous other concerns expressed about the draft copying statutory instrument, not least its apparent conflict on a number of points with EU law. It needs to be strengthened to ensure that the exception applies only for the sole personal use of an individual and is not to be used by commercial operators. It should not authorise the making of a further copy by another person or entity, such as an electronic storage provider, in relation to a further copy. Without such clarification, the exception could seriously impact on the ability of the music industry to license innovative value-added services, such as “scan and match” services in the cloud.
Given the widespread concerns about the latest wording of the exception, I hope the Minister can assure us that a further draft will be presented before the formal publication of the SI. I had a letter today from the Minister saying that the SI may be tabled later on in the year but that it is not intended to bring it into force until 2014. So there is no rush; there is ample time for another draft before proceeding with implementation. However the purpose of the present amendment is to ensure that, where private copying is permitted under the terms of the original product purchase, the exception is not invocable. There is no doubt in my mind that the absence of any commercial availability test when applying a private copying exception would be incredibly damaging for the health of our audiovisual sector. I beg to move.
Lord Stevenson of Balmacara
My Lords, this group is in two quite separate halves. Amendment 18—to which the noble Lord, Lord Clement-Jones, spoke first —is the continuation of a debate that was held in Committee. It will be interesting to hear how the Minister wishes to respond to it. There is a good case here for trying to unpick some of the discrepancies between the various regimes, and in particular to try to anticipate the way in which technology is moving forward.
In Amendment 19, which has been linked in this group, we are hearing a different debate, which is about the Hargreaves exceptions which are currently in consultation. As the noble Lord obviously anticipated, some changes may well occur as that debate goes forward. However, I do not think that it fits well into this Bill and confidently expect the Minister to say that it is a matter for another time. The question, of course, is when.
At the conclusion of the Committee stage the Minister offered—and we gratefully accepted his invitation—to have a broader-based debate around the sort of issues that the noble Lord, Lord Clement-Jones, has been raising. We felt that the recourse to secondary legislation for this important issue in itself makes it difficult for the House to exercise a broader view on these matters. In particular, as there are so many of these exceptions, there is a need for what might be considered a more general debate around the overall balance and overall approach which the Government could have taken in this matter. The noble Lord made that offer and we look forward to hearing whether he has had any success in finding time for that debate. It would be helpful, for exactly the reasons that the noble Lord, Lord Clement-Jones, has given, to have a broader-based discussion around some of the more far-reaching ends of these 11 different exceptions so that when the time comes for both Houses of Parliament to consider these matters—as they will in the secondary legislation process—we are better informed and can make better decisions about how to respond to them. I look forward to hearing the Minister’s response.
Lord Clement-Jones
My Lords, I thank the Minister for his two replies, which were rather different in their tenor. I very much welcome some of the points he made in his reply to Amendment 18. While not necessarily agreeing that it is inappropriate to change the penalties available for online infringement, the Minister said he would reflect further, set in train a review and consult with experts on this subject. That gives us a chink of light. He said that he would advise later on the timing of that review. At this stage, with noble Lords gathering for the next debate, that is as good as it gets.
Amendment 19 should be treated as a preliminary canter. I very much hope that there will be a more extended debate on this. This is the problem with secondary legislation: we may be faced with a debate simply when the order comes and we will not be able to amend it in any shape or form. The Minister should know that there is very deep disquiet about the private copying exception among various members of the creative industries. I hope that he will keep channels open to them because there is basically a fundamental difference of opinion here. Some members of those creative industries believe that their interests are threatened by the private property exception as proposed. They believe it is not narrow but actually quite broad and not explicit about the cloud. They have considerable interest in further discussion.
I hope that the Minister will keep all his channels open in that respect—on the exceptions as a whole but on the private property exception in particular. In the mean time, I beg leave to withdraw the amendment.